OFFSETS AFFECTING DISABLED SERVICEMEM-

BERS AND THEIR SURVIVORS deprive retirees of

their service-earned retired pay and cut compensation

amounts for survivors by up to $1,215 a month.

FOR MORE INFORMATION, PLEASE CONTACT:Col. Mike Barron, USA (Ret) or Col. Phil Odom, USAF (Ret)201 N. Washington St., Alexandria, VA 22314-2539 (800) 234-6622, ext. 123 or 534email: mikeb@moaa.org or philo@moaa.org

Undue Sacrifice

Active duty deaths: Before Sept. 11, 2001, survivors of servicemem-

bers who died on active duty were covered under SBP only if

their sponsor had served 20 or more years on active duty. In the

wake of the Pentagon attack, Congress extended SBP to survivors

of all servicemembers who die on active duty on or after that date.

All survivors of service-connected deaths also are eligible for

DIC from the VA (currently $1,215 monthly, regardless of grade,

with modest additional amounts for each dependent child).

By Col. Steve Strobridge, USAF-Ret.

The Fight for Equity

MARTHA DOUTHIT (pictured front cover) was raising two teenagers when her husband, an Army officer, was killed just outside Iraq in 1991. Only later did she learn a large part of her military Survivor Benefit Plan (SBP) annuity was wiped out by other conflicting laws.

MARY CRAVEN, whose husband retired from the Air Force after being wounded in Vietnam and died of service-connected causes in 1978, was shocked to find her Dependency and Indemnity Compensation (DIC) annuity from the VA is deducted from the military SBP coverage her husband had purchased.

MAJ. EDWIN STONE, USA-RET. (pictured on front cover), a Vietnam veteran and Bronze Star recipient, was struck by a vehicle in July 1980 while assigned to Fort Bliss, Texas. He suffered multiple injuries and nerve damage that left him without the use of his feet. Forced into medical retirement with 17 years of service and a 100-percent VA disability rat-ing, he still can’t believe he has to forfeit a portion of his earned retired pay to fund his own VA disability compensation.

ISSUE 1: The SBP/DIC Benefit Offset

ity to their children, if any. But spouses who do that pay a big price. They lose all SBP eligibility when the children come of age — leaving them with only $14,580 a year in DIC.

Further, the extra post-Oct. 7, 2001, benefits offer no help at all to 94 percent of SBP/DIC

Most survivors don’t realize at first SBP annuities are reduced by the amount of DIC being received, if service caused the death. For servicemembers grade E-6 and below (the vast majority of active duty deaths), this virtu-ally wipes out any SBP payment, leaving most survivors with just

DIC — only about $14,580 a year. Survivors of more senior service-members receive any SBP annui-ty left after the offset.

For active duty deaths since Oct. 7, 2001, Congress substan-tially increased lump-sum death benefits and allowed surviving spouses to assign the SBP annu-

Photographs by Patrice Gilbert

widows whose sponsors died before that date or died in retire-ment from service-connect-ed causes. Most, like Douthit, received only $6,000 or less in immediate benefits and $100,000 or less in military insurance.

“Our lump-sum payments didn’t last that long,” says Douthit. “My husband never would have believed that his being killed in wartime would cause the military to cut my SBP by almost $1,215 a month. That happens because DIC offsets SBP. It needs to be corrected.”

Survivors of servicemembers killed on active duty deserve more than these modest amounts, and those who need to shift SBP to children should not be compelled to accept a lifetime annuity of only $1,215 a month as the price of securing more reasonable short-term family income.

Retiree deaths: Retired ser-vicemembers with disabilities caused by military service (as determined by the VA) often have limited options to purchase life insurance at a reasonable cost. They can participate in SBP on the same basis as every other retired servicemember — paying 6.5 per-cent of their monthly retired pay to provide a survivor annuity equal to 55 percent of their retired pay.

Should a servicemember later die of the service-caused condi-tion (as determined by the VA), his or her survivor will be eligible to receive DIC. But the SBP annuity the servicemember paid for will be reduced by the DIC amount. In many cases, this wipes out most or all of the SBP annuity. In such cases, the survivor receives a pro-

$30,404

$21,976

$15,271

$9,900

$14,580

$14,580

$14,580

$14,580

$30,404

$21,976

$15,271

$14,580

$13,848

$13,848

$13,848

$9,900

Military survivors must forfeit $1 of SBP for each $1 of DIC they receive from the VA. For service-caused deaths, DIC should be added to SBP, not deducted from it. Such survivors deserve more than the tiny annuities they now receive.

