VA rating and sev.pay recoup

C

Clair_108

PEB Forum Regular Member
I was medically discharged from the service in April with 20% disability. I understand the rules of having to pay back the severance pay before one can start receiving disability payments from the VA. However, I have heard some conflicting things and I was wondering if anyone could clear it up for me.

I am anticipating an over 20% rating from the VA due to other service related issues that were not related to my discharge. I have heard, for example, if the VA rates me 50%, they will withhold the 20% I was discharged for (until my severance is payed back) but continue to pay me the other 30%. Can anyone cite the reference to this? I have also heard the VA will withhold ALL of the 50% until the severance pay is repaid. Any knowledge on this subject matter is greatly appreciated.
 
Hi. I just received my IPEB findings...DWSP...board rated me at 21%. I talked to the VA yesterday and they told me ALL of it would be taken to pay back the severance. This is not what my PEBLO told me. I was told by the PEBLO that they would only take the percentage of the condition I was originally boarded for so there is a disconnect somewhere. I would suggest calling your VA rep and ask them since they will be processing your claim. It wasn't the answer I wanted to hear either. Good luck to you.
 
Ok, so I had the same confusion so let me try to clear it up. Lets say you have a member in the military that was medically separated with severance pay. I will use the AF since I'm in it (until this Friday when I ETS :)). For ease of computation we will say the member has served 10 years by the time he gets out and is an E-5, single with no dependents.
So, severance (not separation) is calculated to be (Base Pay) X (2) X (Years/Months/Days in service). So, $2906.70 X 2 X 10 = $58,134 (before the 25% tax I might add). This is your severance check from the AF.
Now lets say you take this, and you were rated by the USAF as 20% disabled. The VA rates you as 50% (arbitrary). Using the chart here, you find that you will be getting from the VA $770 for the rest of your life. Since you elected to take the severance (and not give it to the VA), the VA will deduct the 20% amount ($243) from your VA amount of $770, which now you will received $527 for the rest of your life UNTIL you "pay back" (easier to think it like this) the VA for the money you took. So,
$58,134 divided by $243 = 239 (rough estimate) divide that by 12 (for 12 months in a year) = 19.93 (rough) **EDIT** Years before you "pay back" the VA. After this time, your VA paycheck will go back to $770.
Hope this helps.
 
Talon101,

Thank you for your post. Yes, this makes sense, and it is how I was told it would work. I have heard some people getting the "not so nice answer" of not receiving any compensation until all of their severance was paid back. So even if the AF separates someone with 20%, VA rates them at 50%, they withhold all of that 50% compensation until their 20% was paid back. It seems like the VA employees don't know their own rules and now vets are suffering because of this. I wanted to be prepared to show them their own policy but didn't know where it was in writing. Because as we all know....if it's not written it doesn't happen. Anyway, thanks so much! And congrats on the ETS :)
 
Since it seems no one ever has anything in writing relating to re-coupment of severance pay and the VA isn't going to tell anyone this, let me post what I have found over the course of researching our current situation. We are fighting right now to get the VA to follow their own rules and regulations because they somehow decided to randomly start withholding 40% of my husbands check when his original PEB award was only 20% 15 years ago. They have changed his records to include withholding for non-severance claims, and don't seem to know what their own rules and regs say. So for anyone else who encounters this problem, here is where you can find the VA policies IN WRITING that state they are not supposed to withhold more than the original entitlement (and if you google this document and look further into it, you will see that re-coupment is NOT supposed to be retroactive, although they have also done that to my husband and re-couped a huge amount of his temporary 100% disability after a surgery) Hope it helps others as we endure this neverending fight to get the VA to do their job correctly and follow THEIR OWN RULES....M21-1MR, Part III, Subpart v, Chapter 4, Section B (This is the reference if you want to google and find the whole document)

b. Recoupment Amount for Severance Pay

The amount of severance pay to be recouped from VA compensation is described in M21-1MR, Part III, Subpart v, 4.B.7.c. Generally, if the veteran received

· disability severance pay, then recoup the full amount of the disability severance pay received from compensation payable for the same disability or disabilities, and
· non-disability severance pay, then recoup the entire amount of severance pay from VA compensation.

