Military Divorce Minefields – Part 2 – Division of Retired Pay

Let’s continue where I left off last week.

Ooh, here is the nasty one.  This is the topic that causes the most spiteful disagreement.  In no other area have I witnessed the level of argument and emotion as I have with the division of retired pay.

 

Adding to the confusion on both sides, though, is the fact that every state treats division of pay differently. Puerto Rico, for example, does not divide military retirement at all.  Indiana requires the service member to be eligible for retired pay (twenty qualifying years) at the time of divorce before they will consider division.  North Carolina requires expert testimony on the value of the pension.  Maine does not allow for the computation of Cost of Living Allowances (COLAs) when awarding part of retired pay to a former spouse.  Some states are “shall divide” states while others are “may divide” states.  Anything you may have heard about a one-size-fits-all formula for dividing retired pay is false.

 

The Uniformed Services Former Spouses’ Protection Act allows for this sort of division during a divorce. Except for one recent modification, it gives very few rules on how the division is to occur.  For example, it sometimes allows for up to fifty percent of retired pay (after certain deductions) to be directly deposited into the former spouse’s bank account by the member’s pay center (the Defense Finance and Accounting Service for the Army, Navy, and Air Force, for example) but says nothing about courts requiring a higher amount from the service member (meaning the member would still be liable for paying any remainder out-of-pocket).

 

Let me describe how the division of pay happens.  First, we need to figure out what is called Disposable Retired Pay (DRP).  This is gross retirement pay minus any VA disability offsets, survivor benefit premiums, taxes, and any other money owed to the government.  DRP is what the pay center will divide (regardless of what courts may say) up to fifty percent and deposit in the former spouse’s account.

 

But wait!  It’s not that simple.  DFAS (and the other pay centers) will not always make things so easy for the service member.  There is a little understood rule (often called the “10/10 rule”) which requires ten years of the marriage to overlap a minimum of ten years of the member’s military service.  Contrary to what is often cited by barracks lawyers, there is no automatic eligibility for a portion of the member’s retirement after ten years of marriage.  It is still up to the state courts to decide if division of pay will happen at all.  If it does occur and the former spouse meets the 10/10 rule then the pay center will direct deposit up to fifty percent of the member’s disposable retired pay into the former spouse’s account.  The former spouse will need to file DD Form 2293 and a court-certified copy of the court order with the pay center for this to happen.  If the 10/10 rule is not met and a division occurs, the member is responsible for paying out-of-pocket.

 

I digressed a bit with that last paragraph.  Let’s get back to how the amount of pay the former spouse will receive is computed.  We’ve gone over how to reach the disposable retired pay amount.  The amount paid can either be a flat dollar amount of a percentage of disposable retired pay.  If the flat amount is elected, it will not change over time.  This means COLAs have no effect.  They will, however, be included if the percentage method is used.  So, you’ve computed disposable retired pay. Now what?

 

What happens next is going to vary based on a number of factors.  If the member is still serving, the MPDO has to state the member’s rights under the Servicemembers Civil Relief Act have been honored.  There is also the question of the “marital fraction” part of the computation.

 

Now we’re getting into a lot of confusing territory.  What the heck is a marital fraction?  This isn’t math class.  No, it’s more like abstract algebra.  Don’t be scared.  Dive into the pool and start kicking.  Eventually your head will break water and some semblance of sense will come to you.

 

I said earlier that each state does division of retired pay differently.  Keep that in mind with everything I am about to describe.  I am only giving a basic idea of things.  Your experience may vary.

 

The basic description of the marital fraction is this: what portion of retired pay was earned during the time the service member was married to the former spouse.  Here is the basic formula.

 

Marital Asset (Former Spouse’s portion) = [DRP x (marital service time ÷ total service time) ] X Court Ordered Percentage

 

Marital service time is the overlap of the marriage with the member’s military service.  For reservists, it would be the number of retirement points earned during the marital overlap.  Here is the same formula modified for reservists.

 

Marital Asset (Former Spouse’s portion) = [DRP x (marital service retirement points ÷ total retirement points)] X Court Ordered Percentage

 

Let me add some numbers to this equation so it will make a little more sense.  Let’s assume the disposable retired pay is $2,000, the member has 5,000 retirement points and earned 3,500 of those points while married to the former spouse.  The court awarded fifty percent of the marital fraction to the former spouse. We will call the marital fraction (or marital asset) M in this equation.

