Vadisability Pay Vs Military Retirement Pay
A lot ofveterans have misconceptions about receiving VA disability pay and theirmilitary retirement pay. So, let me help clear up any misconceptions you mayhave about the two.
Military retirement pay and VA disability pay are entirely separate.
Military retirement is a pension that is based on your years of service. VA disability pay is based on your disabilities that impact your life after leaving the military.
Taxation: Military retirement pay is taxable atthe federal government level and is taxed in most states. VA disability pay isconsidered non-taxable income by the federal government. Now this is a bigadvantage, because your VA disability pay gives you more spending power becauseits never taxed. For example, if you were to receive $1000 from your militaryretirement and $1000 from VA disability pay, the $1000 from you disability paywould be worth more because it would never be taxed.
Contact The Attorneys At Ryan Bisher Ryan & Simons For A Free Consultation
If all this seems confusing, be aware that Social Security disability law is complex and fraught with inconsistencies. Rarely are two cases alike.
Dont go it alone. Draw on the knowledge and one-on-one personal attention of law firm partner Philip Ryan. He has successfully handled SSDI and SSI claims for almost 30 years, including more than 3,000 SSDI hearings. Relax knowing he wont back down.
How Are Social Security Credits Calculated
In 2022, one credit is granted for every $1,510 in covered earnings until a maximum of $6,040 which is equal to four credits. Over a lifetime of work, you may earn more credits than the minimum 40 credits, but this does not affect the benefits you receive. The amount received in benefits and what you pay in per credit change each year based on the annual cost-of-living adjustment .
Did you know a free and secure #mySocialSecurity account provides personalized tools for everyone, whether you receive benefits or not? Open yours today!
Social Security
Workers pay into the system through a payroll taxes called Federal Insurance Contributions Act tax or Self Employed Contributions Act Tax . The funds collected from FICA and SECA go into two Social Security trust funds, one for old-age and survivors, the other for disability beneficiaries, which are used to pay out benefits.
Also Check: Continuing Care Retirement Community Nj
Disabled After Early Retirement Benefits Start
On the other hand, if you were collecting early retirement benefits before Social Security says you were disabled, Social Security will not pay you the difference between your disability payment and the early retirement payment. You would be paid at a less-than-full retirement rate for the rest of your life. Similarly, if Social Security denied your disability claim outright, you would continue to receive early retirement payments at the early retirement rate for the rest of your life.
Continuing Benefits & Deductions
Health Coverage
If you’re currently a member of the CalPERS Health Program, you must meet specific requirements to continue your health insurance coverage into retirement, or maintain the right to re-enroll in the future after retirement.
To continue your CalPERS health benefit coverage after retirement, you must meet both of the criteria below:
- Be enrolled in a CalPERS health plan upon separation from employment, either in your own name or as a dependent
- Retire within 120 days of your separation from employment
If you don’t meet both requirements before you retire, you’ll lose all future rights to be in the CalPERS Health Program. If your family members are included in your CalPERS health plan at the time of your death, their enrollment will continue automatically if they’re eligible for and receive a monthly allowance.
Public Agency or School Members
If your employer doesn’t contract with CalPERS for health benefits, contact your employer to determine if your benefits will continue.
Dental Coverage
To continue dental coverage into retirement, you must:
- Be enrolled in a state-sponsored dental plan on the date of your separation from employment
- Retire within 120 days of your separation
Long-Term Care
If you’re enrolled in CalPERS Long-Term Care and have premiums deducted from your paycheck, you’ll need to call 982-1775 before you retire to find out how to continue your premium deductions.
Other Deduction Payments
Recommended Reading: T Rowe Price Retirement 2015 Adv
What Happenswhen You Qualify For Both Retirement Pay & Disability Pay
If yourdisability rating with the VA is 50% or higher, you should qualify forConcurrent Retirement Disability Pay . If you receive CRDP, you will getyour full military retirement pay as well as your full VA Disability pay. Youwill not have a reduction to your military retirement pay.
If you havea 40% or lower, then you wont qualify for CRDP. However, if you do have aservice-connected disability you may qualify for Combat Related SpecialCompensation . If you have CRSC then it will act like the CRDP and youwont have a reduction to your military retirement pay.
If yourrating is 40% or lower and you do not have a combat related disability, thenyour pay will be deducted by the amount of VA service-connected disability payyou receive.
Ssd Benefits And Long
Although long-term disability benefits are not technically a pension plan, this type of coverage can provide ongoing income for disabled workers, similar to a pension or annuity. LTD plans can be from private insurance companies or through employer-sponsored coverage.
Whichever type of LTD you may have, your insurance provider will usually require you to apply for SSD benefits if you begin collecting LTD. This is because monthly benefit payments through long-term disability insurance can be reduced or offset dollar-for-dollar by the amount of SSD benefits you receive.
