Combat Related Special Compensation (CRSC)

Since 05-23-03

If CRSC becomes a mandatory spending program, future enhancements to the program become considerably easier.
-------------------------------

Funding for Special Compensation for Disabled Retirees of the Uniformed Services. Under current law, veterans who retire from the military, the Coast Guard, PHS, or NOAA cannot receive both full retirement annuities and disability compensation from the VA. To receive the non-taxable veterans' compensation benefit, retirees must forgo an equal amount of their taxable retirement annuity. Allowing the receipt of both benefits is often referred to as "concurrent receipt." Two programs currently offer special benefits to retirees who are affected by the ban on concurrent receipt.

The first is a program of special compensation for severely disabled retirees of the uniformed services that pays a monthly stipend to certain retirees who are rated by VA as 60 percent or more disabled.

The second program, scheduled to begin June 1, 2003, will pay a monthly benefit to retirees who receive disability compensation from VA for the injury for which they were awarded a Purple Heart or have certain combat- or training-related disabilities for which they receive compensation from VA.

The benefit will equal the amount of retirement annuity forgone as a result of the ban on concurrent receipt. CBO estimates these programs will together pay military retirees about $300 million in 2004, and $2.8 billion over the
2004-2008 period.

Such payments for both programs are currently made from
DoD's military personnel accounts. Under section 641, payments under these programs would become a liability of the Military Retirement Fund.

The military retirement system is financed in part by an annual payment from appropriated funds to the Military Retirement Fund, based on an estimate of the system's accruing liabilities. If these special compensation payments were to become a liability of the Military Retirement Fund, DoD's yearly contribution to the fund (paid from the military personal accounts) would normally increase to reflect the added liability from the expected increase in payments to future retirees. This increase--or accrual payment--would recognize the addition l costs of deferred compensation in the years during which service members are working, rather than when the benefits are actually paid. Accrual budgeting provides decision makers with more complete information about the full costs of labor and provides incentives to use labor cost-effectively.

Under section 641, however, the incremental increase in the accrual payment would be paid by the Secretary of the Treasury and, therefore, not recognized in DoD's budget. Using information from DoD, CBO estimates that the accrual payment from the Treasury would be $100 million in 2004, and total about $930 million over the 2004-2008 period.
-----------------------------------------------

Senate drops concurrent receipt reform - again
By Rick Maze
Times staff writer


In a blow to disabled military retirees, an amendment to the 2004 defense authorization bill that would have increased their income by eliminating an offset in retirement pay was yanked from the Senate floor Monday on a parliamentary ruling that it was irrelevant to the defense budget. The ruling shocked Sen. Harry Reid, D-Nev., long-time sponsor of so-called concurrent receipt legislation that would allow disabled retirees to draw full military retirement pay and veterans' disability compensation if they are eligible for both.

Passage of a Reid amendment promising full concurrent receipt for all disabled retirees had become an annual rite during debate on the defense bill, although Senate passage has served only to keep the debate alive and has not changed Pentagon opposition to the legislation.

However, Senate rules, have been tightened in the past year. When Reid offered his concurrent receipt amendment on Monday, it was ruled to be not germane to the defense bill. Reid could have forced a vote on the ruling but did not.

Sen. Carl Levin of Michigan, senior Democrat on the Senate Armed Services Committee and a concurrent receipt supporter, urged Reid not to seek a vote overturning the ruling.

Reid said was he is "disappointed" but won't give up. "I will look for another vehicle to move this forward in the future," he said.

Partly because of Reid's efforts last year, the Pentagon is in the final stages of creating a new special pay for some disabled retirees to replace the offset that requires forfeiting one dollar of retirement pay for every dollar received in veteran's disability compensation. This special pay will be limited to retirees with disabilities related to combat and combat-like training.

Defense officials estimate that about 35,000 of the almost 700,000 military retirees who also receive disability benefits will get the new special pay once it becomes available.