For decades, military retirees with VA-rated disabilities were forced to give up a dollar of their retirement pay for every dollar of VA disability compensation they received. This was known as the "VA disability offset" and it effectively penalized veterans who had earned both benefits. Concurrent Retirement and Disability Pay (CRDP) changed that for qualifying retirees, allowing them to receive both full military retirement pay and full VA disability compensation without any reduction.
What Is CRDP?
CRDP is a restoration of retired pay that was previously offset by VA disability compensation. Before CRDP, if you received $2,000 per month in military retirement pay and were awarded $1,200 per month in VA disability compensation, your retirement pay would be reduced by $1,200, meaning you only received $800 in retirement pay plus $1,200 in VA compensation, totaling the same $2,000. CRDP eliminates this offset entirely for eligible retirees, so in that same scenario, you would receive the full $2,000 in retirement pay plus the full $1,200 in VA compensation, totaling $3,200 per month.
Eligibility Requirements
To qualify for CRDP, you must meet two key criteria:
- 20 or more years of creditable military service. This includes active-duty retirees, Reserve and Guard retirees who have reached age 60 and are receiving retired pay, and Temporary Early Retirement Authority (TERA) retirees with at least 15 years of service.
- A VA disability rating of 50% or higher. The combined rating must be 50% or greater. Ratings below 50% do not qualify for CRDP.
If you are medically retired with fewer than 20 years of service, you generally do not qualify for CRDP. However, you may be eligible for Combat-Related Special Compensation (CRSC) instead if your disabilities are combat-related.
CRDP vs. CRSC: What Is the Difference?
CRDP and CRSC are both programs designed to restore retired pay that is offset by VA disability compensation, but they work differently:
| Feature | CRDP | CRSC |
|---|---|---|
| Minimum VA Rating | 50% | 10% |
| Service Requirement | 20+ years (or TERA 15+) | 20+ years or medical retiree |
| Disability Type | Any service-connected | Must be combat-related |
| Taxability | Retirement pay portion is taxable | CRSC payments are tax-free |
| Application | Automatic | Must apply through your branch |
| SBP Impact | Included in SBP base amount | Not included in SBP base |
You cannot receive both CRDP and CRSC simultaneously. If you are eligible for both, DFAS will automatically pay you whichever amount is greater. However, you can elect CRSC over CRDP if the tax-free nature of CRSC results in a higher take-home pay, even if the gross CRDP amount is higher.
Phase-In Schedule
When CRDP was first authorized by Congress in 2003, it was phased in over a 10-year period. Retirees with a 100% VA disability rating received full concurrent receipt immediately in 2004. Those rated 90% were fully phased in by 2005, 80% by 2006, and so on. As of January 1, 2014, the phase-in is complete for all qualifying retirees at the 50% level and above. If you become newly eligible today, you will receive full CRDP from the date your eligibility is established.
How to Apply
The good news is that you do not need to apply for CRDP. It is automatic. Once the Defense Finance and Accounting Service (DFAS) confirms that you meet both eligibility criteria (20+ years of service and 50%+ VA rating), your retired pay will be restored without any action on your part. This typically happens within 30 to 60 days of your VA rating being finalized or updated.
If you believe you qualify but are not receiving CRDP, contact DFAS directly at 1-800-321-1080 or through your myPay account. Make sure your VA rating information has been transmitted to DFAS, as occasional delays in data sharing between the VA and DoD can cause gaps.
Tax Implications
Understanding the tax treatment of CRDP is critical for financial planning:
- VA disability compensation is tax-free. This does not change regardless of whether you receive CRDP.
- Military retirement pay is taxable. The retirement pay restored by CRDP is subject to federal income tax and, in most states, state income tax as well.
- CRSC is tax-free. If your combat-related disabilities make CRSC a better option, the payments you receive under CRSC are not taxable, which can result in a higher net income even if the gross amount is lower than CRDP.
Many financial advisors recommend running the numbers both ways. If you have combat-related disabilities, compare your after-tax income under CRDP versus CRSC. In some cases, the tax savings from CRSC can make it the better choice, even when the pre-tax CRDP amount is higher.
Impact on Survivor Benefit Plan (SBP)
CRDP can affect your Survivor Benefit Plan. Under CRDP, your full retired pay is restored, which means SBP premiums are calculated on the full retired pay amount, and your surviving spouse would receive SBP benefits based on the full amount as well. Under CRSC, the restored pay is not included in the SBP calculation, which could result in lower SBP annuity payments for your surviving spouse. This is another factor to consider when choosing between CRDP and CRSC.
Key Takeaway
If you are a military retiree with 20+ years of service and a 50% or higher VA disability rating, you are entitled to receive both your full retirement pay and your full VA disability compensation. CRDP is automatic and requires no application. If you are not receiving it, contact DFAS. If you have combat-related disabilities, compare CRDP with CRSC to determine which gives you the best after-tax income while also considering the impact on your Survivor Benefit Plan.