Recommended Reading: How To Retire In 20 Years
Can I Qualify For Ssdi If I Have Another Source Of Benefits
Social Security Benefits such as SSDI can be reduced if you become eligible for other benefits programs such as workers’ compensation, or even certain federal, state, and local government aid programs. However, the total combined payments after such a reduction should never be less than the original amount of the SSDI payment, so a person’s net payments should remain the same.
If you are receiving workers’ compensation or another federal disability benefit, you payments cannot equal more than 80% of your SSDI benefits. If you receive more, your SSDI benefits could be in jeopardy.
Is Chris Paul Going To Retire
As the confetti rained down from Fiserv Forum in Milwaukee after the Bucks defeated the Suns 105-98 to win their first NBA title in 50 years, Suns guard Chris Paul made it clear that he has no plans to walk away from the game anytime soon. I aint retiring, back to work, Paul told ESPNs Marc Spears.
Read Also: How To Choose Retirement Funds
Supplemental Security Income And Retirement
Unlike SSDI benefits, Supplement Security Income payments do not automatically convert to retirement benefits when you reach the age of retirement. SSI is funded by federal taxes and are available for low income elderly and disabled Americans. To continue to receive SSI payments, however, you must apply for all other cash benefits you may be entitled to receive, including SSDI and retirement.
Yet, unlike SSDI, you can receive both SSI and retirement benefits at the same time. This means that your overall monthly benefit amount will stay the same when you hit retirement. Some of this money will come in the form of retirement benefits and some will come from SSI benefits. Your disability attorney can help you through this process and ensure that you receive all the benefits you are entitled to as you near retirement.
Benefits For A Disabled Child
A child under age 18 may be disabled, but we don’t need to consider the child’s disability when deciding if he or she qualifies for benefits as a dependent. The child’s benefits normally stop at age 18 unless he or she is a full-time student in an elementary or high school or is disabled.
Children who were receiving benefits as a minor child on a parents Social Security record may be eligible to continue receiving benefits on that parents record upon reaching age 18 if they are disabled.
You May Like: Emerald Park Retirement Home Hollywood Fl
How Much Work Do You Need
In addition to meeting our definition of disability, you must have worked long enough and recently enough under Social Security to qualify for disability benefits.
Social Security work credits are based on your total yearly wages or self-employment income. You can earn up to four credits each year.
The amount needed for a work credit changes from year to year. In 2021, for example, you earn one credit for each $1,470 in wages or self-employment income. When you’ve earned $5,880, you’ve earned your four credits for the year.
The number of work credits you need to qualify for disability benefits depends on your age when you become disabled. Generally, you need 40 credits, 20 of which were earned in the last 10 years ending with the year you become disabled. However, younger workers may qualify with fewer credits.
For more information on whether you qualify, refer to How You Earn Credits.
Switching From Early Retirement To Disability Benefits
If you are collecting disability benefits, they will be converted to retirement benefits once you reach your full retirement age. For this reason, disability and retirement benefits do not overlap.
Individuals who take early retirement can still apply for SSDI/SSI up until they reach their full retirement age. If you are approved, the SSA will convert your early retirement benefits to disability benefits.
If you want to apply for disability benefits, our lawyers at Colbert Cooper Hill Attorneys may be able to help. Applying for disability benefits can be stressful, as there are many complex rules and regulations. Our office can help you determine if you qualify for disability benefits and gather all the necessary information for a successful claim.
Read Also: Texas Military Retirement Divorce Calculator
Can I Receive Social Security Disability And Retirement Benefits
In most cases, you cannot receive Social Security disability and retirement benefits at the same time, since SSDI benefits are meant for those who cannot work due to injury or illness. If youre receiving retirement benefits, it is already implicit that you are no longer working. There is one exception to this rule, however.
If you take an early retirement at age 62 before applying for disability benefits, and are later found to have been eligible for disability during that time, the Social Security Administration will make up the difference between your early retirement benefits and your monthly disability benefits for those months that you received early retirement payments. Of course, youll have to submit adequate documentation that you took an early retirement because of your disabling condition.
Its also worth noting that some individuals can draw monthly benefits from more than one Social Security program. For example, you may be able to qualify for both SSI and SSDI or retirement and SSI.
What Is A Disability
Under the provisions for VRS disability retirement, a disability may be:
-
The result of a physical illness or injury or a cognitive condition. A cognitive disability is a loss or deterioration in intellectual capacity, such as Alzheimers disease.
-
Non-work related or work-related. A work-related disability is the result of an occupational illness or injury that occurs on the job and the cause is determined to be compensable under the Virginia Workers Compensation Act. A non-work-related disability is the result of an illness or injury that is not compensable under the Virginia Workers Compensation Act.
-
A chronic condition, such as diabetes or mental illness, that worsens to the point that you no longer can perform your job duties.
Any condition that existed before you were employed in a covered position must substantially worsen for you to be considered for disability retirement.
