How does your VA compensation interact with your Navy Reserve paycheck?

How does your paycheck as a Navy Reservist interact with your Veteran’s Administration disability compensation?

I got asked this question at the NOSC one sunny weekend.

Anyone else see a person on his knees with his head in the ground?

MILPERSMAN 7220-380 states that members may elect to receive either the payments for current military pay or the entitlements for past military service.

Service Members cannot double dip. Personnel at my NOSC were under the impression that this meant a member had to choose between BEING a reservist or accepting VA disability compensation. This is not quite true.  There is nothing in instructions from either the Veteran’s Administration or the Navy that says you cannot be both a reservist and receive compensation from your disability award.

Still, you cannot double dip. What this means is that the navy payment and VA compensation are broken down to a more granular level from the big monthly checks. The VA instruction (M21-1MR, Part III, Subpart v, Chapter 4 Section C) says this done on a prorated, per diem basis at the end of the year.  Defense Manpower Data Center (DMDC) figures out how many paid days the Service Member drilled/active duty (drill days are 4hr periods = 1 day ergo 1 Saturday of drill = 2 drill days ergo 1 drill wknd = 4 paid days). DMDC then coordinates with Hines Information Technology Center which ID’s reservists who received both VA disability comp and drilling reserve pay. 

Hines ITC then sends a letter to the Service Member to elect to choose to keep either their VA disability compensation or the reserve pay for the tallied number of days.  (For example, lets assume 48 drill days and 15 days of active duty training for a total of 63 days). The Service Member then returns the letter indicating whether they want to foreit the VA disability compensation or the Navy reserve pay.  They can also challenge the number of days of active duty if they see a discrepancy. 

At the New Year, the VA resolves the accounting by withholding the 63 days of the Service Member’s VA benefits until the account has settled and back to zero.  Members can preempt this large withholding by notifying the VA of the times that they will be drilling or on Annual Training and having the money withheld in small pieces each month. 

As an example:  An O-3 with a high disability rating was cleared by the Navy Reserve to transition from Active Duty to Reserve Duty as a drilling reservist.  His pay per day as a LT for those 63 days is much higher than his VA disability benefit, so he would elect to have them withhold 63 days of disability comp until it has settled up. 

The VA’s Answer to Accounting for Drill Days Each Month in Your Benefit Disbursement

I’ve written previously about the interface between the VA disability benefit and drill pay. As previously written, you cannot receive both drill pay and your VA benefit concurrently. (See the post “How Does Your VA Compensation Interact with Your Navy Reserve Paycheck?” for the in depth explanation.)

I heard or read somewhere that you could submit a monthly form to notify the VA that you were drilling, and they would withhold the prorated amount on a monthly basis.  This option would be attractive because under the current process, an awardee’s benefitis withheld for the entire year’s worth of training days – say 63 days (remember, each 4hr period counts as a day).  Turning any income stream off for two full months is inconvenient at best.  Smoothing it out with a monthly deduction of prorated drill days seems like a plausible rumor, so I decided to investigate. When the Google failed me on finding the correct form, I decided to go into the bear’s cave…
Unable to scare up anything on my own, I emailed the nice people at the VA and asked about it.  Naturally, in the face of a monolithic government bureaucracy being scorched on national television for poor customer service, I expected little assistance.  TO THEIR CREDIT, they responded within 5 days with a comprehensive answer to my question.  Kudos to them.  Its a point of success they can build on. Now if they can solve those other little rough spots, they’ll be in good shape. 
Unfortunately, the answer to the question was not what I had hoped.  The magical form does not exist.  According to the response, you cannot alter the disbursement on a monthly basis.  So, if you’re in this boat, you need to practice good cash management and ensure that you deduct the amount yourself and set it aside so that you retain enough to cover you through the withholding period.
This process is simple mathematically.  Take your monthly disbursement and divide by 30.  Each VA month is 30 days.  For the sake of numbers we’ll use $3000.00/30days = $100.00/day.  If you know you are drilling 1 weekend this month, then set aside 4 days worth of benefit, $400.00 into a separate account for that month.  If you do your 14 days of drill, then set aside $1400.00.
To streamline the income for the year, you can figure that you’ll probably drill for 12 weekends and 2 weeks per year.  12 x 4 = 48 + 14 = 62.  Take 62 and divide by 12 months to get a little over 5.  If you withhold 5 days per month, then you’ll come out at right around two months worth of benefit.
There is no way that I’m aware of to establish allotments within the VA, but if you have Navy Federal or USAA, this is an easy task.  Set up a checking account for the set aside and have the bank transfer the allotted amount each month immediately after the benefit arrives.  The tricky part is keeping your fingers out of it throughout the year.  

