Qualifying for Military Benefits
Military veterans may be eligible for tax-free monthly monetary benefits based on their current circumstances, discharge conditions and record of service. While the U.S. Department of Defense offers a variety of benefits to meet health and income needs, three of the most common are disability, veterans and retirement pensions.
VA Disability Payments
Veterans with disabilities related to a disease or injury that occurred or was exacerbated during active military service may be eligible for disability benefits. Benefits are available for mental and health conditions. Compensation may also be available for disabilities suffered after military service that are considered related to disabilities suffered in service. Covered disabilities may also happen after service that are presumed related to the circumstances of service. The level of compensation is related to the degree and severity of disability. Medical records should show evidence of how the disability connects to service. Additional special monthly compensation is available to veterans with special circumstances, such as needing an attendant or a specific disability, such as the loss of use of a hand or leg.
The U.S. Department of Veterans Affairs (VA) offers a needs-based, tax-free paid benefit, known as the Veterans Pension, to qualifying applicants. This is considered supplemental income for wartime veterans. Veterans discharged under dishonorable conditions are ineligible. You must have served at least 90 days of active duty, including at least 1 day during a period of war. The amount of benefit is based on yearly family income.The amount of benefit is based on yearly family income. If you entered active duty after Sept. 7, 1980, you must have served at least 24 months or the full period in which you were called or ordered to active duty, with at least one day during a wartime period.
In addition to meeting the service requirements, to qualify for the pension, the veteran must also meet one of the following conditions:
- Age 65 or older
- Totally and permanently disabled
- Patient in a nursing home receiving skilled nursing care
- Receiving Social Security Disability income
- Receiving Supplemental Security income
Your income also has to be less than the level set by Congress to qualify for a Veterans Pension benefit. For 2018, that amount was $13,166 for a veteran with no dependents and $17,241 for a veteran with a spouse or child. The amount for a veteran who needs an aid and has one dependent is $26,036. Veterans or surviving spouses who are eligible for a VA pension and are housebound or require the aid and attendance of another person may be eligible for additional money.
Military Retirement Plan
As of Jan. 1, 2018, the military retirement system underwent major changes. The former system was a defined pension benefit, with no requirement from participants to pay in. The new system requires military members to contribute to their own retirement. Members of the military enrolled as of Dec. 31, 2017, are grandfathered under the legacy system and will not be switched automatically to the new system. However, service members with fewer than 12 years since their pay entry pay date and members of the reserve who have accrued fewer than 4,320 retirement points as of Dec. 31, 2017, will have the option of participating in the new system. The opt-in period ends Dec. 31, 2018. Nearly 1.6 million current service members are eligible to make this choice or remain in the legacy plan.
All service members who enter the military as of Jan. 1, 2018 will automatically enrolled in the new system, referred to as the Uniformed Services Blended Retirement System (BRS.)
To those who have the option, Defense Department suggests service members use training and informational tools, including the BRS Comparison Calculator and numerous online BRS resource materials. The new plan will allow the 83 percent of service members who do not stay in the military the full 20 years required to get a pension to save some money toward retirement.
Similar to 401(k)
The Department of Defense says the new system blends a smaller, traditional defined benefit pension with a defined contribution system of automatic and matching government contributions through the Thrift Savings Plan (TSP). A TSP is similar to a 401(k) in the civilian world. The new system decreases the pension by 20 percent and decreases the disability retirement calculation in order to prove a 5 percent government match to TSP accounts. The matching will end after 26 years of service.
Under the legacy system, veterans who served in the military for 20 or more years are eligible for a retirement pension based on percentage of basic pay. How this is calculated also depends on what year you entered the service. Changes were made for those who entered after September 1980 and August 1986.
Many former service members are eligible for money to put toward education. Eligible veterans can receive up to 36 months of education benefits under the Post-9/11 GI Bill. Benefits are available for 15 years since the last period of active duty of at least 90 consecutive days. The Forever GI Bill, which became law in August 2017, expanded these benefits. One expansion under the law was to remove the 15-year restriction for those discharged on or after Jan. 1, 2013.Veterans and their dependents are eligible for in-state tuition rates in all 50 states if they enroll within three years of discharge.
Veterans and Social Security
Most veterans are eligible for both Social Security payments and benefits tied to their military service. As of March 2013, around 9.6 million veterans received Social Security benefits. The majority of beneficiaries served from 1955 to the mid-1970s (end of the Vietnam War). Qualifying for these benefits requires working for a minimum number of years, although in some cases military pay may qualify for Social Security earnings during active duty or training.
If you were in the active military service from 1957 through 1967, special extra earnings are added to your earnings record when you apply for Social Security retirement benefits. If your active duty was after 1967, the extra earnings are already on your record.
Social Security Earnings
If you were in the military from 1940 through 1956, including attendance at a service academy, you did not pay Social Security taxes. However, your records are credited with special earnings that may help you qualify for Social Security and Medicare or increase the amount of your Social Security benefit. There is no reduction in Social Security retirement benefits because of military retirement benefits.
In addition, some disabled military veterans are able to receive Social Security disability insurance benefits, as well. Approximately 621,000 military veterans received Social Security disability benefits in 2016, according to the Social Security Administration.
Like all Americans, veterans can start receiving benefits at age 62. But the earlier you start getting them, the more the monthly amount is reduced. If you can wait until full retirement age, which changes depending on the year you were born, you can receive full benefits and income.
Former service men and women can qualify for additional benefits. The SSA evaluates military records when claimants apply for benefits, and qualifying veterans can get a lifetime earnings credit for wages during service. Eligibility is based on length of service.
A veteran’s best strategy for a financially healthy retirement includes double-dipping, which means collecting veterans retirement benefits while still working full-time (or as a contractor) in the private sector. Critics of this practice argue that veterans are compensated enough without income from a second (or third) job, either in a civilian or government position.
Others see the ability to earn extra income as a benefit of the hard years of service. Although the law generally prohibits drawing two salaries from the federal government, military retirees are exempt. People on terminal military leave may work as civilian federal government employees, collecting both their military pay and their salary in their new government job.
The Government Accountability Office reports that in 2014 nearly 60,000 disabled veterans received cash benefits from three federal programs simultaneously. Some received up to $200,000 in benefits from federal salaries, military pensions, disability income and Social Security payments.
It’s legal to access benefits on multiple fronts like this, but this may eventually put a strain on disability programs and other government benefits.