You May Like: What Is A Flexible Retirement Annuity
Concurrent Retirement And Disability Pay
Concurrent Retirement and Disability Pay is a program that provides certain military retirees a monthly restoration of some or all of their VA disability offset. Qualified military retirees are those with 20 or more years of service who have a service-connected disability of 50% or more. The VA disability compensation is automatically added to your regular retirement pay.
You may be entitled to CRDP if…
- you are a regular retiree with a VA disability rating of 50 percent or greater.
- you are a reserve retiree with 20 qualifying years of service, who has a VA disability rating of 50 percent or greater and who has reached retirement age.
- you are retired under Temporary Early Retirement Act and have a VA disability rating of 50 percent or greater.
- you are a disability retiree who earned entitlement to retired pay under any provision of law other than solely by disability, and you have a VA disability rating of 50 percent or greater. You might become eligible for CRDP at the time you would have become eligible for retired pay.
Your CRDP payment is a restoration of retired pay. It is taxed and, if applicable, subject to collection actions for alimony, child support, community property, garnishment and government debt just as your retired pay.
Fortunately you do not need to apply, CRDP is automatic. If you qualify you will automatically see an increase in your monthly retirement check.
Calculating Your Benefit Amount
The formula for calculating your Social Security benefits and your disability benefits is exactly the same right up until the very end. Well get into how it diverges in the next section, but for now, well focus on the shared process.
The first step is calculating your average indexed monthly earnings . The Social Security Administration will take your 35 highest-earning years into consideration. For each of those years, it will index your income for inflation and include it up to the taxable maximum . For tax year 2021, this point is $142,800.
Next, the SSA will add up these totals and divide to get your AIME. If you have more than 35 earning years, your lowest years will be excluded. If you have less, the SSA will include a $0 in the calculation for every year youre short.
The last step is to calculate your primary insurance amount from your AIME. To calculate your PIA, the SSA will take a percentage of three different chunks of your AIME. The exact amount of these portions will differ slightly depending on the year you become disabled or turn 62. If you do either in 2021 the SSA will take 90% of your first $996, 32% of the amount between that and $6,002 and 15% of anything that remains. The total is your PIA.
Also Check: Estimate My 401k At Retirement
Why Doesn’t Everyone Receive Full Dod Retirement And Va Disability Benefits
Legally, the maximum a veteran is allowed to receive is their full military retirement. Since money that comes from the VA is not taxable, however, the government decided that if a veteran qualifies for VA disability compensation, then it would be better for the veteran to receive the money from the VA than the DoD. Thus, any money received from the VA is subtracted from DoD money unless the veteran qualifies for CRDP or CRSC.
Can I Receive Disability And Retirement At The Same Time
Submitted by Ram on Tue, 04/19/2011 – 10:55Ram’s Blog
The amount of Social Security Disability Insurance benefits you are entitled to if you are found to be completely disabled by the Social Security Administration is based on the full amount of retirement benefits you are eligible for. You can not receive both disability benefits and retirement benefits at the same time. If you qualify for disability benefits, your benefits will automatically be changed to retirement benefits when you are old enough for full retirement.
In some cases, however, you can apply for Social Security Disability benefits and simultaneously take an early retirement, if youre old enough. While this works out well for those who are eventually approved for Social Security disability benefits, it can have long term negative effects on your income if you are not ultimately approved for disability benefits.
Heres how it works: You need to apply for Social Security disability benefits first. This establishes your protected filing date and an alleged date of onset for your disabling condition. As with anyone else who applies for Social Security disability benefits, you must have a disabling condition which has lasted or is expected to last a year or longer .
Read Also: Retirement Homes In Ridgeland Ms
A 40% Va Disability Rating Gives You A Tax Break In Your Retirement Pay
If you have a VA rating of 40% and military retired, the VA applies your rating percentage against your retirement pay instead of issuing you a disability check. How this works is 40% of your retirement pay from the military is tax-free the rest of your military retirement pay is taxable.
Here is an example of the payment breakdown. You are receiving $2,000 a month in retirement pay. With a 40% VA disability rating, your disability compensation would be $641.28. However, instead of receiving an extra check each month in VA compensation, the $641.28 out of the $2,000 now becomes tax-free. The rest of the $1,358.72 would be taxable.
At the end of each month, you would receive a check for $2,000, but only pay taxes on $1,358.72.
How To Decide Whether Or Not To Retire Early
If a person decides to retire early at the age of 62, their disability payments may continue at the same time as their retirement benefits, but at a reduced rate. For example, if you were near retirement age and decided to retire early due to chronic health problems, you could apply for disability insurance.
Once you reach 65, your disability payment will kick in. The Social Security Administration will make up the difference between the disability and the retirement benefits for a short period of time while this transition occurs.
The decision to retire is entirely up to each person. It is recommended that you speak with a knowledgeable attorney and financial advisor before taking this step.
Recommended Reading: Best Places To Retire Near Raleigh Nc
