History of Concurrent Receipt

While some form of disability compensation has been offered to injured soldiers
since colonial times, military retirement benefits were not introduced in the United States until
1861 during the Civil War. In 1890, the first legislation prohibiting concurrent receipt was
introduced by Senator Cockrell of Missouri, who argued that military retirement benefits “[are]
intended to be [compensation] in full for all military services.”

In 1941, Congress enacted
legislation which, while maintaining the ban on concurrent receipt, allowed veterans to elect
which benefit they would receive. The ban on concurrent receipt was consistently
maintained by Congress until 1999. A comprehensive legal analysis of concurrent receipt
can be found in Appendix A: Veterans’ Disability Benefits Commission, Concurrent Receipt
of Military Retirement and VA Disability Compensation.

Disability compensation is granted to any service member who becomes disabled
due to military service, regardless of rank or time served. Disabilities are given a percentage
rating in 10 percent increments, and the veteran receives a monthly compensation payment
based on that rating. Congress has said that this disability compensation program is
intended to compensate for the average impairment in earning capacity as a result of the

disability. As such, disability compensation is not paid while the service member is still
employed by the military.

Military retirement benefits are only granted to service members
who have served for over 20 years, and who then retire from service. Military disability
retirement benefits may also be granted to service members who are forced to leave military
service because of a service-connected disability. In order to qualify for military disability
retirement, the service member must have either served for more than 20 years, or receive a
DoD disability rating of 30 percent

or higher. Service members with a 10 or 20 percent
disability who have not served at least 20 years are separated from military service with a
lump sum payment. Those veterans, who received a lump sum and later apply to VA for
disability compensation benefits and are granted benefits, must have the DoD lump sum
payment recouped prior to receiving any VA compensation. Many veterans when they
agreed to the DoD lump sum payment were not aware that their total lump sum had to be
recouped prior to receiving any disability compensation by VA.

As noted, concurrent receipt of both VA disability compensation and DoD retirement
pay was prohibited, and military retirees who subsequently received VA disability
compensation were required to offset an amount of military retirement pay equal to the
amount of their disability compensation. Many military retirees still chose to apply for VA
disability compensation because VA disability compensation is tax-free, whereas retirement
pay is taxed. Also, VA disability compensation provides eligibility for other benefits in addition
to a monthly payment, such as priority care under the VA health care system. The total
annual offset of DoD retirement pay by VA disability compensation amounts to $3.6 billion.