 

M = [$2,000 x (3,500 ÷ 5,000)] x 50%

 

Now think back to your seventh-grade algebra class and recall the order of operations.  First, we solve what is in parentheses so we’re dividing 3,500 by five thousand.  We get this.

 

M = [$2,000 x (0.7)] x 50%

 

Now we solve what is in the brackets.  We multiply $2,000 by 0.7.  We end up with this.

 

M = [$1,400] x 50%

 

We’re almost there.  Now we multiply $1,400 by fifty percent.  The former spouse’s portion of retired pay is $700 per month or 35% of the service member’s disposable retired pay.

 

M = $700

 

$700 ÷ $2,000 = 35%

 

Did that make sense?  I hope so.  I’m about to do something evil.  States used to have a great deal of flexibility in determining what the marital fraction was.  They could even decide whether to based the division of pay on the rank and points at the time of divorce or on the rank and points at the time the member began to receive retired pay.  A change in the law, effective 23 December 2016, changed all of this.  When retired pay is divided by a divorce decree, QDRO (erroneously), or MPDO and the member is still serving, the variables composing the marital fraction are now set for all states and territories.  The change does not affect those who divorce after the member is no longer serving (meaning the member is either in the Retired Reserve or is receiving retired pay).

 

For those people to whom the law change does apply, the marital asset is now based on the retirement points earned during the marriage and the pay grade and time in service the member had attained on the date of the divorce.  This is quite different from what I described earlier.  The previous example included total years of service and highest grade held.  Under these new rules, the pay grade and years of service could be significantly different especially if the member serves several additional years and is promoted one or more times after the divorce.  The new formula would look like this.

 

M = DRP x [(MRP ÷ TRP) x (MPG x HPG)]

 

M is Marital Asset.

DRP is Disposable Retired Pay

MRP is Marriage Retirement Points (the total points earned during the marriage)

TRP is Total Retirement Points

MPG is Marriage Pay Grade (the rate of pay in effect on the date of divorce)

HPG is Highest Pay Grade (the rate of pay in effect when the member began to receive retired pay (assumes the possibility of promotions and additional years of service))

 

I’m going to borrow an example from one of the articles in the references section (http://www.increa.com/articles/division-2017NDAA-USFSPA-tutorial/NDAA-USFSPA-ContinuingEducation.pdf, if you’re interested) since it works very well.  The numbers below will not match the referenced article due to rounding.

 

We start off by calculating the total retired pay, $5,000 per month.  We know 4,700 retirement points were earned during the marriage and a total of 5,500 points were earned during the member’s career.  The retired pay based on the member’s rank, years of service, and the points earned during the marriage equates to $3,298 per month.  The court has awarded 50% of the marital fraction to the former spouse.  Here is how the formula appears with these numbers plugged into it.

 

M = ($5,000 x [(4,700 ÷ 5,500) x ($3,298 ÷ $5,000)] ) x 50%

 

When we divide 4,700 by 5,500, we get .8545 (or 85.45%).  Dividing $3,298 by $5,000 equals .6596 (or 65.96%).  The equation now looks like this.

 

M = ($5,000 x [(85.45%) x (65.96%)] ) x 50%

 

The next step is to multiply the two percentages in parentheses.  This gives us 56.36%.  Now the equation looks like this.

 

M = ($5,000 x 56.36% ) x 50%

 

It’s getting simpler now.  Multiply the total monthly retirement by 56.36%.  We get $2,818.14.  This is the marital fraction of the member’s retired pay.

 

M = $2,818.14 x 50%

 

The former spouse receives fifty percent of the marital fraction.  That amount is below.

 

M = $1,409

 

This is a considerable difference over the formula I showed earlier.  If we used the previous equation, the amount of pay the former spouse would have received would have been $2,136 per month.  One argument in favor of the new rule is the promotion(s) and additional years of service did not happen during the time of the marriage and therefore should not be included when dividing retired pay.  An argument against the new rule, sometimes called the “marital foundation theory,” states that the final pay grade and years of service was built on the joint efforts of the service member and former spouse during the marriage.  You can find articles supporting both of these standpoints in the references section below.

 

That’s it for now.  Next week I will cover medical and on-post benefits.

Thanks for joining me today and, of course, thank you for your service.

D.J.


