Compensation readjustment pay under former 10 U.S.C. 3814a, or non-disability severance pay prior to September 15, 1981 N/A None on or after September 15, 1981 on or before September 30, 1996 pre-tax amount after September 30, 1996 after-tax amount readjustment pay under former 10 U.S.C. 687 prior to September 15, 1981 N/A 75 percent of pre-tax amount on or after September 15, 1981 on or before September 30, 1996 pre-tax amount after September 30, 1996 after-tax amount SSB N/A PL 105-178 provides for recoupment of the amount of SSB a Veteran receives, regardless of the date of receipt. after-tax amount separation pay under VSP RISP N/A on or before September 30, 1996 pre-tax amount after September 30, 1996 after-tax amount disability severance pay for a disability VA initially rated at least 10 percent disabling N/A on or before September 30, 1996 pre-tax amount after September 30, 1996 after-tax amount Exceptions: For exceptions to the policies described in the table above, see M21-1, Part III, Subpart v, 4.B.2.e. References: For more information about calculating the after-tax amount of separation benefits, see M21-1, Part III, Subpart v, 4.B.2.g , and the recoupment of separation benefits, in general, see , and disability severance pay, see M21-1, Part III, Subpart v, 4.B.3. e. Handling Separation Benefits When Compensation Becomes Greater Than Pension Follow the instructions in the table below when all four conditions apply a Veteran who received separation benefits that have not yet been entirely recouped the Veteran is receiving pension entitlement to compensation is established and compensation would be the greater benefit, and the amount of compensation payable to the Veteran is actually less than the amount of pension payable because VA must withhold all or part of the Veteran’s compensation in order to recoup the separation benefits. Step Action
b. Instructions for Preparing an Award That Recoups VSP The contains instructions for preparing an award that recoups VSP from an Air Force Veteran’s VA compensation. Important: Follow the instructions in the table below when preparing an award to recoup VSP according to the recoupment schedule in the third row of the table under M21-1, Part III, Subpart v, 4.B.4.a, and the Veteran’s combined disability rating is higher than 20 percent. Step Action 1 Verify the percentage of service connection on the COMBINED RATING AWARD screen on the RATING tab is at least 30 percent. 2 On the DISCHARGE PAY screen under the MILITARY PAYMENT INFORMATION tab, select Add. Enter the VSP amount as Readjustment Pay. Select Accept. Select OK. Note: Do not enter any information on the AWARD ADJUSTMENTS screen. 3 Select Generate Award. 4 On the PROPOSED AWARD screen, select GAO. 5 Select Yes to copy the proposed tab award lines to the GENERATE AWARD OVERRIDE screen. 6 Select Edit for each award line affected by VSP recoupment. 7 Determine the amount to withhold by referring to the Air Force Recoupment Schedule shown in the chart in M21-1, Part III, Subpart v, 4.B.4.a. Enter the amount to withhold in the Sep Pay Adj box and select the Tab button on the keyboard. This will automatically populate the Total W/H box and the Award Net box. Important: If the Award Net box involves cents, drop the cents and enter the amount in the Amount box in the lower right of the OVERRIDE WORKSHEET. 8 Select Accept. 9 Enter Remarks such as Processed using GAO. Select Generate. 10 Enter the balance into the Input Recoupment Balance box. Select OK. 11 Select No when asked if there is another recoupment balance for this adjustment type. Note: Since GAO was used, a Concur is needed on the award action.
That Require Special Handling VA completed recoupment of a Veteran’s separation benefits prior to the conversion of his/her award to VETSNET, and a retroactive adjustment of the Veteran’s award from a date prior to completion of the recoupment is now necessary. b. Adjusting an Award Based on a Reduction in the Combined Disability Rating If, while VA is withholding all of a Veteran’s compensation to recoup separation benefits he/she received, VA decides a decrease in the Veteran’s combined disability rating is in order, the provisions of still apply. Even though the Veteran is not receiving compensation, VA must send notice of proposed adverse action to the Veteran, and allow the Veteran 60 days to provide evidence showing why VA shouldn’t take the proposed action. Reference: For more information about notifying a Veteran of proposed adverse action under , see M21-1, Part IV, Subpart ii, 3.A.3. c. Status of a Recoupment Balance When VA Stops Paying Compensation When VA stops paying a Veteran compensation from which it had been recouping separation benefits, any amount VA has not yet recouped remains as a charge against any future award of compensation, and is subject to recoupment from any future award of compensation. Exception: The principle set forth in this block does not apply when the Veteran dies before VA finishes recouping his/her separation benefit. The recoupment balance does not remain as a charge against survivors benefits VA subsequently pays based on the Veteran’s service.