Tips for Lifelong Caregiving (TLC):
A Financial-Legal Planning Guide for Military Caregivers
Transition from Currently Serving to Retired Military and/or Non-Retiree Status
When a wounded, ill, or injured, service member transitions from active duty to medically
retired, separated “veteran”, or retiree status, caregivers are faced with many confusing,
interconnected programs that have a direct impact on the lifetime benefits and compensation of
the service member.
The following sections are designed to help caregivers navigate the various phases of the
Disability Evaluation System’s critical processes as the service member moves (transitions) from
active duty to veteran status.
Benefits Delivery at Discharge (BDD)
The Benefits Delivery at Discharge (BDD) program gives a service member the opportunity to
apply for VA disability compensation benefits before being discharged from service. The benefit
of the program is to speed up receipt of VA compensation so that the member will start receiving
VA pay (compensation) within 60 days of discharge.
There is a “timing” rule that exists so it is very important caregivers understand when and how
their service member can apply.
The “timing” rule establishes a 90-day application window. The service member must file the
disability claim with no less than 60 days, but no more than 180 days, remaining on active duty
prior to separation. BDD requires the 60 day-minimum to allow enough time to complete the VA
medical examination process prior to separation from service. (The VA medical exam process is
known as the Compensation and Pension exam and is commonly referred to as a C & P exam.)
Your service member can apply for the BDD program using one of two methods. They can
submit VA Form 21-526, Veteran’s Application for Compensation and/or Pension, to the nearest
VA Regional Office or they can also complete the application on-line at VA’s website
(www.VA.gov) using the Veterans Online Application (VONAPP). Additionally, the VA Form
21-526 can be downloaded from the VA website at www.va.gov and submit by mail or with the
help of a Veteran Service Officer (which is highly recommended).
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Medical Evaluation Board Process/Issues
As the service member’s recovery phase reaches the final stages, the first step in any medical
discharge process is the Medical Evaluation Board (MEB). The MEB is where the service
member’s branch of Service decides whether or not the service member can continue to serve on
active duty (or with their guard/reserve unit) or needs to be discharged.
During the MEB, military doctors document the service member’s medical conditions that limit
his/her ability to perform his/her duties and continue to serve. This list of conditions that may
make a service member unable to perform his/her required duties is called a Narrative Summary
and is more commonly referred to as a NARSUM. The Services then decide if the service
member’s long-term medical condition(s) “meets medical retention standards.”
It is important for caregivers, especially in cases involving Traumatic Brain Injury and PostTraumatic Stress, to be involved in the both the MEB and Physical Evaluation Board (PEB)
processes. You have first-hand information regarding the service member’s limitations and can
provide the medical doctors important information regarding your service member’s conditions
and limitations.
The MEB is not a formal board because it, by itself, does not drive the decision of the service as
to whether or not a service member will be retained, separated, or retired. MEB findings—the
list of conditions a service member has that MAY make him/her unfit for duty-- are referred to
the PEB which formally determines fitness for continued service.
The governing instruction related to both the MEB and PEB is DODI 1332.38. More details on
the MEB/PEB process can be found here.
Caregivers and their service member can receive counseling from the Physical Evaluation Board
Liaison Officer (PEBLO) who is there to provide information and advocacy during the
MEB/PEB processes. These PEBLOs are experts in the disability evaluation process and
understanding the service member’s due process rights.
Physical Evaluation Board Process/Issues
The second step of the medical discharge process is the Physical Evaluation Board (PEB). This
Board reviews all the MEB documentation to determine whether or not the service member is fit
for continued military service or “fit for duty.”
There is a distinct difference between the two. The MEB is a medical process where the PEB is
a personnel process. The PEB looks at the MEB’s NARSUM and the service member’s medical
records, and considers whether the medical condition(s) impact the member’s ability to do their
job or renders them non-deployable or world-wide assignable.
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The PEB is broken into four phases: the Informal Board, the Member’s Review, the Formal
Board, and the Final Decision.
Informal Board – Once a (PEB) board has determined if the service member is no longer fit for
duty, the board assigns a disability rating. The disability rating is very important because it
determines whether the service member is retired or separated. If the rating is less than 20
percent, the service member may be discharged with or without severance pay depending
whether the PEB finds that a member’s disability existed prior to entry into the armed forces. If
the rating is 30 percent or more, the board may place the service member on one the following:
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Temporary Disability Retired List (TDRL) – The TDRL allows the Service to re-evaluate
the service member’s conditions that placed them on the TDRL every 12 to 18 months for
up to five years. Other conditions diagnosed during TDRL examinations will be
compensable if the condition is considered unfitting and was caused by, or directly related to,
the original condition that the service member was placed on the TDRL. While on the
TDRL, the “retiree” receives retired pay and benefits (TRICARE, commissary/exchange
access, etc.) at a rate of no less than 50%. It is very important to meet the scheduled
appointments under the TDRL. Refusal or failure to report will terminate a member’s retired
pay. If the member subsequently shows, retired pay will resume retroactively.
Permanent Disability Retired List (PDRL) – On the PDRL, the member is permanently
medically retired and receives retirement pay and benefits for life.
Member's Review – The service member will be advised of the Informal Board’s findings by
the PEB Liaison Officer (PEBLO). PEBLOs provide information and assistance during the
MEB/PEB processes. If the member agrees with the Informal Board’s findings, the PEB
recommendation is forwarded to the Service for final decision. If the member disagrees with the
Informal Board’s findings, the service member can request a Formal Board.
Formal Board – If the service member disagrees with the findings, he or she may request a
Formal Board. Members found not fit for duty have the right to demand a Formal Board and
shall be given one upon request. The service member may appear before a formal PEB in a
variety of ways-- in person, through a designated representative, or via video teleconferencing
media.