References
: ·

 

MILITARY PAY CENTERS

Air Force
DFAS-Indianapolis Center
Attn.: Garnishments Section
8899 East 56th Street
Indianapolis, IN 46249-0875
Phone: 1-888-332-7411
Fax Coversheet:   https://corpweb1.dfas.mil/civpaywf/coversheet
Fax: 866-401-5849
*Utilizing coversheet  expedites processing time*

Army
DFAS-Indianapolis Center
Attn.: Garnishments Section
8899 East 56th Street
Indianapolis, IN 46249-0865
Phone: 1-888-332-7411
Fax Coversheet: https://corpweb1.dfas.mil/civpaywf/coversheet
Fax: 866-401-5849
*Utilizing coversheet  expedites processing time*

Commanding Officer (SES)
Coast Guard Pay and Personnel Center

444 Southeast Quincy Street
Topeka, KS 66683-3591
Phone: 785-339-2200
Fax: 785-339-3780
US Coast Guard Website (https://www.uscg.mil/ppc/)
E-mail: PPC-DG-CustomerCare@uscg.mil

Marine Corps
DFAS-Cleveland Center
Attn.: DFAS-CL/JFLTC
1240 East 9th Street
Cleveland, OH 44199-2005
Phone: 888-332-7411
Fax: 216-367-3614; DSN: 580-7011
E-mail: DFAS.CLEVELAND-OH.JFL.MBX.USMC-SPECIAL-PROCESSING@MAIL.MIL

National Oceanic and Atmospheric Administration (NOAA)
NOAA Commissioned Personnel Center
1315 East-West Highway, Rm. 12100
Silver Spring, MD 20910-3282

Navy
DFAS-Cleveland Center
Attn.: DFAS-CL/JFLAGB
1240 East 9th Street
Cleveland, OH 44199-2005
Phone: 888-332-7411
Fax: 216-367-3666; DSN: 580-7603
E-mail: DFAS.CLEVELAND-OH.JFL.MBX.CCL-CATCH-62-CLE@MAIL.MIL

Public Health Service
U.S. Public Health Service
Division of Commissioned Corps Personnel and Readiness
Commissioned Corps Compensation
1101 Wootton Parkway, Plaza Level, Suite 100
Rockville, MD  20852
Phone: 240-276-8799
Fax:  240-276-8817
E-Mail: CompensationBranch@psc.hhs.gov


Podcast Episode 0053 – Military Divorce Minefields – Part 2 – Division of Retired Pay

 

References: ·

 

MILITARY PAY CENTERS

Air Force
DFAS-Indianapolis Center
Attn.: Garnishments Section
8899 East 56th Street
Indianapolis, IN 46249-0875
Phone: 1-888-332-7411
Fax Coversheet:   https://corpweb1.dfas.mil/civpaywf/coversheet
Fax: 866-401-5849
*Utilizing coversheet  expedites processing time*

Army
DFAS-Indianapolis Center
Attn.: Garnishments Section
8899 East 56th Street
Indianapolis, IN 46249-0865
Phone: 1-888-332-7411
Fax Coversheet: https://corpweb1.dfas.mil/civpaywf/coversheet
Fax: 866-401-5849
*Utilizing coversheet  expedites processing time*

Commanding Officer (SES)
Coast Guard Pay and Personnel Center

444 Southeast Quincy Street
Topeka, KS 66683-3591
Phone: 785-339-2200
Fax: 785-339-3780
US Coast Guard Website (https://www.uscg.mil/ppc/)
E-mail: PPC-DG-CustomerCare@uscg.mil

Marine Corps
DFAS-Cleveland Center
Attn.: DFAS-CL/JFLTC
1240 East 9th Street
Cleveland, OH 44199-2005
Phone: 888-332-7411
Fax: 216-367-3614; DSN: 580-7011
E-mail: DFAS.CLEVELAND-OH.JFL.MBX.USMC-SPECIAL-PROCESSING@MAIL.MIL

National Oceanic and Atmospheric Administration (NOAA)
NOAA Commissioned Personnel Center
1315 East-West Highway, Rm. 12100
Silver Spring, MD 20910-3282

Navy
DFAS-Cleveland Center
Attn.: DFAS-CL/JFLAGB
1240 East 9th Street
Cleveland, OH 44199-2005
Phone: 888-332-7411
Fax: 216-367-3666; DSN: 580-7603
E-mail: DFAS.CLEVELAND-OH.JFL.MBX.CCL-CATCH-62-CLE@MAIL.MIL

Public Health Service
U.S. Public Health Service
Division of Commissioned Corps Personnel and Readiness
Commissioned Corps Compensation
1101 Wootton Parkway, Plaza Level, Suite 100
Rockville, MD  20852
Phone: 240-276-8799
Fax:  240-276-8817
E-Mail: CompensationBranch@psc.hhs.gov


