To amend title 10, United States Code, to expand eligibility for concurrent receipt of military retired pay and veterans' disability compensation to include additional chapter 61 disability retirees, to coordinate eligibility for combat-related special compensation and concurrent receipt, to eliminate the reduction of SBP survivor annuities by dependency and indemnity compensation, and to enhance the ability of members of the reserve components who serve on active duty or perform active service to receive credit for such service in determining eligibility for early receipt of non-regular service retired pay.

Summary: Allows the receipt of both military retired pay and veterans' disability compensation with respect to any service-connected disability (under current law, only a disability rated at 50% or more). Repeals provisions phasing in the full concurrent receipt of such pay through December 31, 2013.

Makes eligible for the full concurrent receipt of both veterans' disability compensation and either military retired pay or combat-related special pay those individuals who were retired or separated from military service due to a service-connected disability.

Repeals certain provisions which require the offset of amounts paid in dependency and indemnity compensation from Survivor Benefit Plan (SBP) annuities for the surviving spouses of former military personnel who are entitled to military retired pay or who would be entitled to retired pay except for being under 60 years of age.

Prohibits requiring repayment of certain amounts previously paid to SBP recipients in the form of a retired pay refund.

Repeals the optional authority of (and instead requires) the Secretary of the military department concerned to pay an annuity to a member's dependent children when there is no eligible surviving spouse.

Directs the Secretary concerned to restore annuity eligibility to a surviving spouse who earlier agreed to transfer such eligibility to a surviving child or children of a member.

Removes the requirement that days of active duty or active service used to reduce the minimum age at which a member of the reserves may retire for non-regular (reserve) service must occur in the same fiscal year.

SECTION 1. ELIGIBILITY FOR PAYMENT OF BOTH RETIRED PAY AND VETERANS' 
              DISABILITY COMPENSATION FOR CERTAIN ADDITIONAL MILITARY 
              RETIREES WITH COMPENSABLE SERVICE-CONNECTED DISABILITIES.

    (a) Extension of Concurrent Receipt Authority to Retirees With 
Service-Connected Disabilities Rated Less Than 50 Percent.--Subsection 
(a) of section 1414 of title 10, United States Code, is amended--
            (1) by striking ``Compensation'' in the subsection heading 
        and all that follows through ``Subject'' and inserting 
        ``Compensation.--Subject''; and
            (2) by striking paragraph (2).
    (b) Repeal of Phase-In of Concurrent Receipt of Retired Pay and 
Veterans' Disability Compensation.--Such section is further amended--
            (1) in subsection (a), as amended by subsection (a) of this 
        section, by striking the final sentence;
            (2) by striking subsection (c) and redesignating 
        subsections (d) and (e) as subsections (c) and (d), 
        respectively; and
            (3) in subsection (d), as so redesignated, by striking 
        paragraphs (3) and (4).
    (c) Clerical Amendments.--
            (1) Section heading.--The heading for section 1414 of such 
        title is amended to read as follows:
``Sec. 1414. Members eligible for retired pay who are also eligible for 
              veterans' disability compensation: concurrent payment of 
              retired pay and disability compensation''.
            (2) Table of sections.--The item relating to such section 
        in the table of sections at the beginning of chapter 71 of such 
        title is amended to read as follows:

``1414. Members eligible for retired pay who are also eligible for 
                            veterans' disability compensation: 
                            concurrent payment of retired pay and 
                            disability compensation.''.
    (d) Effective Date.--The amendments made by this section shall take 
effect as of January 1, 2012, and shall apply to payments for months 
beginning on or after that date.

SEC. 2. COORDINATION OF SERVICE ELIGIBILITY FOR COMBAT-RELATED SPECIAL 
              COMPENSATION AND CONCURRENT RECEIPT.

    (a) Eligibility for TERA Retirees.--Subsection (c) of section 1413a 
of title 10, United States Code, is amended by striking ``entitled to 
retired pay who--'' and all that follows through the end of paragraph 
(1) and inserting ``who--
            ``(1) is entitled to retired pay, other than a member 
        retired under chapter 61 of this title with less than 20 years 
        of service creditable under section 1405 of this title and less 
        than 20 years of service computed under section 12732 of this 
        title; and''.
    (b) Amendments To Standardize Similar Provisions.--
            (1) Clerical and conforming amendments.--Section 1413a of 
        such title is further amended--
                    (A) in the heading for paragraph (3) of subsection 
                (b), by striking ``rules'' and inserting ``rule''; and
                    (B) in subsection (f), by striking ``Subsection 
                (d)'' and inserting ``Subsection (c)''.
            (2) Specification of qualified retirees for concurrent 
        receipt purposes.--Section 1414 of such title, as amended by 
        section 3, is amended--
                    (A) in subsection (a)--
                            (i) by striking ``a member or'' and all 
                        that follows through ``is entitled'' and 
                        inserting ``an individual who is a qualified 
                        retiree for any month is entitled''; and
                            (ii) by inserting ``retired pay and 
                        veterans' disability compensation'' after 
                        ``both''; and
                    (B) in subsection (d), by adding at the end the 
                following new paragraph:
            ``(3) Qualified retiree.--The term `qualified retiree' 
        means a member or former member of the uniformed services who, 
        with respect to any month--
                    ``(A) is entitled to retired pay, other than in the 
                case of a member retired under chapter 61 of this title 
                with less than 20 years of service creditable under 
                section 1405 of this title and less than 20 years of 
                service computed under section 12732 of this title; and
                    ``(B) is entitled to veterans' disability 
                compensation.''.
            (3) Standardization with crsc rule for chapter 61 
        retirees.--Subsection (b) of section 1414 of such title is 
        amended--
                    (A) by striking ``Special Rules'' in the subsection 
                heading and all that follows through ``is subject to'' 
                and inserting ``Special Rule for Chapter 61 Disability 
                Retirees.--In the case of a qualified retiree who is 
                retired under chapter 61 of this title, the retired pay 
                of the member is subject to''; and
                    (B) by striking paragraph (2).
    (c) Effective Date.--The amendments made by this section shall take 
effect as of January 1, 2012, and shall apply to payments for months 
beginning on or after that date.