VA Response to Monthly Witholding Question

The comments below are the complete response to my question of how to submit form monthly to withold the VA benefit on a monthly basis vice an annually accumulated basis.

“Dear Mr. Knight:

This is in response to your inquiry to the Department of Veterans Affairs (VA) dated May 14, 2014.

For the service you have performed for our country, we are grateful. Thank you for your sacrifice.

Unfortunately, it does note quite work that way sir.

Annually, the Defense Manpower Data Center (DMDC) sends a VA form 21-8951, Notice of Waiver of VA Compensation or Pension to Receive Military Pay and Allowances, to reservists and guardsmen.

Waiver Requirements

Inactive duty training pay or active duty pay cannot be paid concurrently with VA benefits and a waiver must be filed annually. It is usually advantageous for the Veteran to waive disability benefits. However, the Veteran may waive drill pay in order to receive full compensation.

Reduction of VA benefits

VA does not create an overpayment on drill pay adjustments. Reduction is made prospectively (in the future) based on the rate in effect during the last day of the fiscal year the training actual took place. A fiscal year runs from October 1 through September 30.

For example, Fiscal year 2007 began October 1, 2006, and ended September 30, 2007. If training occurred during FY 2007, the rates in effect on September 30, 2007, are those on December 1, 2006.

If a Veteran was drawing a temporary 100%, the withholding is based on the permanent rate in effect at that time.

Effective date Reason Code Entitlement Code Dependents Total Award Net Award Type Withholding
06-01-2008 19 01 10/10 568.00 12.00 1 556.00
08-04-2008 19 01 10/10 568.00 568.00 0

If a service-connected Veteran, with an evaluation of 40% and a dependent spouse, completed 63 training days during FY 2007, VA would withhold the rate in effect and pay the difference to the Veteran. Our M12 screen would show as follows:

Counting of Training Time

Inactive Duty Training — On drill weekends, each four-hour training session counts as one day to be waived. So, a drill weekend would be four paydays.

Active Duty Training — For two-week summer camp, each day attended counts as one day to be waived.

In computing the number of days VA benefits must be waived, any authorized travel time for which service pay and allowances are paid is included.

Each month is considered 30 days no matter how many days are actually in the month.

Completing VA Form 21-8951

VA Form 21-8951 mailed to the Veteran will give the individual the following options:

(a) The Veteran can check a box indicating agreement with the number of drill days printed on the form and agree to waive a corresponding number of days of VA benefits, OR
(b) The Veteran can indicate that the number of drill pay days shown on the form is incorrect, enter the correct number of days, have the commanding officer or designee sign the form, and agree to waive a corresponding number of days of VA benefits, OR
(c) The Veteran can indicate that he/she received no drill pay during the fiscal years shown on the form with the commanding officer’s or designee’s signature, OR
(d) The Veteran can elect to waive drill pay in order to receive VA benefits.

Notification of VA action

Inform the Veteran that VA will send a letter informing him or her of the amount withheld and the date full compensation benefits will be restored. If the Veteran does not agree with the amount of days benefits were withheld, the Veteran may appeal the decision.

VA Form 21-8951 Is Not Returned to VA

If there is no response within 90 days from a Veteran who was sent VA Form 21-8951, then three copies of the form are generated by the computer system in Hines, IL. Two copies are sent to the Regional Office of jurisdiction and one copy is sent to Central Office.

The Regional Office will send a due process letter to the Veteran along with one copy of VA Form 21-8951. The Veteran is to complete and return the form within 65 days from the date of the letter. If the Veteran fails to respond to the due process letter, then the Regional Office will adjust the award according to regulations.

Manual Reference: M21-1MR Part III subpart v Chapter 4 Section C

Thank you for contacting us. If you have questions or need additional help with the information in our reply, please respond to this message or see our other contact information below.

Sincerely yours,

National IRIS Response Center Manager”