YouTube Episode 0056 – Military Divorce Minefields – Part 2 – Division of Retired Pay

References: ·

 

MILITARY PAY CENTERS

Air Force
DFAS-Indianapolis Center
Attn.: Garnishments Section
8899 East 56th Street
Indianapolis, IN 46249-0875
Phone: 1-888-332-7411
Fax Coversheet:   https://corpweb1.dfas.mil/civpaywf/coversheet
Fax: 866-401-5849
*Utilizing coversheet  expedites processing time*

Army
DFAS-Indianapolis Center
Attn.: Garnishments Section
8899 East 56th Street
Indianapolis, IN 46249-0865
Phone: 1-888-332-7411
Fax Coversheet: https://corpweb1.dfas.mil/civpaywf/coversheet
Fax: 866-401-5849
*Utilizing coversheet  expedites processing time*

Commanding Officer (SES)
Coast Guard Pay and Personnel Center

444 Southeast Quincy Street
Topeka, KS 66683-3591
Phone: 785-339-2200
Fax: 785-339-3780
US Coast Guard Website (https://www.uscg.mil/ppc/)
E-mail: PPC-DG-CustomerCare@uscg.mil

Marine Corps
DFAS-Cleveland Center
Attn.: DFAS-CL/JFLTC
1240 East 9th Street
Cleveland, OH 44199-2005
Phone: 888-332-7411
Fax: 216-367-3614; DSN: 580-7011
E-mail: DFAS.CLEVELAND-OH.JFL.MBX.USMC-SPECIAL-PROCESSING@MAIL.MIL

National Oceanic and Atmospheric Administration (NOAA)
NOAA Commissioned Personnel Center
1315 East-West Highway, Rm. 12100
Silver Spring, MD 20910-3282

Navy
DFAS-Cleveland Center
Attn.: DFAS-CL/JFLAGB
1240 East 9th Street
Cleveland, OH 44199-2005
Phone: 888-332-7411
Fax: 216-367-3666; DSN: 580-7603
E-mail: DFAS.CLEVELAND-OH.JFL.MBX.CCL-CATCH-62-CLE@MAIL.MIL

Public Health Service
U.S. Public Health Service
Division of Commissioned Corps Personnel and Readiness
Commissioned Corps Compensation
1101 Wootton Parkway, Plaza Level, Suite 100
Rockville, MD  20852
Phone: 240-276-8799
Fax:  240-276-8817
E-Mail: CompensationBranch@psc.hhs.gov

 


Military Divorce Minefields – Part 1 – Military vs Civilian Plans

I know writing this week’s article is going to be difficult.  I might even regret doing it.  Who knows?  It’s a touchy subject and I know full well that no matter what I do I will make someone mad at me (or, at least, at what I say).  I’m going to write it anyway.  The information needs to be put out there.  Deep breath.  “Damn the torpedoes.  Full speed ahead.”

 

Let’s talk about divorces in the military.  How do they affect service members, former spouses, their families, their money, and their benefits?  I am going to leave the more personal bits out of the discussion and talk mainly about pay, benefits, and survivorship.

 

We are going to get into some legal territory here. Let me say up front that I am not a lawyer or even a paralegal.  I do have a great deal of experience in this area from a retirement services perspective, though, and I will give examples of items with which I have dealt.  Let’s call this an “experienced layman’s point-of-view” supplemented by a great deal of research.  You can find several of the sites I visited in the references section below.

 

I certainly cannot go into all the different circumstances which could arise during a military divorce.  I will hit some of the most important highlights and describe them as best I can.  If I do get anything blatantly wrong, I welcome constructive criticism and correction.

 

Differences Between Military and Civilian Retirement Plans

 

First, let’s define what military retirement is not.  For civilian lawyers who are not regularly involved with military divorces, this is easily the most difficult to comprehend.  Civilian retirement plans are managed under a law called the Employee Retirement Income Security Act (or ERISA, for short).  ERISA defines the participation rules, funding, and vesting requirements for most pension plans in private industry.  Civilian lawyers are often very comfortable with how ERISA functions.  The problem here is military retirement does not operate in any way like an ERISA plan.

 

Just how different can civilian and military pension be, you may ask?  Well, here are several questions I was asked about a National Guardsman’s pension from a family law lawyer familiar with ERISA.