An attorney is appointed (by the branch of service for free) to represent the service member at
the Formal Board or the member may have their own representation at the Formal Board (cost to
be funded by the service member). The Formal Board re-examines the medical evidence, hears
testimony, and considers any new evidence, before making its recommendation, and the Formal
Board may uphold the Informal Board’s recommendations or make a new determination.
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Final Decision – The informal or formal PEB recommendations are sent to the member’s Service
for final decision. PEBLOs will assist the service member and caregivers through the process. It
is during this process when a retirement date is set. Additional information can be found at:
DoD Instruction (DoDI) 1332.38, Physical Disability Evaluation, November 1996, Incorporating
Change 1, July 2006
Relocation/Final PCS-Related Issues
In general, a service member who is separating or retiring due to disability is allowed a final
move to a home selected by the member from his/her last duty station. A service member may
choose a home anywhere in the U.S., the home of record outside the U.S., a place outside the
U.S. where the member was initially called or ordered to active duty, or even any other place
(CAUTION: the allowance paid in these cases cannot exceed those paid as if the member
selected a home at a CONUS (Continental United States) location).
The decision to move does not have to happen immediately upon separation or retirement, but
the decision to move must be made within one year after leaving active duty. Caregivers will
need to take into consideration whether or not the service member for whom you care requires
routine specialty care that is located away from where you plan to make your final home.
If the service member is in the hospital or undergoing continuous medical treatment at a hospital
on an outpatient basis upon retirement, the one year restriction starts upon discharge from the
hospital or termination of the medical treatment.
There are exceptions to the one year rule; however, the service member must submit an
extension request in writing to the various Service (usually the Transportation Office at the last
duty station) (outlined in the governing regulation) and the extensions are made annually for a
time period not to exceed 6 years. The request should state that the extension is being requested
due to ongoing medical treatment.
Even at the six year mark, additional time may be granted for a period not to exceed six years if
it is substantially to the member’s benefit; not costly or otherwise adverse to the Service; or if
additional time beyond the 6-year limit is required because of a member’s certified on-going
medical condition.
The important thing to remember is if you need an extension because of the service member’s
medical treatment, there is an exception available…but you must request the extension.
More can be found in the governing regulation, the JFTR Vol 1, Chapter 5.
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DoD/VA Payment Starts/Delays
Disability compensation programs are provided to service members who were wounded, injured,
or became ill as result of their military service. Both the Department of Defense (DoD) and the
Department of Veterans Affairs (VA) have disability compensation programs in which payments
in some cases are made from both departments, but in other cases are not.
DoD’s programs include disability severance pay and disability retired pay. VA’s programs
include disability compensation and disability pension.
Payments under these programs depend upon the level of the veteran’s disability, whether he/she
was evaluated as “unfitting” during the PEB process, years of service, base pay, and other
variables.
A good rule of thumb – disabled service members medically retired by a PEB will generally be
eligible to receive VA disability compensation.
When a service member is medically retired following a PEB, the service member’s active duty
pay stops when released from Service.
The veteran’s retired pay commences one month later as retired pay is paid in arrears (after the
fact).
VA’s disability compensation is similar. The VA will establish an effective date for
compensation (the date which the VA determines the veteran was disabled AND eligible to
receive compensation from the VA.) This date usually coincides with the member’s last day on
active duty for a disability retirement. However, members will not receive VA compensation for
the first month…basically VA compensation is also paid in arrears (after the fact).
Special Considerations for Guard/Reserve Members
Members of the Guard and Reserves require special consideration; especially if they are no
longer activated. When called onto active duty, Reserve Component (RC) members wounded, ill
or injured are treated like active duty and have their conditions evaluated by the MEB/PEB.
Wounds, injuries, or illnesses occurred in the line of duty (LOD) should be considered BEFORE
the member is deactivated.
However, the problem comes when a member is deactivated and returns to their home unit only
to have their medical condition worsen over time. The rights to an MEB/PEB process are the
same (as long as the conditions are in the “line-of-duty”), but the transition process differs.
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Referral to the MEB is generally voluntary, and the member can request it of his/her command
when he/she is notified of a pending separation due to medical disqualification.
The member’s unit/command decides whether to submit a case as “duty-related” or “non-dutyrelated”. Cases referred under the “duty-related” process are authorized MEBs.
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Military Programs & Benefits
ID cards & the Defense Eligibility Enrollment Reporting System (DEERS)
When a member receives a disability retirement, he or she is entitled to all the rights and
privileges of any other military retiree. This includes rights to a military retired identification
(ID) card that authorizes medical care (TRICARE), commissary and exchange shopping
privileges (NEX or AAFES), and access to morale, welfare, and recreation (MWR) facilities.
DEERS is the DoD computerized database containing information on military sponsors and their
beneficiaries who may be eligible for medical care and other military privileges. The database is
automatically updated when a new ID card is issued. Retirees who acquire new family members
after retirement should contact the nearest military ID card issuing facility for information on
DEERS enrollment and ID card information/issuance.
100% Disabled vs. Military Retiree Entitlements
If a veteran is not medically retired from DOD, but is found 100% disabled by the Department of
Veterans Affairs, the veteran may be entitled to a DOD ID card for commissary, exchange, and
MWR (morale, welfare, and recreation) privileges.
Military Retired Pay & the Defense Finance and Accounting Service (DFAS)
Once a member becomes a retiree, the Defense Finance and Accounting Service (DFAS)
provides military retired pay services to retirees. Retirees can access their monthly pay
statements on-line at the MyPay website managed by DFAS.