Important:
· The rate of recoupment should not be in excess of the rate of compensation payable for the initial determination of the degree of disability assigned to those disabilities, except for hospitalization (Paragraph 29) and convalescence (Paragraph 30) ratings. The initial determination of the degree of disability is the first schedular rating for that disability under Subpart B of Part 4 of the CFR. For example:
- If the initial disability evaluation was 20 percent, but the current evaluation is 30 percent, the recoupment is at the 20 percent rate.
- If the disability was initially evaluated as 50 percent, but a temporary 100 percent rate was paid due to Paragraph 29 or Paragraph 30, the recoupment is at the 50 percent rate.
- If the disability was initially evaluated as 0 percent and then a temporary 100 percent rate is assigned due to Paragraph 29 or Paragraph 30, there is no recoupment until the first regular schedular compensable evaluation is assigned. (See 38 CFR 3.700(a)(3))

· Prior to the initial determination of the degree of disability for a service-connected condition for which disability severance was paid, recoup the full rate of monthly compensation payable for the severance-pay disability.

· PL 96-513, Section 631 provided that when entitlement to disability compensation was established on or after September 15, 1981,
- a veteran may receive disability compensation for disabilities incurred or aggravated by service prior to the date of receipt of non-disability severance pay, but
- VA must recoup an amount equal to the severance pay from the disability compensation.

Continued on next page



7. Recoupment and Withholding Procedures for Severance Pay, Continued


b. Recoupment Amount for Severance Pay (continued)

References: For more information on
· severance pay, see
- 38 CFR 3.700(a)(3), and
- Fed. Reg. September 27, 2002 (Vol. 67, No. 188)
· determining the total amount or balance of severance pay to make the recoupment determination, see M21-1MR, Part III, Subpart v, 4.B.6.b, and
· withholding flat tax rate for Federal income tax, see
M21-1MR, Part III, Subpart v, 4.B.6.d.
 
I've just had my MEB referred to the PEB, and I was seeking clarification relating to this issue. I have researched for 2 days straight on every search engine and keep getting conflicting answers. I'm anticipating the Army to rate my recurring stress fractures at 20%, so I will get a medical severance. Now I have other issues that the VA is rating, Adjustment Disorder, Planar Fascitis, Rub Lesions under patellas, Lumbar Strain (Army's stupid description for chronic pain), Cyst surgery on Dominant hand that restricts movement, Tinititus, and complications from LASIK. Now say the VA rates me at 50%.

When the recoupment happens, will it be for only 20%, and I will still recieve a check for 30%? I'm not going to take a severance if I cannot help support my family after the Army.
 
The rate of recoupment should not be in excess of the rate of compensation payable for the initial determination of the degree of disability assigned to those disabilities, except for hospitalization (Paragraph 29) and convalescence (Paragraph 30) ratings. The initial determination of the degree of disability is the first schedular rating for that disability under Subpart B of Part 4 of the CFR.

If you are looking for docs in writing, check out my previous post as it refers you to both the VA policy and the Code of Federal Regulations concerning severance.

If you receive severance for ONLY recurring stress fractures at 20% and then the VA later increases your ratings (after discharge), then they should only withhold at the 20% rate and you should receive the remaining percentage. If you receive severance for all of the conditions listed, they will withhold everything until it's paid back. Think carefully and make sure you get everything that will occur in writing before you sign any severance documents. And remember....the Army is NOT the VA. Two separate entities....think about that when the Army is telling you something the VA will do and vice versus.