  1. What is the current balance of the member’s pension fund?
  2. What is the member’s contribution to the fund?
  3. What is the buy-out (or “lump-sum”) value of the fund?
  4. What portion of the fund was acquired during the marital period and what portion was vested on the date of divorce?
  5. Who is the asset manager of the pension fund?

 

See what I mean?  Even someone with a rudimentary understanding of military retirements can see that none of these questions can be answered satisfactorily.  The differences are just too great.  For example, while there is such a thing as the Military Retirement Fund on a macro level, there is no personal account for each service member.  There is no buy-out or lump-sum option (at least before the Blended Retirement System came to be and even then it would be difficult to calculate while the member is still serving).

 

The military pension, simply put, is a defined-benefit plan.  This means the member receives a certain standard amount or percentage of pay for each year of service.  Vesting, the point at which the benefit is definitely yours and cannot (usually) be taken away, is twenty years of qualifying service.  The same cliff vesting requirement holds true for most of the other benefits involved in military retirement, such as Tricare coverage and use of on-post facilities.

 

This all-or-nothing approach to pension eligibility is called “cliff vesting” and can be difficult for civilian attorneys to understand at first.  They are much more comfortable with the three to five-year vesting requirements of ERISA plans. Now throw in the unique nature of being a reserve retiree and you can practically see that lawyer’s head explode.  I recommend wrapping their heads in duct tape before telling them you’re a reservist so – when their heads do explode – you’ll at least have all the pieces in one place.

 

Now let’s take a quick look at how a division of pay and benefits would be accomplished.  Unless the terms of division are laid out in the divorce decree itself, division of assets usually occurs by way of a document called a Qualified Domestic Relations Order (or QDRO – often pronounced Quah-Dro, for short).  A QDRO works for most divisible assets but isn’t necessarily best for military pensions.  Since military retirements are not “qualified plans” like IRAs and 401(k)s, but are statutory programs (meaning created and managed exclusively by federal law), it is best to use a Military Pension Division Order (MPDO).  I will include sample language for an MPDO in the references section of this article.

 

Here is an interesting sidebar I have seen repeatedly over the years.  On several occasions, I have read divorce decrees which ordered the service member to keep Servicemembers Group Life Insurance (SGLI) policies on themselves with the ex-spouse as the beneficiary.  The decree even mandated the member to keep this policy after leaving service.  There is some good news for the member, though.  A Supreme Court decision from 1981 (Ridgway v. Ridgway, 454 U.S. 46 (1981)) declared courts cannot enforce orders requiring SGLI coverage.

That’s all for this week.  Next week I will cover a touchy subject, the division of retired pay in a divorce.  Join me for that.

Thanks for joining me today and, of course, thank you for your service.

D.J.


References
: ·

 

MILITARY PAY CENTERS

Air Force
DFAS-Indianapolis Center
Attn.: Garnishments Section
8899 East 56th Street
Indianapolis, IN 46249-0875
Phone: 1-888-332-7411
Fax Coversheet:   https://corpweb1.dfas.mil/civpaywf/coversheet
Fax: 866-401-5849
*Utilizing coversheet  expedites processing time*

Army
DFAS-Indianapolis Center
Attn.: Garnishments Section
8899 East 56th Street
Indianapolis, IN 46249-0865
Phone: 1-888-332-7411
Fax Coversheet: https://corpweb1.dfas.mil/civpaywf/coversheet
Fax: 866-401-5849
*Utilizing coversheet  expedites processing time*

Commanding Officer (SES)
Coast Guard Pay and Personnel Center

444 Southeast Quincy Street
Topeka, KS 66683-3591
Phone: 785-339-2200
Fax: 785-339-3780
US Coast Guard Website (https://www.uscg.mil/ppc/)
E-mail: PPC-DG-CustomerCare@uscg.mil

Marine Corps
DFAS-Cleveland Center
Attn.: DFAS-CL/JFLTC
1240 East 9th Street
Cleveland, OH 44199-2005
Phone: 888-332-7411
Fax: 216-367-3614; DSN: 580-7011
E-mail: DFAS.CLEVELAND-OH.JFL.MBX.USMC-SPECIAL-PROCESSING@MAIL.MIL

National Oceanic and Atmospheric Administration (NOAA)
NOAA Commissioned Personnel Center
1315 East-West Highway, Rm. 12100
Silver Spring, MD 20910-3282