Military Non-disability Retirement (types of retirement)
There are four types of military retirements: Final Pay, High-36, REDUX, and disability. This
section will outline the first three types considered “non-disability” retirements.
Final Pay: Most current retirees retired under the final basic pay system, which provides 2.5% of
final basic pay per year of service (e.g., 50% of basic pay after 20 years), with annual cost-ofliving adjustments (COLAs) tied to the rise in the Consumer Price Index during the previous
year (the same COLA system used for Social Security).
High 36: The majority of currently serving members (those that entered service after Sept 8,
1980) have their retired pay based on 2.5% of their highest 36 months’ average basic pay per
year of service, also with annual CPI-based COLAs. This system yields about 8% less lifetime
retired pay value than the final basic pay system.
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REDUX: The REDUX system was enacted in 1986 and applied to people who entered service
on or after Aug 1, 1986. It provides 2.5% times high-36-month basic pay per year of service,
except that 1% is subtracted for each year of service less than 30 (e.g.., 40% of high-36-months
basic pay after 20 years of service). Further, REDUX retiree COLAs are adjusted annually at a
rate 1% less than the CPI (CPI-1). Under the REDUX law, retired pay is recomputed on a onetime basis when the retired member attains age 62. At that point, retired pay is recomputed to
the amount that would have been payable under the high-36-month average system. After age
62, CPI-1% COLAs continue for life. The REDUX system further reduced lifetime retired pay
value by up to 27%.
Congress repealed REDUX as the default system for post-1986 entrants in 2000 after the Joint
Chiefs of Staff complained that it was undermining career retention and readiness. At the time,
the REDUX system was the most frequently mentioned specific reason for leaving service
among separating personnel.
Under current law, the high-36-month retired pay system is the default option, but service
members have the option at the 15-year point of electing the REDUX option in return for a onetime, $30,000 taxable career retention bonus.
Additional information can be found on the DoD website for the four military retirement
systems.
Military Disability Retirement
Members going through a disability retirement/separation receive a disability percentage
assigned by the PEB. This rating determines whether the member’s disability qualifies for a
retirement (and all the related benefits) or a separation. The rules are:
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If he/she has less than 20 years of active service and a disability rating of 30 percent or
higher, the service member qualifies for retirement, where a disability rating below 30
percent will result in separation.
If he/she has 20 or more years of active service, retirement will be recommended regardless
of his/her disability rating.
The member will be placed on the either the Temporary Disability Retired List (TDRL) or the
Permanent Disability Retired List (PDRL).
Either way, members of the TDRL or the PDRL is a retired member and entitled to all rights and
privileges of a military retiree. For pay purposes, they may include:
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
Participation in Survivor Benefit Plans
Voluntary/involuntary allotments from his/her retired pay
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Disability compensation from the Department of Veterans Affairs
Disability Retired Pay Calculations
Retired pay is calculated differently by law based on the type of retirement. If your member is
placed on the TDRL, their retired pay is computed using one of two methods:
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The member’s disability percentage (using a minimum of 50 percent for payment purposes
while on the TDRL), or
His/hers years of active service.
The member’s retired pay is computed whichever way provides the greater benefit. For a
disability retirement, the formula used to determine a member’s retired pay is a multiplier that’s
the higher of 2½% for each year of service or the disability percentage assigned by the Service at
retirement.
Basic Pay X (Years of Service x 2.5%) or (disability percentage) = Retired Pay
Temporary Disability Retired List (TDRL) Issues
While on the TDRL, a physical examination is required at least once every 18 months. If the
member fails to report for their physical examination, his/her Service will remove him/her from
the TDRL list and retired pay will be suspended until the examination has been completed.
A member can remain on the TDRL for up to five years, providing his/her condition does not
change. If at any time he/she is found fit for duty, he/she may be removed from the TDRL and
returned to active duty.
If the service member’s condition stabilizes and is rated at 30 percent or greater at the time of reevaluation, the member is transferred to the Permanent Disability Retired List (PDRL). If the
disability stabilizes and is rated at less than 30 percent and the member has less than 20 years of
service, he/she are discharged from the TDRL with severance pay.
Concurrent Receipt Programs: Concurrent Retirement and Disability Pay (CRDP) and
Combat-Related Special Compensation (CRSC)
In order to understand concurrent receipt, it is necessary to provide some history behind it.
In the old days, if a service member had earned both retired pay from the Service and VA
compensation for a disability or illness, the VA compensation was subtracted from the Service
member’s retired pay. This was due to a law that stated the service member could not receive
pay from two government agencies for the same service.
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The VA compensation was subtracted from the Service retired pay in the form of what is called a
“VA Waiver” since the Service member agreed to “waive” retired pay to receive the VA
compensation. If your service member has a “VA Waiver,” it can be found indicated on the
retired pay stub (or commonly referred as the Retiree Account Statement (RAS) by DFAS).
With the help of Congress, many retirees now receive both earned retired pay and VA
compensation for service-connected disabilities. The process to restore pay is not complete, but
Congress has made significant progress since 2003 to eliminate the withholding of Service
retired pay that had been earned through years of service because of a disability or illness that
was caused by the duty performed.
Currently, there are two succinct programs under concurrent receipt (pay received both from
DOD and VA for the same disability) and the rules behind the two are very complicated:
Concurrent Retirement and Disability Pay (CRDP) and Combat-Related Special Compensation
(CRSC).
Concurrent Retirement Disability Pay was established in January 2004 and eliminates the offset
of retired pay for VA disability compensation (also known as the VA Waiver) for those with 50100% disabilities. This is regardless of the nature of the disabilities (combat vs. non-combat).
All 20-year(+) retirees who have VA disability ratings of 50% or higher will have military
retired pay offsets (the VA Waiver) phased out over a ten-year period, starting January 1, 2004.
