Severance Pay - Retirement Pay - VA $

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ndrkk

PEB Forum Regular Member
PEB Forum Veteran
Hello folks,
I'm very confused about how things might play out for me.
My case is currently with the PDBR, I am hopeful that I will get retirement. IF I do, I am wondering:

- How will the roughly $100,000 I received in severance pay be affected? currently, about half of my VA disability payment is being withheld to repay this severance pay. Will I all of a sudden have to pay this back? Or will it just continue to be taken out of my VA payment for the next 10 years until it is paid back? Will any retired pay over the VA amount be withheld to help pay the severance pay back sooner? My medical condition is not combat related, so my retired pay will be reduced by my VA payment. Will the balance of the retired pay go towards paying back teh severance, or will I collect that?

welcome to any thoughts or experiences you can share.

Thanks
 
My husband was medically seperated Oct 2007 from the Army with 20% disability. (He ended up having back surgery due to an injury that occrued at JRTC while his unit was training to go to Iraq. They gave him 10% for his back and 10% for his ankle.) We received roughly $100,000 as well...the IRS of course took over $20,000 in taxes. We had to file a St. Clair VS. US tax return to get that part of the money back.

Then we waited until we could offficially submit his info to the PDBR. We finally heard back from them last Oct saying that he should have been medically reitred...they granted him 30%. (10% for the back issues and 20% for his ankle.) We did not receive any other paperwork from the PBDR until Feb 2010. We had to call several different people to get the orders cut. Everyone kept telling us that they had no clue what we were talking about and that his last base would have to handle it. Anyway, once we got orders we had to go to a Marine Corp. station to get IDs and enroll in DEERS to become eligble for TriCare. We initially sent in our TriCare forms that we rejected becuase of some coding issue with DEERS due to his medical discharge status and becuase we missed that month's enrollement date for TriCare Prime we had to wait until May to be covered by TriCare Prime. We received a letter from retirement in July 2010 that detailed his retirement pay, SBP payments & VA pay...we were actually due some retirement pay that we never received. According to that letter the over $3000 we shoulod have received was forwarded to the VA due to our recoupment status. (Very annoying!) Anyway, we also pay DFAS $48 a month out of pocket to cover his SBP payments. He is currently rated at 60% disability according to the VA but we only see $720 a month from them...his retirement pay is basically tax free becuase of the amount of his VA pay. ( I should probably warn you that his case worker tried to get us to waiver his retirement pay because of the amount of his VA pay but since we have kids that amount would decrease while the retirement pay would not. Hope that makes sense)

Long Story short. We did not get any of the money that we have had withheld from his VA pay over the last 3 years.
 
Hmm, very interesting.

I received a letter from the Air Force dated 27 July on the 3rd of August, saying that the PDBR recommended retirement and the AF accepted that recommendation. The next day I took that letter to the AF Military personell flight in the pentagon where i work, I showed them the letter, and based on that they updated my DEERS status to retired. The following day I went to the Bolling AFB MPF to do my SBP briefing/selection. We got that done and got my wife her new ID card. This week Monday I went to the tricare service center in the Pentagon and filled out the paperwork for Tricare. They tell me it will be effective 1 September.
I also called DFAS this week to ask them what I could expect in regards to retirement pay. Based on what they told me, this is what will happen.
My base retired pay will be $1452. (30% of my high 3) My VA payment will not change (I'm 50% with 2 kids, so its like $927, but $452 is withheld to pay back my severance pay, leaving a net of 475 each month) My retired pay will be reduced by my net VA pay ($475), leaving $973. From that, they will take my SBP payment and tricare, leaving me at about $920. From that $920, the DFAS guy told me that they may only withhold a maximum of 40% ($370) towards recouping my severance pay. That will basically bring my retired pay down to about $550, which will be taxable. DFAS will continue to withhold the $370 until my severance pay is payed back. When it is all payed back, the VA will stop withholding the $452, and DFAS will stop withholding $370. At that point I'll get the full VA payment and my retired pay will be reduced by the full VA payment amount.
As to back pay of my retired pay, the DFAS guys said the same rule applied. They cannot withhold more than 40% of a payment for recoupment of severance pay. He also said that if my account was created and the back pay was issued before the recoupment division saw the new retired pay account, I could potentially have all the back pay. If the recoupment division does see the new retired pay account before the payment goes out, they will withhold 40% and apply it towards recoupment of my severance pay.
So basically, one way or another, I will end up paying it all back, sooner or later depends on how much they pay me up front in back retired pay. This is what the helpful guy at DFAS told me, but I'll truly believe it after I've started getting the payments :)
 