Navy
DFAS-Cleveland Center
Attn.: DFAS-CL/JFLAGB
1240 East 9th Street
Cleveland, OH 44199-2005
Phone: 888-332-7411
Fax: 216-367-3666; DSN: 580-7603
E-mail: DFAS.CLEVELAND-OH.JFL.MBX.CCL-CATCH-62-CLE@MAIL.MIL

Public Health Service
U.S. Public Health Service
Division of Commissioned Corps Personnel and Readiness
Commissioned Corps Compensation
1101 Wootton Parkway, Plaza Level, Suite 100
Rockville, MD  20852
Phone: 240-276-8799
Fax:  240-276-8817
E-Mail: CompensationBranch@psc.hhs.gov


Podcast Episode 0052 – Military Divorce Minefields – Part 1 – Military vs Civilian Plans

 

References: ·

 

MILITARY PAY CENTERS

Air Force
DFAS-Indianapolis Center
Attn.: Garnishments Section
8899 East 56th Street
Indianapolis, IN 46249-0875
Phone: 1-888-332-7411
Fax Coversheet:   https://corpweb1.dfas.mil/civpaywf/coversheet
Fax: 866-401-5849
*Utilizing coversheet  expedites processing time*

Army
DFAS-Indianapolis Center
Attn.: Garnishments Section
8899 East 56th Street
Indianapolis, IN 46249-0865
Phone: 1-888-332-7411
Fax Coversheet: https://corpweb1.dfas.mil/civpaywf/coversheet
Fax: 866-401-5849
*Utilizing coversheet  expedites processing time*

Commanding Officer (SES)
Coast Guard Pay and Personnel Center

444 Southeast Quincy Street
Topeka, KS 66683-3591
Phone: 785-339-2200
Fax: 785-339-3780
US Coast Guard Website (https://www.uscg.mil/ppc/)
E-mail: PPC-DG-CustomerCare@uscg.mil

Marine Corps
DFAS-Cleveland Center
Attn.: DFAS-CL/JFLTC
1240 East 9th Street
Cleveland, OH 44199-2005
Phone: 888-332-7411
Fax: 216-367-3614; DSN: 580-7011
E-mail: DFAS.CLEVELAND-OH.JFL.MBX.USMC-SPECIAL-PROCESSING@MAIL.MIL

National Oceanic and Atmospheric Administration (NOAA)
NOAA Commissioned Personnel Center
1315 East-West Highway, Rm. 12100
Silver Spring, MD 20910-3282

Navy
DFAS-Cleveland Center
Attn.: DFAS-CL/JFLAGB
1240 East 9th Street
Cleveland, OH 44199-2005
Phone: 888-332-7411
Fax: 216-367-3666; DSN: 580-7603
E-mail: DFAS.CLEVELAND-OH.JFL.MBX.CCL-CATCH-62-CLE@MAIL.MIL

Public Health Service
U.S. Public Health Service
Division of Commissioned Corps Personnel and Readiness
Commissioned Corps Compensation
1101 Wootton Parkway, Plaza Level, Suite 100
Rockville, MD  20852
Phone: 240-276-8799
Fax:  240-276-8817
E-Mail: CompensationBranch@psc.hhs.gov


YouTube Episode 0055 – Military Divorce Minefields – Part 1 – Military vs Civilian Plans

 

References: ·

 

MILITARY PAY CENTERS

Air Force
DFAS-Indianapolis Center
Attn.: Garnishments Section
8899 East 56th Street
Indianapolis, IN 46249-0875
Phone: 1-888-332-7411
Fax Coversheet:   https://corpweb1.dfas.mil/civpaywf/coversheet
Fax: 866-401-5849
*Utilizing coversheet  expedites processing time*

Army
DFAS-Indianapolis Center
Attn.: Garnishments Section
8899 East 56th Street
Indianapolis, IN 46249-0865
Phone: 1-888-332-7411
Fax Coversheet: https://corpweb1.dfas.mil/civpaywf/coversheet
Fax: 866-401-5849
*Utilizing coversheet  expedites processing time*

Commanding Officer (SES)
Coast Guard Pay and Personnel Center

444 Southeast Quincy Street
Topeka, KS 66683-3591
Phone: 785-339-2200
Fax: 785-339-3780
US Coast Guard Website (https://www.uscg.mil/ppc/)
E-mail: PPC-DG-CustomerCare@uscg.mil