Retirees with less than 20 years are not eligible for Concurrent Retirement Disability Pay
(CRDP) (TERA retirees are the only exception). CRDP can be retroactive to the maximum of
January 1, 2004 if applicable.
The Combat Related Special Compensation (CRSC) program provides a special compensation to
members who have military retired pay offset by VA compensation because of combat-related
disabilities regardless of years of service. The program became effective May 31, 2003.
Program Comparison
It’s important to know the differences between the two programs. CRDP is for any VA rated
disability or illness where CRSC is for combat-related disabilities and illnesses.
CRDP replaces a member’ retired pay (usually taxable) where CRSC is tax-free compensation
because of its combat-related nature.
CRDP is automatically calculated when a 20+ year retiree gets a VA rating where the service
member must apply to their Service to receive CRSC (see contacts below).
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For CRDP, the VA notifies the Service pay agency of the VA rating and the Service pay agency
establishes the CRDP as appropriate. CRDP is based on the VA rating.
For CRSC, the Services determine what proportion of the VA disability rating is specifically
combat-related. So CRSC uses a separate rating based on the combat-related disabilities within a
VA rating. The Service will notify your pay agency of its CRSC ruling and rating.
If a Service member is eligible for both program (CRDP and CRSC) payments, upon CRSC
notification by the Service, the pay agency will make the initial determination of which form of
pay is most advantageous to the Service member and establish either a CRDP or CRSC payment.
After this initial decision, the decision is up to the Service member each year during the open
season described below.
Pay Administration
If your service member receives CRDP, he/she receives two separate payments. One is your VA
compensation and one is your Service retired pay. The CRDP is incorporated in their Service
retired pay. The CRDP amount is phased-in each year so as CRDP rises, the VA Waiver amount
will decrease. In 2014, when CRDP is fully phased-in, the VA Waiver will go away. So in
practice, CRDP is the elimination of the VA Waiver from Service retired pay; it’s just that
simple.
Members with CRSC receive up to three separate payments each month. One is the Service
retirement pay with the full VA waiver deducted. (If the service member’s DOD retirement is less
than his/her VA compensation, then the service member will not receive this check.) One is full
VA compensation. And the third pay check is the CRSC tax-free payment. The separate taxfree CRSC pay reimburses you for the VA Waiver amount off-setting the Service retired pay.
Open Season
Retirees eligible under both CRDP and CRSC criteria have the ability to choose between the two
forms of compensation each year under the open season process.
As the CRDP program is phased-in through the year 2014, CRDP may become the better option
at some point. This is because the CRDP payment amounts increase each year until the year
2014 when CRDP is fully implemented. Or you may find that the CRSC rating is not high
enough to make the tax-free CRSC check better than the higher amount of taxable pay available
from CRDP’s elimination of the VA Waiver from the retire pay.
Your pay agency mails you an Open Season letter each December for you to make the choice.
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Evaluating the Programs – How to Choose
If a member qualifies for both programs, the member must choose one or the other; they cannot
have both.
Why would anyone who qualifies for both programs take CRDP instead of CRSC which is taxfree? Because it is not unusual for the combat-related rating to be lower than the VA rating. The
Service may determine for example that only 30% of the disabilities in your 70% VA rating are
combat-related. A 70% CRDP concurrent receipt payment may put more money in your pocket,
even with taxes, than a 30% CRSC tax-free payment.
CRDP-CRSC Contact Links
Army CRSC
Air Force CRSC
Navy/USMC CRSC
DoD CRDP-CRSC
DFAS CRDP-CRSC
Coast Guard/NOAA CRSC
USPHS CRSC: Compensation Branch of Commissioned Personnel at 1-800-638-8744.
Start-Stop Dates for Payment of Benefits………………………….
Applicable Calculator(s)……………………………………………
DoD Support for Caregivers
DoD and other government agencies provides support, compensation, and benefits specifically
tailored to family members of recovering wounded, ill or injured service members. This section
outlines those support benefits unique to caregivers during a member’s early stages of treatment
and recovery.
Invitational Travel Orders – Caregivers will want to be with the service member for whom
they care in order to support his/her recovery efforts. If the member is being treated at a location
away from his/her family, the family may be able to travel at government expense to be at the
service member’s bedside.
Travel costs, which include the cost of lodging, meals, etc., are expensive. The government
helps fund these costs by issuing orders for families called Invitational Travel Authorizations
(ITAs), Invitational Travel Orders (ITOs), or Emergency Family Member Travel (EFMT) orders,
depending upon your Service.
The travel orders can cover up to three members of the inpatient service member’s immediate
family or designated individual. When the service member for whom you care becomes an
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outpatient, travel orders are restricted to one family member to remain with the service member
during his/her recovery.
The Services do their best to give caregivers flexibility in their travel orders by providing
periodic payments and extensions if their stay at the medical facility is an extended one.
The orders cover the cost of travel, hotel bills, meals, and some incidentals up to a maximum
daily amount determined by the location, but not all expenses are covered. For example, the cost
of renting a car is not reimbursable. Each Service handles their orders in a slightly different
manner, so it is best to check directly with them. The length of the orders varies depending on the
service member’s needs and the amount of daily “per diem” varies depending on the local cost of living
near the Military Treatment Facility (MTF).
The MTF’s finance office can provide answers to your questions about the amounts and duration
of your per diem as well as about the overall process. Keep your receipts so they are available
when you file your claim for reimbursement. (Keep copies in case the claim is lost.)
