Thursday, February 07, 2013

VA Math & Separation Pay

I recently received my Veteran's Affairs (VA) Disability Rating, but I hit a few snags along the way that the internet was unable to answer. Hopefully, this post will answer some questions that other military folks have about the VA disability rating process.

In my case, my involuntarily separation included a separation payment, but other than the cash in my bank account I never received an official document stating the amount awarded. Often times the DD 214 shows the amount of the separation payment, but sometimes it doesn't. This was the first hurdle, and the solution was simply to contact DFAS and request the LES for my last month in service and for the first month after separation (which is when I received the sep pay). So now all my separation paperwork is finally in order.

Next step, and probably the one most posted about, is what is commonly called "VA math." For non-military folks, the idea is that during the course of our military service, we put our bodies through all sorts of stuff that wears it down or otherwise degrades it faster than if we didn't serve...so we are compensated for that with money and/or healthcare. From what I've seen, you can get ratings on various conditions that categorize your disability as a percentage (i.e. 0% disabled, 10% disabled, 30% disabled, 50% disabled, etc). What confuses a lot of folks is these disability ratings also reflect your remaining ability (for the previous example: 100% able, 90% able, 70% able, and 50% able, respectively).

What also confuses folks is that the VA calculates a combined disability rating (your whole body) that incorporates all the various individual ratings (a bad knee, back problems, etc), but it's by multiplication and not addition. Perhaps an example is best here: Imagine your body is represented by a pie. As a whole pie, it represents your 100% original ability, with 0% disability rating. Now, if you receive one 50% disablity rating, that's the same as cutting the pie in half and giving that massive piece to your kid. You now have half a pie in the pie dish. If another second kid comes up and asks for 50% of what you have left (a second 50% disability rating), you cut the remaining piece in half and are now with 25% of your original pie and are missing 75% of it. The pie's total disability rating would be 75%.

What some people seem to get wrong is that if you've got two 50% ratings, that doesn't equal 100% because you can't add percentages in this way. You have to multiply them. But be careful, as there are two ways of doing this. You can multiply either remaining ability or disability, but the formulas can get complicated. I've found it easier to use remaining ability, then subtract that from your original ability.

Mathematically, 100% ability is equal to 1.00*(original ability) and calculating the rating would look like this:
(Original ability)*(0.5)*(0.5)=0.25 (ie, 25% of remaining original ability)
Disablity: 1.00-0.25=0.75 (ie, 75% disability rating)

Hopefully you're tracking now, but using 50% might still confuse some folks, so here it is again using two 10% ratings. Remember, if you're 10% disabled, you're 90% able which is equal to 0.9*(ability). A second 10% rating would take 90% of that 90% ability, leaving you with 81% ability.

(Original ability)*(0.9)*(0.9)=0.81 (ie, 81% of original ability)
Disablity: 1.00-0.81=0.19 (ie, 19% disability rating)


And just for completeness, getting a 0% disability rating just means multiplying by 1, which doesn't really change anything.

So, hopefully that made sense. The VA's process is to start with the highest rating and work through to the smallest. In my case, I received one 50% rating, one 30% rating, twelve 10% ratings, and eight 0% ratings. Since the point of this post is clarity, I'll write it out long form (instead of using exponents) but I dropped the 0% ratings because they don't change the value of the rating.
(Original ability=1.00)*(0.5)*(0.7)*(.9)*(.9)*(.9)*(.9)*(.9)*(.9)*(.9)*(.9)*(.9)=0.12 remaining ability
Disability: 1.00-0.12=0.88 disability, so that yields an 88% disability rating.

The VA then rounds to the nearest 10%, so 88% rounds up to 90%. Which was much higher than I thought I was going to get. I was expecting something like 19% (which would round up to 20%). When the VA rep told me "90" on the phone, I actually had him spell it out for me on the phone. It went something like this: "Ninetee? As in 'Nine Zero' and not 'One Nine'?"

Anyways, that 90% rating is tied to a compensation rate, but the VA couldn't pay me until they knew how much I received in my sep pay. Why? Simply put, you can't be paid twice for the same period of service. The separation payment was based solely off of my base pay, and did not include any of the housing (BAH) or other special pay. So administratively, I effectively received my base pay for a period of time after separation even though I no longer wore the uniform. This is why the VA needed to know when I could start receiving the disability compensation so they could calculate recoupment of my separation payment.

I know, it sounds like the VA is trying to "take back" money, but that's not the case. Think of it as the VA having to wait to pay you until your total due disability compensation value is equal to what the government already paid you for separating. Again, you can't get paid for the same period of service. Fortunately, the VA calculates that value as your separation payment minus federal income withholdings, which works out to around 75% of your separation pay. That means you have a lower amount to recoup...and, the higher your disability rating, the higher the associated compensation rate, and the faster you reach that equivalent amount. Depending on your rating and the amount you received for separation, you could be looking at several years (low rating and a large separation payment) or several of months (a high rating and a small separation payment).

Anyways, these are answers that I was looking for online but didn't find online. Hopefully it helps you too.
For more on the VA eBenefits, check out:

To read my Military to Civilian Transition mini-series in chronological order, Click Here.
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