As I said before, VA policies and the Code of Federal Regulations guide re-coupment of severance pay. However, we are personally fighting a neverending battle right now to get someone at the VA competent enough to be able to read and understand their own policies. They have made more mistakes over the past 15 years with my husband's file that we have had to research and then prove to them that they violated their own policies....you have to be very careful and diligent in your review of everything they send you. Don't take everything at face value. Keep this in mind as you transition from dealing with the Army to the VA.

I hope this information helps. Good luck.
 
I understand the payback of the severance, and have read the regulations, I just wanted some real world experience. I should only be getting the severance from the Army for the stress fractures. I was just checking to see if when the VA rates me for the other conditions, that they would not recoup that amount as well.

so in a nutshell:

Army rates me 20% for stress fractures and pays me a severence of about 30K.

VA rates me at 20% for the same condition and recoups this amount to pay the 30K back.
Now if I have other condtions that were not paid severence and would give me overall 60%, will I still be entitled to the remaining 40%, or will this amount also be recouped.
 
The VA will only recoup the severance from your compensation for only the ailment they discharged you for.

For me i was discharged with anxiety and given 10%, but i am total 80%, i 1508 a month and they only take out 205 dollars a month out of my compensation to recoup my severance. I have since been retired by the PDBR and am trying to get it back.
 
Thanks. That's exactly what I was looking for. I am so used to getting the shaft from the Army, I kinda expected it to be a universal theme with anything military related.
 
Just received my VA rating. 70%. On the first page of the packet it states right away what the entitlement is and how much they are with holding and why. While it doesn't specifically state policy, it states why you will be getting an amount less your total entitlement. I hope the rest of you get your answers and your regional VA can explain their reasonings as well as the Portland Regional Office. Thanks everyone for your help.
 
One of the documents that came with my MEB package states: "Severence pay is computed using years in service and base pay--for those who entered service after 8 Sept 80, pay is based on the high 3 average."

Really??? I thought High 3 was only for Retirement. Can someone please verify? Or point me in the direction of where to find the source document for figuring severance pay?? Many thanks in advance!!
 
Well my findings just came back last week and they said medical separation with severance pay of $160,000. By the way, I have 19 years and 11 months in ADAF. Since the medical condition I was being evaluated for was less than 30% (20%) and my time in service is less than 20 years, they are required to separate me. However, I can appeal the FIT, UNFIT findings, which won't work, or I can ask the VA for a one-time reconsideration of the 20% they gave me for my back.

This can only be done if you have new or compelling evidence that was not taken into consideration in the original MEB package. I have had LOTS more back issues and just told yesterday that I need ANOTHER back surgery. This is all NEW medical information that is being submitted to the VA for reconsideration. I am also submitting new x-rays that show deterioration of disc space, numerous physical therapy appointments that did more harm than good, a new MRI that shows more damage than before and some other info. This should get me to at LEAST 30%, if not 40%, thereby allowing me to be medically RETIRED.

Even if they say that it is staying at 20%, by the time the VA reconsideration is complete, I'll be over 20 years and I can retire anyway. I'm just tired of all the red tape and waiting!!!

The good thing is that I will get my full retirement pay* (CRDP) and my full disability pay which is currently 70%, but with new findings could very well push it to 80%.

*Full concurrent receipt will be phased-in over the coming years. This means that if you qualify you will see your retirement pay increase by approximately ten percent each year until the phase-in is complete in 2014.

In other words, since I am getting out in 2011, that is three years away from 2014. I will initially receive 70% of my retirement plus all of my disability. Next year I will go up to 80% of my retirement, and 10% more the next two years which will be 2014. For those who get out after 2014, if you are eligible for CRDP, you will get all of your retirement and all of your disability the day after you retire, since the phase out will be complete.
 
The taxed portion of my severance pay was returned to me this tax season without any hang ups. I know a lot of people are not this fortunate and have to fight with the IRS on this issue. I went to a tax attorney who was prior service, so he understood what all the VA and DOD language was about. I hope you all get back what was earned.
 
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