If you have additional financial concerns, the Service-branch wounded warrior programs are
associated with many nonprofit organizations that can help. Service points of contact are:
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Army – the Army’s Wounded Warrior Pay Management Team (WWPMT)
Navy – the local Personnel Support Detachment (PSD)
Marine Corps – the Marine Detachment Team (MarDet)
Air Force – the Air Force Family Liaison Officer (FLO)
Family and Medical Leave Act/Military Caregiver Leave
The National Defense Authorization Act (NDAA) for Fiscal Year 2008 and 2010 added
protection for families of military members under the Family and Medical Leave Act (FMLA) of
1993. One major provision is called “military caregiver leave” which allows up to 26 work
weeks of leave (in a single 12-month period) to be taken by an eligible caregiver to care for a
seriously injured, ill, or wounded service member.
Some employers may be exempt by the law such as those with fewer than 50 workers.
Employers may ask the employee to obtain a certification completed by the service member’s
health care provider. The Department of Labor has developed a new optional form (WH-385)
for employees’ use in obtaining certification that meets military caregiver leave certification
requirements. This optional form reflects certification requirements so as to permit the employee
to furnish appropriate information to support his or her request for leave to care for a covered
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servicemember with a serious injury or illness. Additional information can be found at:
http://www.dol.gov/whd/fmla/finalrule/MilitaryFAQs.pdf
Special Compensation for Assistance With Activities of Daily Living (SCAADL)
Caregivers give up part, and sometimes all, of a salary or wage to care for their loved one.
Because of this sacrifice of income, the Department of Defense provides the service member
with Special Compensation for Assistance With Activities of Daily Living (SCAADL), a special
compensation, intended to assist caregivers financially who provide nonmedical care, support
and assistance for the member.
Because of funding constraints, SCAADL is given to the service member directly, not the
caregiver, and the compensation is not automatic. The Service will notify the service member if
he/she is eligible and, if he/she wishes to apply, the Service will assist in the paperwork to get the
compensation started.
Eligibility for SCAADL
An eligible Service member:
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Has a catastrophic injury or illness incurred in the line of duty;
Has been certified by a licensed physician to be in need of assistance from another person to
perform the personal functions of everyday living; or
Would, in the absence of this provision, require some form of residential institutional care.
Survivor Benefit Plan and Life Insurance Options………………………..
This program only applies to currently serving members or Service retirees—either medical or
longevity retirees. SBP does not apply to separated or discharged Service members.
The SBP is the only program offered that continues a currently serving Service member’s pay or
a retired Service member’s retired pay to a spouse and/or child after the Service member’s death.
This is not a one-time lump sum payment. It is a regular monthly income payment.
The program works differently for currently serving and retired members.
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Currently serving members: SBP is simple while you are on active duty. SBP automatically
covers, at no cost, the survivors of Service members who die while serving on active duty. The
survivor receives a portion of what would have been the member’s Service retired pay at the time
of death every month for life or until remarriage.
The SBP annuity is calculated as though the Service member was medically retired with a total
disability at the time of death. Total disability means the medical retired pay would be 75 percent
of base pay at the time of death with the SBP beneficiary receiving 55 percent of that amount.
The survivor’s benefit is adjusted for inflation each year. In other words, you get 55% of 75% of
base pay.
If you have dependent children, the service secretaries, in consultation with your surviving
spouse, may opt to have any dependent children receive the SBP annuity. Dependent children are
also eligible to receive the SBP annuity when there is no eligible surviving spouse.
At the time of death, base commanders and personnel staff (title of this person and where they
can be found?) will start the program for the family along with all other benefits processing
during the delicate time.
Retired members: The SBP is the only program available that ensures a portion of your retired
pay continues to go to your family after your death. It provides a lifetime monthly income
payment to your eligible beneficiaries. The survivor payment is increased each year with the
inflation rate to ensure the survivor benefit remains valuable over the years.
The benefit: SBP provides 55% of your base amount (defined later under “Cost”) to your
beneficiary.
The only time members can apply for SBP is during the retirement application process.
Members with dependents must enroll in SBP at the time of retirement or lose the opportunity in
the future. Anything less than maximum coverage requires your spouse’s approval.
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Service members have one chance to cancel the program if they change their mind. Cancelling
requires spouse approval. Members can cancel starting the 24th month of enrollment and ends on
the 35th month of enrollment.
Reserve/Guard members. Reserve/Guard members enroll in SBP upon receipt of their 20-year
notice of eligibility for retirement letter. Guard/Reserve retired pay does not start until age 60 so
SBP premiums don’t start until retired pay begins. You must select from three enrollment
options, A, B, or C, at the time of notice for retirement eligibility. Option A is to delay a SBP
decision until age 60—you have no coverage if you die prior to age 60. Option B elects
immediate SBP coverage but the survivor payment won’t start until the Service member would
have turned age 60, assuming a death prior to age 60. Option C pays the beneficiary
immediately upon the death of the member regardless of the member’s age at death. Anything
other than Option C requires spouse approval. Upon turning age 60, Option B and C people will
pay a premium for both the current coverage starting at age 60 plus the coverage you had prior to
age 60 but weren’t paying for.
Cost: The SBP premium is 6.5% of your “base amount.” Given the mortality data and the history
of SBP, most survivors receive far more in benefit than members pay for the benefit. The 6.5%
premium rate doesn’t begin to pay for all SBP costs. The federal government actually subsidizes
the majority of SBP costs to keep it going.
Members choose a base amount as a part of the application. The base amount is the amount of
retired pay that is covered by the SBP. Most people choose to cover the entire amount of retired
pay as their base amount. Anything less than full coverage requires the spouse’s approval.
Minimum coverage is $300 a month meaning the spouse gets 55% of $300 as a benefit--$165 a
month.