Marine Corps
DFAS-Cleveland Center
Attn.: DFAS-CL/JFLTC
1240 East 9th Street
Cleveland, OH 44199-2005
Phone: 888-332-7411
Fax: 216-367-3614; DSN: 580-7011
E-mail: DFAS.CLEVELAND-OH.JFL.MBX.USMC-SPECIAL-PROCESSING@MAIL.MIL

National Oceanic and Atmospheric Administration (NOAA)
NOAA Commissioned Personnel Center
1315 East-West Highway, Rm. 12100
Silver Spring, MD 20910-3282

Navy
DFAS-Cleveland Center
Attn.: DFAS-CL/JFLAGB
1240 East 9th Street
Cleveland, OH 44199-2005
Phone: 888-332-7411
Fax: 216-367-3666; DSN: 580-7603
E-mail: DFAS.CLEVELAND-OH.JFL.MBX.CCL-CATCH-62-CLE@MAIL.MIL

Public Health Service
U.S. Public Health Service
Division of Commissioned Corps Personnel and Readiness
Commissioned Corps Compensation
1101 Wootton Parkway, Plaza Level, Suite 100
Rockville, MD  20852
Phone: 240-276-8799
Fax:  240-276-8817
E-Mail: CompensationBranch@psc.hhs.gov



The Temporary and Permanent Disability Retirement Lists

You’ve finally made it through the maze of the medical board journey, your branch of service has given you a disability rating, and you are about to be medically retired.  What in the world does all of that mean?  Here is the skinny on the disability retirement lists.  This will be a long article so please read it carefully.

 

What are they?

These are essentially active duty retirements (even if you are a reservist) with benefits starting right away.  You do not have to wait until sixty like the usual reserve retirement.  The Temporary Disability Retired List (TDRL) and the Permanent Disability Retired List (PDRL) are statuses given to service members who have long-term medical disabilities and are no longer able to perform their military duties as a result.  These service members also have a combined disability rating (see my article on medical boards, “Beware the IDES of Medical Boards…?” for an explanation on how this works.  I’ll include a link in the notes below.

 

Eligibility

If your injuries are long-term and you have a disability rating from your branch of service of at least 30% then you can be placed on the permanent disability retired list (PDRL).  If you have a possibility of recovering from your injuries within a certain amount of time, usually three years or less, then you can be placed on the temporary disability retired list (TDRL).

 

Service members on the TDRL will be on the list for a maximum of three years and will have their conditions reevaluated at least every eighteen months.  If you have recovered sufficiently then you will be removed from the list and returned to service.  If you have not recovered (more likely) then you can either be offered a severance package or transferred to the PDRL.

 

Benefits

For members on the TDRL, the minimum amount of retired pay is fifty percent of active duty base pay (even if your branch of service’s disability rating is lower than that) up to a maximum of seventy-five percent (even if your branch of service’s disability rating is higher than that).  Keep in mind that your final rating from your branch of service (BOS) can go down when you are reevaluated.  This downgrade can result in severance if your rating goes below thirty percent.  If you are transferred to the PDRL then your rate of pay will be based on your final disability rating (determined upon reevaluation).

 

Members on the PDRL will receive retired pay based on their active duty base pay and their final disability rating.

 

A benefit often more valuable than the amount of retired pay is Tricare health care benefits.  Tricare is available not only for the service member but also his spouse and dependent children.  Make sure they are registered in the Defense Enrollment Eligibility Reporting System (DEERS) – the same database used to determine which ID card you receive – since this is what is referenced by Tricare whenever you try to use your health benefits.  I usually tell people that Tricare is easily worth at least $1,000 per month in value.

Service members on either of these retirement lists are eligible for a blue (retired) ID card.  Their dependents are eligible for tan cards.  These cards allow you to use all of the on-post (and off-post) benefits received by any other military retiree (such as discounts at civilian businesses).  Be sure to take your disability order with you when you show up to get new cards for everyone.

 

You should get the cards around a week or so from your orders’ effective date.  You can do it within a week after this date, as well.  Don’t wait any longer than this, though, or you may have problems with DEERS.  Be sure the DEERS operator lists you as a retiree (not a reserve retiree) when he updates your record.

 

Applying for Pay

I recommend getting the help of a retirement services officer (RSO) for this part of things.  While the pay application can appear simple at first, there are many areas where mistakes can be made.  Errors on the application can delay the start of your benefits (until they are fixed).  An RSO will know how to do everything correctly.

 

Use DD Form 2656 to apply for retired pay.  Other than a few supporting documents, you will not need to complete any other forms (they just have the same information as the DD 2656 anyway).