Just a quick question regarding repayment of severance payment. If an injury is combat related the severance does not have to be payed back due to the (National Defence Authorization Act 2008), and I noticed that AFradio has incurred an injury while performing combat related training. If this is correct, why is the VA recouping his severance? Another question, if a service member was seperated with an injury that was/is combat related and the service member receive a retirement, will DFAS or VA recoup the severance?

It seem all to new to know for sure what will happen, but I believe that we need to keep inquiring, picking, and fighting to get what is right. I am still fighting and will post as I get more information. Good luck to all and keep fighting the good fight.

Frank,
 
Not sure of the specifics of anyone's case, nor have I looked closely at this issue. So, given the caveat that this is from the hip, if the effective date of the finding predates a provision of law that later excused repayment, they may be basing the calculation on the state of the law at the time the original PEB occurred. I am not saying this is correct (nor am I saying it is not), it is just one explanation that comes to mind.
 
ndrkk said:
Hmm, very interesting.

I received a letter from the Air Force dated 27 July on the 3rd of August, saying that the PDBR recommended retirement and the AF accepted that recommendation. The next day I took that letter to the AF Military personell flight in the pentagon where i work, I showed them the letter, and based on that they updated my DEERS status to retired. The following day I went to the Bolling AFB MPF to do my SBP briefing/selection. We got that done and got my wife her new ID card. This week Monday I went to the tricare service center in the Pentagon and filled out the paperwork for Tricare. They tell me it will be effective 1 September.
I also called DFAS this week to ask them what I could expect in regards to retirement pay. Based on what they told me, this is what will happen.
My base retired pay will be $1452. (30% of my high 3) My VA payment will not change (I'm 50% with 2 kids, so its like $927, but $452 is withheld to pay back my severance pay, leaving a net of 475 each month) My retired pay will be reduced by my net VA pay ($475), leaving $973. From that, they will take my SBP payment and tricare, leaving me at about $920. From that $920, the DFAS guy told me that they may only withhold a maximum of 40% ($370) towards recouping my severance pay. That will basically bring my retired pay down to about $550, which will be taxable. DFAS will continue to withhold the $370 until my severance pay is payed back. When it is all payed back, the VA will stop withholding the $452, and DFAS will stop withholding $370. At that point I'll get the full VA payment and my retired pay will be reduced by the full VA payment amount.
As to back pay of my retired pay, the DFAS guys said the same rule applied. They cannot withhold more than 40% of a payment for recoupment of severance pay. He also said that if my account was created and the back pay was issued before the recoupment division saw the new retired pay account, I could potentially have all the back pay. If the recoupment division does see the new retired pay account before the payment goes out, they will withhold 40% and apply it towards recoupment of my severance pay.
So basically, one way or another, I will end up paying it all back, sooner or later depends on how much they pay me up front in back retired pay. This is what the helpful guy at DFAS told me, but I'll truly believe it after I've started getting the payments :)
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Very Interesting. Thank you for sharing your story with us. Told my husband what you said about the back pay and he said that he is going to call them on Monday to find out why they took it all. I have been trying to tell hinm that it didn't soulnd right since we got the letter but since they won't talk to me about it I had to convince him. LOL So if they were only suppose to withhold 40% for the recoupment then we should have been forwarded the leftover $1800. I know that we have to pay it back sooner or later but still don't get why they decided to give it all to the VA.
 
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