Premiums are deducted from retired pay pre-tax; from your gross pay. This reduces your taxable
income which reduces your tax burden and is like getting a break on the premium costs. The
survivor benefit payments are taxable.
The SBP income is suspended if the spouse beneficiary remarries prior to age 55. The SBP
income is reestablished if the remarriage ends due to death or divorce. Remarriage of your
spouse at or after age 55 does not suspend the payments.
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Making a claim: Report the death of the Service member to your Service pay agency. The pay
agencies administer the SBP-- The Defense Finance and Accounting Service (DFAS) for the
armed forces, Coast Guard and NOAA share a pay agency, and the Public Health Service has
their own pay agency.
SGLI and VGLI
Commercial insurance
The tricky issue with commercial life insurance is that the insured person has to pass a medical
checkup to determine if he/she is “insurable” before being allowed to purchase the insurance.
“Insurable” means the insurance company wants to be sure the insured person lives a long time
so the insurance policy does not have to pay off in the short term.
Just because someone is ill or disabled does not mean they cannot get life insurance. The person
may still qualify for insurance but a sick or disabled person may pay more in premiums. If the
illness or disability is bad enough, the medical checkup may disqualify some members from
purchasing life insurance. The VA makes their insurance available for people who cannot qualify
for commercial life insurance.
If a Service member can pass the medical check-up, getting commercial life may be your best
bet. You can usually purchase more insurance with less cost from commercial firms.
There are many forms of life insurance and they all have various options and features but you
can boil them down into 3 general types.
Whole life: Like the name states, this insurance will last your whole life if you continue
to pay the premiums. This type of policy tends to be more expensive (higher premium)
than the other types and most build some cash value (savings) over time. It can come
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with many options and features. Do not to get impressed with the options and features
because the bottom line is about providing money to live on after the death of an income
provider. The cash value savings in this policy comes from extra premium amount you
pay. Ask yourself before purchasing this kind of policy, do you still want the coverage
when you are 65, 75, 85, 95 years old? If so, this may be the type of policy you need.
Term life: The most popular form of life insurance. As the name implies, this type of
policy lasts for a specific period of time and ends. You can buy the most coverage for the
least money with term insurance. That’s because it typically does not come with extra
options and features. It is pure insurance—someone dies, it pays. If you are looking for
life insurance that will stop after 5, 10, 20, 30 ,40 years, this may work for you. Look for
death benefit coverage and premiums that stay the same amount over the entire length of
the term period.
Universal life: This life insurance policy is designed to be both a life insurance and a
savings/investment account. Unlike the whole life cash value savings account feature
mentioned above, this type of policy is designed to be two types of plans in one. It is
complex, confusing and salespeople pitch it with many different features and options
which drive up the cost to you. It comes in many different varieties. In this policy, you
purposely decide to pay more than the insurance cost so the extra amount you pay into
plan goes into the savings/investment account portion of the plan. In other words, you set
the monthly payment. Find out how much the insurance cost and whether the insurance
costs go up over time. Is the savings/investment account locked-up? It is probably
simpler to keep insurance and savings separate. These plans can be expensive and too
complicated.
Do not be fooled by all the options and features. Just remember these basic points about why you
are buying life insurance:
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
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The family is dependent on a person’s income to maintain their standard of living. If an
income producer dies, the family is in financial trouble.
Upon death, the life insurance pays the family, and the life insurance money is used to
live, pay debts, and plan for the future, etc.
Someone has to manage the money to meet the family’s needs now and into the future.
Plan for this before the insured dies—Who will manage the money?; What is the
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objective with the money?; and Who will develop the plan for the money to accomplish
the objectives set forth?
Options or features in an insurance policy going beyond the 3 points above probably are not
needed and only cost more. Before purchasing any options, ask if you really need the option to
make your life function in the future.
Where to go for insurance: Chances are that if you contact an insurance firm for an explanation
of their products, you’ll be swamped by their sales pitches and you’ll only hear about their own
offerings. Check with Service specific associations, armed forces mutual aid organizations, and
find web sites that allow you to comparison shop numerous insurance agencies before you pick
one insurance company (www.accuquote.com or www.lifequotes.com). Search for articles in
personal finance magazines about comparison shopping for life insurance. Once you’ve
searched, select a company with a proven financial track record. Insurance firms are rated by
rating agencies (example of ratings agency?) and high grades matter.
Homeowner Assistance Program
The Homeowner Assistance Program (HAP) helps wounded, ill, or injured service members and
their families sell their homes in a down economy when their mortgage is “upside down”
(mortgage exceeds value of the home). The HAP, which is managed by the Army Corps of
Engineers, was expanded as a result of the American Recovery and Reinvestment Act of 2009 to
specifically provide mortgage assistance to disability retirees of the Armed Forces (30% or
greater disability) who incur a wound, injury, or illness in the line of duty during a deployment in
support of the Armed Forces on or after September 11, 2001.
Wounded, ill, or injured service members are eligible for the program if they are being
reassigned to further medical treatment or rehabilitation, or due to medical retirement in
connection with such disability; and needs to sell their primary residence (for example, to be
closer to a hospital or to work more accommodating to the disability).
If you believe your service member is eligible, visit: http://hap.usace.army.mil/.
VA Disability Compensation and Pension
VA disability compensation and pension are two different monthly tax-free financial benefits
paid by the U.S. Department of Veterans Affairs. Disability compensation and pension are
meant to make up for veterans’ lost wages due to long-lasting injury or disease. A veteran may
only receive either compensation or pension, not both. The benefits are discussed further below.
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The benefit is paid by direct deposit to the veteran’s bank account, or to a payee if the veteran
cannot handle his or her own money, also called a fiduciary.
Disability compensation or disability pension will benefit the veteran by providing tax-free
benefits to replace the income the veteran could have been earning if he or she were not disabled.
