Introduction to Concurrent Receipt Programs Concurrent Retirement and

Introduction to Concurrent Receipt Programs Concurrent Retirement and Disability Pay (CRDP) Combat-Related Special Compensation (CRSC) Presented by Shane Ostrom, CFP® Lt Col, USAF (Ret) Deputy Director, Financial and Benefits Information Military Officers Association of America

Why Concurrent Receipt Programs? Before CRDP/CRSC, Uniformed Service retirees receiving both retired pay and VA comp, this applied: Retired Pay Denied Gross Retired pay - VA Waiver VA Disability Comp Paid in full based on VA rating. Net Retired Pay • VA Waiver amount = VA Disability Comp amount • VA Waiver Intent: stop double dipping; two pays for the “same event” • Concurrent Receipt questioned the “same event” issue • Retired pay due to time served vs. VA comp disability • Concurrent Receipt restores ONLY “vested service” retired pay • Still prohibits double payment of disability pay

Concurrent Retirement and Disability Pay (CRDP) • CRDP restores vested retired pay by eliminating the VA Waiver from retired pay – Usually (more later) • Eligibility: 20(+)yos AND >=50% VA rating • Pay agencies (DFAS, USCG/NOAA, PHS) pay CRDP automatically • Some members expect to see a “CRDP payment” • They don’t realize the lack of VA Waiver IS CRDP • CRDP is taxable and subject to divorce courts CRDP and Retired Pay Gross Retired pay - VA Waiver Gross Retired Pay VA Disability Comp Paid in full based on VA rating.

Combat-Related Special Compensation (CRSC) • CRSC pay based on combat situations making it tax-free • It’s a separate payment—a third pay (Retired, VA, CRSC) • The VA Waiver still applies in retired pay • CRSC reimburses a member for the VA Waiver • CRSC may not reimburse for the full VA Waiver amount • Eligibility: everyone with retired pay and VA comp • Tricky with medically retired members • Apply w/Service VA Disability Comp CRSC and Retired Pay Gross Retired pay - VA Waiver Net Retired Pay + CRSC Restored Retired Pay Paid in full based on VA rating.

Concurrent Receipt (CR) How it Works CR – restoration of vested retired pay due to years of service Without CR With CRDP With CRSC Retired pay - VA Waiver Net Retired Pay + Full VA comp Retired pay - VA Waiver Full Retired pay + Full VA comp Retired pay - VA Waiver Net Retired pay + Full VA comp + CRSC Check Total compensation Without CR <50% VA rating or <20 years of service No Service combat rating Total compensation CRDP 50%(+) VA rating and 20(+) years of service Automatic approval Total compensation CRSC Any VA rating Any years of service Must be combat rated by applying to Service

CRDP-CRSC The Tricky Parts • Smaller Tax-free CRSC can be greater than taxable CRDP • CRSC separate from retired pay – not subject to divorce • Members don’t understand continued VA Waiver w/CRSC • Confusion about Open Season in December

CRDP-CRSC The Tricky Parts Medically retired members Disability rating higher than vested service pay multiplier • Retired Pay formula: [(2½ x YOS) x base pay/high-3] • With 10 yos; 2½ x 10 yos = 25% • Service medical disability rating 50% • Service uses the greater percentage for retired pay – 50% • CRDP/CRSC reimburses “vested service” pay only – 25% • CRDP/CRSC will not reimburse full amount of VA Waiver in this case

CRDP-CRSC The Tricky Parts Guard/Reserve members Medical retirement is “active duty” retirement— “total service” time does NOT count Example: Guard/Reserve member medically retired – 12 yos Active Duty, 21 Total “Good” years of service – ONLY 12 yos Active Duty count for retirement status • However, 21 Total Years counts for pay purposes – Result: not CRDP eligible due to 12 yos; CRSC only – However: at age 60, 21 Total yos kicks in • Now CRDP eligible

Legislative Status of Concurrent Receipt Full Payment of Retired Pay and VA Compensation

Congress Has Fixed For Some CRSC Combat Related CRDP Non-Combat Related 20+ Yrs/100% and IUs Yes 20+Yrs/50+% Disability Yes 20+ Yrs/0 -40% Disability Yes No Under 20 Yrs—Med Retire Yes No

Concurrent Receipt Haves vs. Have-nots 270 k HAVES 553 k Have-nots