Concurrent Receipt: Goodbye Disability Tax?

Concurrent Receipt is one of those mysteries that cannot be explained by the Defense Department, Veterans Affairs or the Catholic Church. But this is a priority of the Military Officers’ Association of America (yes, the same people who kindly sponsor my blog) and it seems progress has been made.

Concurrent receipt, which dates to an obscure law from the 1890s according to MOAA, refers to the receipt of retirement and disability compensation. Until recently veterans were “taxed,” as MOAA puts it in its informative e-book “Undue Sacrifice.” (Look past the melodramatic title.)

For each dollar of medical compensation, that much has been deducted from the retiree’s pay. So, a retiree with $2,000 in retirement and $1,000 in disability compensation would receive $2,000 not $3,000.

A few years ago, the law changed, phasing in concurrent receipt for those with 20 years or more of service and a disability rating of 50 percent or greater. Most in group receives both retirement and disability payments with no offset, but according to MOAA a percentage is still hit with the “tax.” Work has been done on behalf of veterans whose disabilities are deemed combat-related. The goal is all in this category will be exempt from the offset.

But 20-year retirees with a rating of 40 percent or less and those with a retirement of less than 20 years (even with as many as 19 years) are still subject to the offset. MOAA and others are fighting this battle, and it seems with some success.

Changes in concurrent receipt are sitting in some version of this year’s Defense Authorization Bill. The new guidelines take a phased approach. During the first year, those with disabilities rated at 90 and 100 percent (and fewer than 20 years of service) would be allowed in the concurrent receipt club. Year Two would extend the “benefit” to those rated at 70 and 80 percent. Currently, there are no plans to include the 60 percent and under crowd, but it could come once the way is paved with the higher ratings.

Though there are costs with the proposal, they should be offset by other spending cuts, says MOAA. A zero net cost or something close should appeal to lawmakers.

Whether or not payments will be retroactive is still unknown, though MOAA says it’s doubtful. Our guess is that was taken off the table to try and get the rest of this plan through, though the “plan” ignores most under 70 percent.

MOAA’s says its position is to compensate for career and disability. Twenty years? Fewer? There is no difference in service, the organization says. That the 60 percent crowd and below are left out makes one wonder.

What do you think about a veteran’s retirement being offset by his or her disability compensation?

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