Additionally, obtaining compensation or pension may mean the veteran now qualifies for VA
health care. VA does not have the capacity to provide health care to every American veteran.
VA health care enrollment is based on factors such as POW status, catastrophic disability,
service-connected status, and financial need. Many disabled veterans may be eligible for VA
health care, TRICARE, or both. See the Veterans Health Administration webpage to apply
for VA health care and find out more about the wide range of services offered.
Service-connected disability compensation is paid to veterans whose injury or disease is due to
military service. A veteran is any person who served in the armed forces of the United States and
left the service on good terms, usually this means he or she received an “honorable” or “general”
discharge. A reservist or guard member, who never served full-time in the military, may qualify
as a veteran if he or she was injured while performing duties at drill or training, since there is no
“worker’s compensation” in the military – instead there is VA health care and compensation.
Service-connected disability covers more types of injuries and diseases than you might think. It
covers not only obvious combat wounds and PTSD, but also disabilities such as hearing loss due
to weapons training, or cancer due to exposure to toxic chemicals. See the guide “Federal
Benefits for Veterans, Dependents, and Survivors” published by the Department of Veterans
Affairs for more information.
What can I expect to receive?
A veteran does not need to be totally disabled or unable to work to receive disability
compensation: it is not an all-or-nothing benefit. The payment is based on the average loss of
earning capacity from that disability, and ranges from about one hundred dollars per month to
several thousand dollars per month for very severely injured veterans. Please see VA’s website
for current pay tables and information about how VA comes up with an overall rating if a veteran
has multiple disabilities.
There is a rating chart for each part of the body and mind that is applied to every veteran, no
matter what the veteran’s previous or current job may be. For example, a piano player does not
receive more compensation for a finger injury, than a telephone operator, even though it may
have a bigger impact on the piano player’s ability to work. However, the impact on the
individual person’s job will be looked at if the disability causes inability to work.
A veteran with a disability that interferes with work may be eligible for vocational rehabilitation
benefits to allow him or her to train for a new career. If a veteran is severely disabled and a
vocational rehabilitation counselor determines he or she is unable to work, the veteran may be
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put in an independent living program. This program gives veterans the tools to pursue a hobby
or better care for themselves, to preserve their dignity and quality of life. For more information
about Vocational Rehabilitation (sometimes called “Voc Rehab”) and the Independent Living
Program, check out VA’s Vocational Rehabilitation and Employment Service webpage.
Often, VA will require an exam to determine the level of disability. These exams are not
performed by the veteran’s usual physician who treats and attempts to improve his or her
disability: they are performed by specialists who ask questions and perform tests to assist VA in
deciding whether a veteran is entitled to compensation. For some types of exams, you can have
the veteran’s regular doctor fill out the same exam worksheet that a VA doctor would fill out,
and avoid waiting for an appointment with a VA doctor. To find those worksheets, see VA’s
website on “disability benefit questionnaires” or “DBQs”. Some exams require special
knowledge of VA law and the rating chart, and you will need to wait for VA to schedule the
exam, but if you can fill out some of the DBQs, do. A veteran service officer can recommend
which DBQs the veteran’s doctor should complete.
A veteran may have symptoms not described in the rating chart or may be unable to work due to
the disability even though the average person would be able to work. In this case, the VA may
assign a higher rating, called an “extraschedular” rating because it is not in the rating chart. The
most common rating of this type is called “TDIU” or “IU” which stands for total disability based
on individual unemployability. In this case, the veteran would still be rated according to the
rating chart, but paid at the 100% rate.
A 100% rating may be “total and permanent and static in nature” or “temporary”. If a rating is
“total and permanent” it is not likely that the disability will improve. In this case, the veteran
will be entitled to all the benefits that come with a 100% rating, such as eligibility for dental
care, dependents educational assistance, and more. If a rating is “temporary”, this means VA
thinks the disability may improve, and will schedule a follow-up exam sometime in the future to
re-evaluate the disability. In fact, all ratings may be lowered at any time if the veteran actually
shows improvement, but there are rules VA must go by to reduce a rating. If a disability has
been at a certain level of severity for 20 years, the rating cannot be lowered below that level
unless there was a clear error or fraud.
VA Disability Pension
VA may also pay disability pension to veterans of war time who are unable to work, even if the
disability is not related to military service. Even though it is called pension, this benefit has no
relation to years of service. It is based on inability to work, with no likely improvement, and
financial need. Many lawyers are now informing caregivers of this benefit, because of its
interaction with medical expenses. Disability pension is a set amount per year for any veteran
who receives it (it is not a high benefit – it is around the annual poverty line), but is reduced by
most income the veteran and spouse earn. Now, disability pension means the veteran cannot
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work, but retirement pension, help from family and friends, and spouse’s income all count as
income. Welfare benefits, supplemental security income, and certain wages earned by the
veteran’s children do not count, but other agencies may count VA disability pension as income
and reduce other benefits.
If the veteran’s medical expenses are more than 7.5% of his or her income, the medical expenses
are deducted from income, which may make this benefit worthwhile for many veterans. Medical
expenses may offset income entirely for veterans who need constant care.
Aid and Attendance
A higher amount of disability compensation or disability pension is awarded if a veteran needs
the “aid and attendance” of another person to do activities like grooming, bathing, eating, and
toileting. A veteran may only receive either disability compensation or disability pension, but
VA will automatically pay the higher benefit if you apply for both. For more information, see the
VA website on Aid and Attendance.
How do I apply?