SEC. 3. REPEAL OF REQUIREMENT OF REDUCTION OF SBP SURVIVOR ANNUITIES BY 
              DEPENDENCY AND INDEMNITY COMPENSATION.

    (a) Repeal.--
            (1) Repeal.--Subchapter II of chapter 73 of title 10, 
        United States Code, is amended as follows:
                    (A) In section 1450, by striking subsection (c).
                    (B) In section 1451(c)--
                            (i) by striking paragraph (2); and
                            (ii) by redesignating paragraphs (3) and 
                        (4) as paragraphs (2) and (3), respectively.
            (2) Conforming amendments.--Such subchapter is further 
        amended as follows:
                    (A) In section 1450--
                            (i) by striking subsection (e); and
                            (ii) by striking subsection (k).
                    (B) In section 1451(g)(1), by striking subparagraph 
                (C).
                    (C) In section 1452--
                            (i) in subsection (f)(2), by striking 
                        ``does not apply--'' and all that follows and 
                        inserting ``does not apply in the case of a 
                        deduction made through administrative error.''; 
                        and
                            (ii) by striking subsection (g).
                    (D) In section 1455(c), by striking ``, 
                1450(k)(2),''.
    (b) Prohibition on Retroactive Benefits.--No benefits may be paid 
to any person for any period before the effective date provided under 
subsection (f) by reason of the amendments made by subsection (a).
    (c) Prohibition on Recoupment of Certain Amounts Previously 
Refunded to SBP Recipients.--A surviving spouse who is or has been in 
receipt of an annuity under the Survivor Benefit Plan under subchapter 
II of chapter 73 of title 10, United States Code, that is in effect 
before the effective date provided under subsection (f) and that is 
adjusted by reason of the amendments made by subsection (a) and who has 
received a refund of retired pay under section 1450(e) of title 10, 
United States Code, shall not be required to repay such refund to the 
United States.
    (d) Repeal of Authority for Optional Annuity for Dependent 
Children.--Section 1448(d)(2) of such title is amended--
            (1) by striking ``Dependent children.--'' and all that 
        follows through ``In the case of a member described in 
        paragraph (1),'' and inserting ``Dependent children.--In the 
        case of a member described in paragraph (1),''; and
            (2) by striking subparagraph (B).
    (e) Restoration of Eligibility for Previously Eligible Spouses.--
The Secretary of the military department concerned shall restore 
annuity eligibility to any eligible surviving spouse who, in 
consultation with the Secretary, previously elected to transfer payment 
of such annuity to a surviving child or children under the provisions 
of section 1448(d)(2)(B) of title 10, United States Code, as in effect 
on the day before the effective date provided under subsection (f). 
Such eligibility shall be restored whether or not payment to such child 
or children subsequently was terminated due to loss of dependent status 
or death. For the purposes of this subsection, an eligible spouse 
includes a spouse who was previously eligible for payment of such 
annuity and is not remarried, or remarried after having attained age 
55, or whose second or subsequent marriage has been terminated by 
death, divorce or annulment.
    (f) Effective Date.--This section and the amendments made by this 
section shall take effect on the later of--
            (1) October 1, 2011; or
            (2) the first day of the first month that begins after the 
        date of the enactment of this Act.

SEC. 4. ELIMINATION OF FISCAL YEAR LIMITATION IN CONSIDERING ACTIVE 
              DUTY AND ACTIVE SERVICE FOR EARLY ELIGIBILITY FOR RECEIPT 
              OF NON-REGULAR SERVICE RETIRED PAY.

    (a) Consideration of 90-Day Periods of Service.--Section 
12731(f)(2)(A) of title 10, United States Code, is amended by striking 
``below 60 years of age by three months for each aggregate of 90 days 
on which such person so performs in any fiscal year after such date, 
subject to subparagraph (C)'' and inserting ``, subject to subparagraph 
(C), below 60 years of age by three months for each aggregate of 90 
days on which such person serves on such active duty or performs such 
active service after such date''.
    (b) Retroactive Effective Date.--The amendment made by subsection 
(a) shall take effect as of January 28, 2008, and as if included in the 
National Defense Authorization Act for Fiscal Year 2008 (Public Law 
110-181) as enacted.