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Understanding the VA Waiver and Retired Pay/CRDP/CRSC Adjustments

Many military retirees who are eligible for DoD retired pay are also eligible for VA disability pay. The laws and regulations that apply when a retiree is eligible for both types of pay are complex and can be confusing.

The law requires that a military retiree waive a portion of their gross DoD retired pay, dollar for dollar, by the amount of their Department of Veterans Affairs (VA) disability compensation pay; this is known as the VA waiver (or VA offset).

Some retirees who receive VA disability compensation may also receive CRDP or CRSC payments that make up for part or all of the DoD retired pay that they waive to receive VA disability pay.

Concurrent Retirement and Disability Pay (CRDP) and Combat-Related Special Compensation (CRSC)

There are two programs that were created by Congress to allow eligible military retirees to recover some or all of the retired pay that retirees waive for VA disability pay.

The first program, Concurrent Retirement and Disability Pay (CRDP), is a monthly payment to restore retired pay for those with service-connected disabilities who waive retired pay for VA disability pay. You do not need to apply for CRDP. When DFAS is notified of your VA disability compensation pay, if you are eligible for CRDP, we will process and pay your CRDP on the regular monthly pay schedule. For information about CRDP and eligibility, please see this website page.

The second program, Combat-Related Special Compensation (CRSC), is a special entitlement for combat-related disabilities. You must apply to your Branch of Service to receive CRSC pay. For information about CRSC and eligibility, please see this webpage.

You may qualify for both types of payments, but you can only receive either CRDP or CRSC, not both. To compare the two types of payments, please see this website page.

The Impact of VA Disability Determination Changes on Retired Pay, CRDP, and CRSC

When the VA determines that you are eligible to receive VA disability compensation or when there is a change in your VA disability compensation, your DoD retired pay, and/or your CRDP or CRSC pay accounts may need to be adjusted.

If your initial VA disability rating or a change in your rating applies to prior months or years (this is referred to as a retroactive disability rating change), the adjustments will need to be made to those prior periods, as well (retroactive adjustments).

The administrative process for creating or updating a DoD retired pay, and/or a CRDP or CRSC account requires coordination between DFAS and the VA. Because of the time lag in reporting between two organizations, this nearly always creates a set of debits and credits that must be applied to prior months (referred to as retroactive debits and credits). When you have a retroactive VA disability change that applies to prior years, the debits and credits will need to be applied to prior years.

Whenever your VA disability rating changes, please expect an increased payment from the VA to be counter-balanced by a decreased retired pay payment. The increased VA waiver may, in turn, result in an increase in your CRDP or CRSC payment.

Managing your DoD retired pay and your VA disability pay includes planning for these offsetting, retroactive credits and debits. When you receive an increased VA disability payment, it is important that you are prepared for a decrease in your retired pay payment (because of the VA waiver). It is also important to be prepared that sometimes you may need to repay DoD retired pay you received in prior months or years because it was affected by an increase in your VA disability rating/pay which applies to those prior months or years.

When VA Disability Rating Changes Result in a Retired Pay/CRDP/CRSC Debt

The time lag in reporting between the VA and DFAS means that a VA disability rating change often creates a set of debits and credits that must be applied to prior months. In addition, a retroactive disability rating change can create retroactive debits and credits that require adjustments to retired pay and/or CRDP or CRSC pay that stretch back months or years, even though payments have already been made based on the information that was current at the time.

In a small percentage of cases, the adjustments will result in a debt. Although DFAS receives an average of over 15,000 benefit changes each month from the VA, less than 2% (on average) of those benefit changes result in a debt.

DFAS also periodically audits CRSC and CRDP pay accounts to ensure that all adjustments were made correctly.

When there is a debt in your CRDP or CRSC account, you will receive a letter from us with an explanation of the debt, and information about options for repayment.

Repayments options include:

          A-Paying your debt in full, or;

          B-Setting up a payment plan to pay your debt in installments, or;

          C-Having payments deducted from your CRDP or CRSC pay.

If you do not either pay your debt in full, or make installment payments, or have payments deducted from your CRDP or CRSC pay, your debt may be considered delinquent.

Debts delinquent for more than 120 days are transferred to the Department of Treasury for collection.

Interest will be added to any unpaid portion of the debt beginning 30 days from the date of the debt notification letter.

The Department of Defense Financial Management Regulation (DoD FMR) contains information on debt collection in Volume 16, Chapters 1-4. You may review the DoD FMR on this website:

Note: The information on this website is provided to explain typical situations regarding retiree and annuitant benefits. For details and exceptions, please see applicable laws, financial management regulations, and instructions.