Recoupment of Separation and Severance Pays

Under current Law VA CANNOT pay Disability Compensation to a Veteran who also received certain separation benefits from the Department of Defense (DoD).

The idea being that for the Veteran to get both is equivalent to 'double dipping'. Yes, even if the reason the Veteran was separated was due to reasons other than having a medical basis.

Does it make sense? No, but Congress!

In the end, even if you do have to 'repay' your separation benefits back before you can draw VA disability compensation. You in effect get an interest free loan/cash advance.

 

Types of Separation Benefits

There are various types of Separation Benefits that have been offered by the DoD throughout the years.

 

Separation Pay (Modern)

Those separated under 10 U.S. Code § 1174 and served at least 6 years active service, but less than 20 years.

Usually due to:

• Involuntary separation due to PT failure;

• Involuntary separation due to H/W failure;

• Being denied reenlistment due to being too high tenure in grade; or

• Sole survivorship discharge*.

*can be separated with less than 6 years of service and get paid.

 

Severance Pay (Medical Separation)

Paid to those who go through a Medboard but do not rate at least 30% DoD.

 

Non-disability severance pay

For those separated under former 10 U.S.C 359, 360, 859, and 860, who involuntarily separated from service, usually due to their failure to meet standards of performance.

 

Readjustment pay under former 10 U.S.C. 687

Was paid to reserve officers who were involuntarily released after completing at least five years of active service but did not qualify for retirement.

 

Readjustment pay under former 10 U.S.C. 3814a

Was paid to regular officers below the rank of major who were discharged during a reduction in force.

 

Reservists' Involuntary Separation Pay (RISP)

Paid to a member the Selected Reserve who has at least 6 years but less than 15 years of service under 10 U.S.C. 12732 (reference (c)) as of the date of discharge from a Reserve Component or involuntary transfer from the Selected Reserve.

NOTE:

• Reserve Special Separation Pay (RSSP) is NOT subject to recoupment.

 

Special Separation Benefit (SSB) & Voluntary Separation Incentive (VSI)

Were used to help downsize the military by encouraging service members, who might otherwise face involuntary separation or denial of reenlistment, to separate voluntarily.

IMPORTANT NOTE:

• VA is NOT responsible for recouping VSI from a Veteran’s disability compensation! It is the DoD's responsibility to recoup the money. However, the VA ain't no snitch and will NOT notify the DoD of any awards to the Veteran.

  • Further, if the DoD has paid the entire amount of VSI the Veteran is owed, the DoD has NO mechanism to recoup that money. UNLESS, the Veteran rejoined the military and became eligible for retirement.

 

Voluntary Retirement Incentive (VRI)

Payment DoD offers to officers to encourage voluntary retirement when they have served for more than 20 years.

NOTE:

• VRI is NOT subject to recoupment.

 

Voluntary Separation Pay (VSP)

Was paid to service members who voluntarily separated from active duty due to restructuring or a reduction in force.

 

Recoupment and You

The table below details the situations in which the Veteran is required to 'repay' as well as the amount that is due.