$1,058

$14,580 $14,580$14,906 $14,580

$15,681

$26,974

$14,580

$14,580

$1,101

$12,394 $14,580

$14,580

DIC still is deducted from retiree-purchased SBP when retirees die of service-caused conditions. DIC payments should be added to SBP, not substituted for it.

service-caused disability makes the problem worse by limiting or denying any post-service working life.

Congress has enacted a series of laws that progres-sively eased or eliminated this unfair offset for more and more disabled retirees but has addressed less than half the problem so far.

Combat-related special compensation (CRSC): This program eliminates the dis-ability offset for VA-rated dis-abilities that are deemed to have

portional refund of the retiree-paid SBP premiums. But the gov-ernment pays no interest on what might have been many years of premium payments, and the only net DIC benefit is a modest tax advantage.

“Why have two programs if one wipes out the other?” asks Craven. “Getting the premiums back doesn’t replace the cover-age my husband paid for. The service caused his death. The service should pay extra for that, rather than canceling part

A century-old law forces thousands of disabled military

retirees like Maj. Edwin Stone, USA (Ret), to fund their own

VA disability compensation by forfeiting $1 of their service-

earned military retired pay for each $1 of disability compen-

sation they receive from the VA.

Military retired pay is earned compensation for the extra-

ordinary demands and sacrifices inherent in a military career.

Military people forced into medical retirement by service-

ISSUE 2: The “Disabled Veterans’ Tax”

caused disabi l i t ies before attaining 20 years of service should be “vested” in retired pay earned by service. They should not be penalized finan-cially solely because they had the misfortune to incur a ser-vice-caused disability.

Veterans’ disability com-pensation, on the other hand, is recompense for pain, suf-fering, and lost future earning power caused by a service-con-nected illness or injury. Few retirees can afford to live on their retired pay alone, and a

of the insurance he bought for me. It’s as if they’re saying it was his own fault he died.”

MOAA thinks the DIC for a service-caused death should be added to any SBP purchased by the retiree, not substituted for it. No survivors of civilian retirees who also are disabled military veterans and die of a service-connected cause must forfeit any of their purchased survivor benefits to receive DIC. Retired military survivors shouldn’t either.

Congress authorized paying SBP/DIC survivors an extra $50 a month, starting Oct. 1, 2008. But that small amount has out-raged most who do qualify. “It’s almost an insult to take away $1,215 and then expect us to be grateful to get back $90 in FY 2013,” says Craven.

been caused by combat- or oper-ations-related causes. It applies to all disabled military retirees, regardless of their years of ser-vice. Unfortunately, a glitch in the law still denies full payment — and in some cases, any pay-ment — to many.

Concurrent ret i rement and disability pay (CRDP): This program eliminates the offset for retirees with 20 or more years of service who are 100-percent disabled. It also authorizes a 10-year schedule (currently in its final year) to

Action Needed: Repeal the law that deducts DIC payments from military SBP annuities.!

phase out the disability offset for all retirees with 20 or more years of service and a 50-per-cent or higher VA disability rating. (Note: Retirees eligible for both CRSC and CRDP must choose one or the other.)

The remaining inequities: A 40-percent non-combat dis-abled retiree (e.g., one who lost a leg)regardless of years of service gets no relief at all. A 100-percent non-combat dis-abled retiree who has the mis-

fortune of incurring the disabili-ty at 19 years and 11 months gets no relief, forfeiting most — if not all — of his or her military retired pay. In fact, most dis-abled retirees still have no relief from the disability offset.

This is morally wrong and must be changed. For decades, the country has been unfair-ly extracting the full price of a legislative fix from the pay-checks of disabled military retirees, who already have sac-rificed more than any other American to protect our coun-try. Who can better afford that cost — disabled retirees or the government?