 

The supporting documents for most people on the PDRL or TDRL are just the disability order (the one with your rating on it not your discharge from your branch of service) and your final retirement points statement. I’ll include an example from the Army in the notes below.  Expect about two months from the time the application is sent to the Defense Finance and Accounting Service (DFAS) for pay to begin.

 

If you have a twenty-year letter, it is a good idea to include that letter and your reserve component survivor benefit plan election, as well.  Don’t worry. You’ll get back pay from the effective date of your disability order to the present. You won’t lose any money.

 

How VA Compensation Affects Pay

Just like any other type of military pay, compensation from the Veterans Administration will offset – dollar for dollar – anything you get from the military.  There is a thing called Concurrent Retired and Disability Pay  (often simply called concurrent receipt) – or CRDP for short – which allows for this offset not to happen if you have at least a 50% rating from the VA, but this does not apply for medical retirements.  There is also a type of pay called combat-related special compensation which makes up for some or all of the VA offset.  You might be eligible for both of these but can only receive one or the other.

 

Concurrent Retired and Disability Pay (CRDP)

I just said you can’t get CRDP if you have a medical retirement, but you can choose to get this if you have twenty years of qualifying service and you have reached your retired pay eligibility date (RPED).  Your RPED is usually age sixty, but can be earlier if you have qualifying active duty service.  Talk to an RSO to see if this applies to you.  I will go deeper into the CRDP topic in next week’s article.

 

Combat-Related Special Compensation (CRSC)

CRSC sounds very similar to CRDP (probably because they both have CR in the acronym) and people very often get them confused.  Even retirement services officers and your physical evaluation board liaison officer (PEBLO) can get the facts jumbled in their minds.

 

CRSC is a type of pay for people with combat-related injuries which makes up for part (or all) of the offset between retired pay and VA compensation.  This pay does not happen automatically.  There is a separate application packet which needs to be sent to your branch of service in order to receive it.  First, though, you need to have retired pay which is being reduced by VA compensation (so be sure to apply for pay with an RSO’s assistance).  I will cover the specifics of CRSC in two weeks (after I have talked about concurrent receipt in more detail).

 

Hopefully, this was a useful article.  I don’t want to get too deep in the weeds or it might end up being more of a mind bender than it needs to be.  If I missed anything or you are confused about something, please drop a comment for me and I will answer any problems you might have.

 

Be sure to subscribe to my YouTube channel and podcast for updates on future posts.

 

Thanks for joining me today and, of course, thank you for your service.

 

D.J.

 

References:
TDRL Order Example

Related YouTube Episodes:
Change of Plans: New Series on Medical Retirement
I’m Medically Unfit for Retention. Now What?
Beware the IDES of Medical Boards…?
“Jackpot! I’ve Been Offered a HUGE Severance Payment.”  DJ says, “Don’t Take It.”
Interview With a PEBLO


Related Podcast Episodes
:
Change of Plans: New Series on Medical Retirement
I’m Medically Unfit for Retention. Now What?
Beware the IDES of Medical Boards…?

“Jackpot! I’ve Been Offered a HUGE Severance Payment.”  DJ says, “Don’t Take It.”
Interview With a PEBLO
Related Articles:
I’m Medically Unfit for Retention. Now What?
Beware the IDES of Medical Boards…?
“Jackpot! I’ve Been Offered a HUGE Severance Payment.”  DJ says, “Don’t Take It.”


Podcast Episode 0042 – The Temporary and Permanent Disability Retirement Lists

 

References:
TDRL Order Example

Related YouTube Episodes:
Change of Plans: New Series on Medical Retirement
I’m Medically Unfit for Retention. Now What?
Beware the IDES of Medical Boards…?
“Jackpot! I’ve Been Offered a HUGE Severance Payment.”  DJ says, “Don’t Take It.”
Interview With a PEBLO


Related Podcast Episodes
:
Change of Plans: New Series on Medical Retirement
I’m Medically Unfit for Retention. Now What?
Beware the IDES of Medical Boards…?

“Jackpot! I’ve Been Offered a HUGE Severance Payment.”  DJ says, “Don’t Take It.”
Interview With a PEBLO
Related Articles:
I’m Medically Unfit for Retention. Now What?
Beware the IDES of Medical Boards…?
“Jackpot! I’ve Been Offered a HUGE Severance Payment.”  DJ says, “Don’t Take It.”


YouTube Episode 0044 – The Temporary and Permanent Disability Retirement Lists