A veteran must apply for disability compensation, it is not automatic. If a veteran is still on
active duty, he or she can go through the “IDES” process, or “integrated disability evaluation
system”. This process puts together the military medical retirement board process and VA
disability application and rating process. If the veteran you care for is no longer in the military,
you will have to file an application at the VA Regional Office nearest the veteran – there is at
least one office for each state.
You should consider getting the help of a “veteran service officer representative” or “VSO” to
file a claim – VSOs will fill out the paperwork and often have the ability to follow up and check
on the status of your claim, all at no cost. You should consider filing a “fully developed claim”,
using VA Form 526-EZ: this means you provide VA with all the information they need to
research and decide on the claim.
We suggest you read up on the benefits the veteran you care for may qualify for, and make an
appointment to take the veteran you care for to see a local veteran service officer, or in certain
cases, for the veteran service officer to come to you. You can see a listing of all accredited
service officers published by VA’s Office of General Counsel (Central Law Office for VA).
VSO representatives will never charge a fee for services: agents and attorneys may charge a fee
and usually handle appeals rather than initial claims. If there is not a VSO near you, VA
employs “public contact representatives” or “veteran service representatives” who can help you
file the paperwork.
What should I bring to my appointment?
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Bring copies of the veteran’s military records (especially the discharge papers or “DD-214” that
show he or she left the service on good terms – see the National Personnel Records Center
website for information on how to send for military records). Bring copies of all relevant
medical records. Try to organize these records by facility and by ailment; it makes it faster for
the representative and VA to find important words. It is very important to give VA copies of the
veteran’s medical records from private doctors, since it takes VA a long time to get those
records. If you absolutely cannot get them, write down the doctors seen, addresses and dates of
treatment. Also, write down the dates of treatment and address for each military hospital and VA
clinic or hospital so that VA can get those records. Although VA medical records are now
electronic, not all are in the centralized database. A VSO can help you to file a fully developed
claim.
Bring legal documents such as power of attorney or guardianship, marriage and divorce decrees,
and birth certificates for any dependents. A veteran receives additional money if he or she has a
spouse or children to support.
A few words about power of attorney:
If a veteran is receiving help in filing his or her claim, through a veteran service officer, agent, or
attorney, the veteran will need to sign what VA calls a “power of attorney”. This is also called a
“21-22”, the form number on the authorization. It is limited to VA claims representation, so it
has no effect on the veteran’s legal or financial situation apart from VA benefits. Without a
power of attorney, the service officer or attorney won’t be able to receive any information about
your claim. A state issued general or durable power of attorney has no effect in VA claims.
However, a guardian may sign for a veteran. For more information about VA power of attorney,
please see VA’s Compensation and Pension Manual Rewrite (Manual M21-1 MR), Chapter 1,
Part 3: Power of Attorney. Note: the compensation and pension manual has almost all the
information you could want to know about how VA processes claims, but it has a lot of jargon in
some places. It is a good resource.
If you are not the veteran’s guardian, it is best for the veteran to sign and participate in his or her
claim. However, if the veteran you care for is so disabled that he or she cannot sign the power of
attorney form, certain people can sign that document for him or her. The best thing to do in that
situation would be for the spouse, parent, or next of kin to sign the “power of attorney” form and
select a veteran service officer to represent the veteran.
On using a veteran service officer:
A veteran service officer representative, or “VSO” for short, is found capable to help veterans by
his or her parent veterans group, such as the DAV, American Legion, or VFW, who is in turn
recognized by VA as capable to provide help to veterans, dependents, and survivors. Each VSO
has certain rules and policies their service officers must follow, and most will have client
responsibilities as well. Some of these rules for representatives and clients were made by
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Congress can be found, with all VA laws, at Title 38 of the United States Code. Once, the
United States Code was a giant book of all the laws in the country with different “titles” or
sections for each government agency or program, such as federal criminal laws, banking laws,
environmental laws, etc. Now it can easily be found on the internet at the Government Printing
Office website.
Each veteran service organization has more than one representative. This means that if the
person you are working with becomes sick, absent, or unable to help, you can call their
headquarters for assistance from another representative. Do not be afraid to ask questions –
veteran service officers may use a lot of abbreviations: for example, “S-C” for service connected
disability compensation. Don’t be afraid to ask for copies of what was sent to VA. A good
representative will be able to get you a copy – if it is a lot of documentation it may take some
time to copy or scan since the representative may want to hold on to an office copy.
Veteran service officers tend to have a large workload. Once you have filed your claim, the
process moves slowly. You can help by organizing the documents, having a basic understanding
of benefits from the Federal Benefits guide, and following up about once a month or when you
receive a letter from VA. Also, be sure to tell your service officer if the veteran you care for
becomes severely or terminally ill, turns 75 years old, or was a prisoner of war or veteran who
served in Iraq or Afghanistan after September 11, 2001. These veterans’ claims may be
expedited by VA.
CHAMPVA care for caregivers/survivors
The VA has always provided some support services for caregivers of veterans, including respite
care and home health services. Congress recognized the sacrifice family caregivers make in
giving up their career to care for veterans. Caregivers who are not already paid for their services
are eligible for caregiver training, a monthly stipend, respite care, and health insurance from VA
through CHAMPVA.
CHAMPVA allows caregivers to access VA health care services and private doctors who
contract through CHAMPVA. It is an insurance program, so you will have to pay some co-pays.
CHAMPVA is a second payer to other health insurance programs, including Medicare, which
means your existing insurance has to pay first. Then, CHAMPVA may pick up remaining costs.
If you as a caregiver become eligible for Medicare due to age, you will need to pay for Medicare
Part B insurance to remain on CHAMPVA.
See the Veterans Health Administration Caregiver page for more information. There is a good
basic overview of the caregiver program provided in this video by the VA Maryland Health Care
System (scroll to Episode 84).
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