Veterans’ Disability Benefits Commission: “End the Offset.” While enacting partial relief, Congress also chartered a com-mission to review DoD and VA disability benefits and make rec-ommendations to Congress for action. The commission’s 2007 report stated:

“Military retirement ben-efits and SBP are intended to compensate for years of service, while VA disability compensation and DIC are intended to compensate for disability or death attrib-utable to military service. It should be permissible to receive both sets of benefits concurrently.”

553,000

65,000

239,000

304,000

ith

ith121,000

353,000

76,000

319,000

156,000

197,000

395,000

Many Disabled Retirees Su�er Retired Pay Loss

Action Needed: Change the law to extend CRDP eligibility to all disabled retirees,

regardless of years of service or disability rating.

!*Represents 75% of base pay at retirement (Jan. 1, 2013). **Represents 47.5% of base pay at retirement (19 years x 2.5% a year = 47.5%). Any retired pay above this amount represents disability compensation and thus is still subject to offset by VA disability compensation to prevent duplicate payments for the same disability.

E-7 medically E-7 medically E-3 with retired with retired with two years 19 years 19 years

VA Pay (100%) $2,527 $2,527 $2,527

Retired pay None $2,687* $1,702**

Deduction None -$2,527 -$985

Net compensation $2,527 $2,687 $4,229

THE PROBLEM THE FIX

Under current law, servicemembers forced into medical retirement by a non-combat-related, service-caused disability before 20 years of service must forfeit $1 of service-earned military retired pay for each $1 of VA disability compensation. The message to a senior NCO (shown below) is that 19 years of stellar service is only worth $160 a month.

Undue Sacrifice

$2,816

$1,425

-$1,425

$2,816 $3,210

-$2,816

$3,210*

$2,816 $2,816

$2,033**

None

$4,849

$394

The Bottom-Line Fix

THE QUESTIONS ARE STRAIGHTFORWARD: Did disabled retirees earn

their retired pay by service, independent of any service-caused disability?

Further, when military service causes a servicemember’s death, does the

survivor deserve to receive the $1,215 a month VA indemnity annuity in addition to,

rather than subtracted from, normal military benefits?

MOAA strongly believes the answer to both questions is “yes” and supports

the following legislation to complete fair treatment for disabled retirees and

servicemembers’ survivors:

MILITARY WIDOWS RELIEF: S.734, introduced by Sen. Bill Nelson (D-Fla).; H.R. 32, introduced by Rep. Joe Wilson (R-S.C.).

DISABLED RETIREES RELIEF: S. 234, introduced by Sen. Harry Reid (D-Nev.); H.R. 333, introduced by Rep. Sanford Bishop (D-Ga.); and H.R. 303, introduced by Rep. Gus Bilirakis (R-Fla.).

FY ‘08 FY ‘09 FY ‘10 FY ‘11 FY ‘12 FY ‘13 10-Yr total

SBP/DIC $753 $792 $826 $861 $897 $ $9,222

CRDP $ $1,480 $2,250 $2,300 $2,360 $2,410 $23,800

(all figured in millions)

How Much Will It Cost?

DIC Survivors 61,000

CRDP 553,000

How Many Are Affected?

FY ‘10 FY ‘11 FY ‘12 FY ‘13 FY ‘14

$598 $607 $622 $641 $661 $7,116

55

553

FY ‘08 FY ‘09 FY ‘10 FY ‘11 FY ‘12 FY ‘13 10-Yr total

SBP/DIC $753 $792 $826 $861 $897 $ $9,222

CRDP $ $1,480 $2,250 $2,300 $2,360 $2,410 $23,800

(all figured in millions)

How Much Will It Cost?

DIC Survivors 61,000

CRDP 553,000

How Many Are Affected?

FY ‘10 FY ‘11 FY ‘12 FY ‘13 FY 14

$598 $607 $622 $622 $661 $7,116*

$27,000*

**

** Congressional rules require 10 year budget projections*Cost according to availible info, Jan. 2011

FOR MORE INFORMATION, PLEASE CONTACT:Col. Mike Barron, USA (Ret), or Col. Phil Odom, USAF (Ret)201 N. Washington St., Alexandria, VA 22314-2539 (800) 234-6622, ext. 123 or 534email: mikeb@moaa.org or philo@moaa.org