Military Disability Pay Examples
In military divorce cases, Virginia courts are allowed by the federal Uniformed Services Former Spouses Protection Act (“USFSPA”) to award the servicemember’s former spouse a portion of the member’s “disposable retired pay.” The USFSPA excludes from the definition of disposable retired pay any disability pay the member receives. A member may receive one of two different types of disability pay, both of which are excluded from the USFSPA definition of disposable retired pay: (1) military disability retired pay and (2) VA disability compensation.
Military Disability Retired Pay
Military disability retired pay is available for those members who are sufficiently disabled that they cannot perform their assigned duties. If a member has enough creditable service, the member may be placed on the “disability retired list” and may begin to draw disability retired pay.
Let’s look at the example of (the entirely hypothetical) Marine Colonel Jessup. A year ago, Colonel Jessup left his wife in Virginia and took a new set of orders to Naval Base Guantanamo, in Guantanamo Bay, Cuba. The Colonel told his wife that he would “send for her” once he got settled in Cuba. However, soon after arriving at “Gitmo,” the Colonel fell in love with a younger Cuban woman, and told his wife their marriage was over.
Colonel Jessup’s wife has now been granted a divorce from the Colonel in Virginia on the ground of desertion. The Virginia court has awarded the now former Mrs. Jessup 50% of Colonel Jessup’s disposable retired pay. But that wasn’t enough for the scorned Mrs. Jessup. She also filed a charge of adultery against Colonel Jessup with the Marine Corps.
Colonel Jessup is now having breakfast on base with two intrepid Navy Judge Advocates conducting an investigation of the adultery charge. Colonel Jessup is explaining to them:
Just then, one of the legs of Colonel Jessup’s chair snaps, causing him to fall awkwardly to the floor. Colonel Jessup is rushed to the hospital, where doctors find that he has cracked several vertebrae in his back. Colonel Jessup’s days in the Marine Corps are over. He applies for military disability. The government rates Colonel Jessup as 40% disabled, and incidentally drops the adultery charge against him. Colonel Jessup leaves the military after 24 years of service.
Colonel Jessup will receive disability retired pay in an amount equal to his normal retired pay based on his years of service, or his base pay times his disability rating, whichever amount is greater. This can be viewed as a three-step process (for the purposes of this example, assume Colonel Jessup has an active duty base pay of $9,000 per month). The first step is to calculate Colonel Jessup’s normal retired pay based on his years of service. This is done by multiplying his active duty base pay by his years of service by 2.5%; in this case, $9,000 x 24 years x .025 = $5,400. The next step is to multiply Colonel Jessup’s base pay times his disability rating. In this case, $9,000 x .40 = $3,600. Colonel Jessup would then receive the higher of these two amounts as his military disability retired pay: in this case, he would receive $5,400 per month.
In Colonel Jessup’s case, the Uniformed Services Former Spouses Protection Act provides that the amount of the Colonel’s military disability retired pay that derives from multiplying his base pay times his disability rating is not divisible. Thus, in this case, $3,600 of Colonel Jessup’s military disability retired pay is “off limits” to division. The Virginia court order can be used to divide only the remaining $1,800 of Colonel Jessup’s military disability retired pay. Thus, the former Mrs. Jessup will receive only 50% of $1,800, or $900 per month. She has “lost out” on 50% of the remaining $3,600; i.e., $1,800 per month.
VA Disability Compensation
To examine the second type of disability pay a member may receive, disability compensation from the Department of Veteran’s Affairs (“VA disability compensation”), let’s return to the example of Colonel Jessup, and flash back to his breakfast with the Navy Judge Advocates. Again, Colonel Jessup is advising them:
Just then, one of the legs of Colonel Jessup’s chair snaps. However, Colonel Jessup’s lightning-quick reflexes enable him to reach out, grab the table, and stop himself from falling. He is a bit embarrassed, but uninjured.
The investigation into the adultery charge against Colonel Jessup proceeds. The investigators find incontrovertible evidence that the Colonel had indeed committed the crime. In order to avoid a court-martial, Colonel Jessup agrees to quietly retire.
Again, for the purposes of this example, assume Colonel Jessup has an active duty base pay of $9,000 per month; thus, with 24 years active duty service, the Colonel’s normal retired pay will be $5,400 per month ($9,000 x 24 years x 2.5%). However, as part of his processing out of the military, Colonel Jessup applies for VA disability compensation, based on a number of chronic injuries he has endured over the course of his storied military career.
Colonel Jessup enters the civilian world. The former Mrs. Jessup’s attorney makes sure that DFAS receives the Virginia court order awarding her 50% of Colonel Jessup’s disposable retired pay. DFAS honors the order, and begins distributing Colonel Jessup’s military retirement, $2,700 to the Colonel and $2,700 to the former Mrs. Jessup.
Seven months after his retirement, Colonel Jessup’s application for VA disability compensation is approved. For his chronic injuries, Colonel Jessup receives a “rating” of 40% and will be entitled to receive $500 per month in VA disability compensation, if he waives an equivalent amount of his military retired pay.
What is the benefit to Colonel Jessup of waiving $500 per month of his retired pay in exchange for $500 per month in VA disability compensation? First, the Colonel will receive a tax benefit. VA disability compensation, unlike military retired pay, is tax-free! Second, the VA disability compensation offers Colonel Jessup a unique opportunity to retaliate against the former Mrs. Jessup. The USFSPA and federal case law provide that the retired pay waived by Colonel Jessup in order to receive VA disability compensation is not divisible by state courts or DFAS. Thus, once the Colonel waives $500 of his military retired pay in exchange for $500 of VA disability compensation, DFAS will divide only the remaining $4,900 of retired pay. The former Mrs. Jessup has “lost out” on $250 per month, her 50% of the $500 in retired pay that Colonel Jessup waived.
The bad results for the former Mrs. Jessup described in each example above could have been avoided with proper planning by her attorney. To learn how, see Military Disability Pay.
Special note regarding “concurrent receipt” of disability pay and retired pay: the above was written prior to the enactment of the FY 2004 National Defense Authorization Act (NDAA), which provides for a 10-year phased restoration of retired pay for retirees with a disability rating of 50 percent or greater, who had 20 years or more of creditable service. Also, any retired pay offset attributable to a combat- or operations- related disability is now restored in full. If you or your spouse fall into either of these categories—a disability rating of 50 percent or greater (and completion of 20 years or more creditable service) or a disability that is combat- or operations- related—you should discuss this issue with a knowledgeable military divorce attorney.
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