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More on Military Benefits

MILITARY BENEFITS - FORMER SPOUSES
FORMER SPOUSE RETIREMENT BENEFITS
FORMER SPOUSE DISABILITY RETIREMENT BENFITS
FORMER SPOUSE SURVIVOR BENEFITS
FORMER SPOUSE MEDICAL BENEFITS



The Military Retirement System is not a single unit. Rather there are two distinct components to the Military Retirement System.

The first part is for members who are career personnel and is termed: “Regular Component” Retirement System.

The second part is for members who are other than career soldiers and is termed: “Reserve Component” Retirement System.

CAUTION:
The military uses acronyms and terms in a manner unique to them. It is suggested that prior to negotiation and drafting regarding either of these retirement systems the practitioner either become familiar with military retirement terminology or use the services of an attorney familiar with military benefits, DFAS (Defense Finance Accounting Service) and the VA (Veterans Administration).

For Domestic Relations Orders regarding the retirement or survivor benefits of a member, the non-member spouse is not referenced as “Alternate Payee”. The correct term to use for military Orders is: “Former Spouse”.

Q. Is there more than one formula to compute military retirement benefits?
A. Currently there are three formulas:
Old Formula: For soldiers entering service prior to September 8, 1980. The retirement benefit is 50 percent of Final Basic Pay after 20 years of military service with a full post-retirement COLA. If the member serves for thirty years he or she will have reached the maximum benefit of 75% of Final Basic Pay.
High-3 Formula: For soldiers entering service between 8 September 1980 and 31 July 1986. The retirement benefit is 50 percent of Average Basic Pay (3 years) received over the three years when basic pay was highest with a full post-retirement COLA after 20 years. The maximum benefit is 75% of Average Basic Pay (30 years of credited military service).
CSB/REDUX Formula: For soldiers entering subsequent to July 31, 1986 the basic system was called REDUX. CSB means “Career Status Bonus”. This was a significantly reduced form of retirement. It provided 40 percent of average basic pay. Up to age 62 the post-retirement COLA was 1% less than offered by the other plans. The National Defense Authorization Act of 2000 effectively ended REDUX. This Act allows post-August 1, 1986 entrants to retire under the pre-Redux system or opt for Redux plus an immediate $30,000 cash payment. For the great majority of members the pre August 1, 1986 format provides a larger benefit.
Ret.Sys Basis Multiplier COLA Bonus

Final Pay Final Pay 2.5%/yr up CPI None
to 75%

High 3 Avg. 36 mo. 2.5%/yr up
high pay to 75% CPI None

CSB/REDUX Avg. 36 mo. 2%/yr up to CPI - 1%, $30,000 at
high pay 20yrs. 3.5 adjusted 15th yr, but member
thereafter to at age 62 commits to
75% serve 20 yrs.
Practice Pointer: Although the High-3 Formula was initially for members who entered service between the above indicated dates, subsequent legislation in an attempt to “equalize” formulas gave post 31 July 1986 members an option to elect the High-3 formula.
Q. Regarding military divorce what piece of legislation most relevant?

A. Uniformed Services Former Spouses Protection Act (USFSPA).

Q. What is the Uniformed Services Former Spouses Protection Act?

A. This was the remedial response of Congress to the U.S. Supreme Court’s decision in McCarty v. McCarty, 453 U.S. 210. You may begin your investigation of this Act at 10 U.S.C.A. 1408.

Q. Does a State Court of Competent Jurisdiction have the right in an Equitable Distribution or Division of Community Property action to divide the member’s retired pay?

A. Yes, provided this action relates to pay periods beginning after June 25, 1981. However, this is not a broad grant of power to state family courts. There are many limitations spread throughout this title. See for example 10 U.S.C.A. 1408, 1447, 1448,1450.

Prior to discussion and analysis of the significance of the term “disposable retired pay we define the term;

“Disposable Retired Pay”

"disposable retired pay", the total monthly retired pay to which a member is entitled less amounts which:

(A) are owed by that member to the United States for previous overpayments of retired pay and for recoupments required by law resulting from entitlement to retired pay;

(B) are deducted from the retired pay of such member as a result of forfeitures of retired pay ordered by a court-martial or as a result of a waiver of retired pay required by law in order to receive compensation under title 5 or title 38 (either a Civil Service or Veteran’s Retirement Benefit.

(C) regularly required withholdings for federal income tax purposes

(D) in the case of a member entitled to disability retired pay a dollar for dollar offset of regular retired pay (this exclusion will lose significance as a result of the National Defense Authorization Act’s treatment of Concurrent Benefits, discussed below).

Practice Pointer:
Regarding “C” above: If retired military personnel request additional income tax withholdings beyond regularly required withholdings in computation of net or "disposable" military retired pay subject to apportionment, the member is required to present factual evidence demonstrating existence of tax burden justifying additional withholding. Of interest to the attorney representing a Former Spouse is the fact that no additional tax withholding may be allowed in computation of disposable retired pay in a case of a retired member who gives only rough estimate or opinion of projected tax obligations and presents no financial record as evidence in support of estimate. Nevertheless, it is not uncommon for a retiree to seek post-military employment. The reasonableness of increased withholding is a subjective decision. If the attorney representing a Former Spouse has reason to believe this additional withholding is possible additional language is suggested for the Property Settlement Agreement in order to avoid excessive diminution of the retirement benefit otherwise payable to the Former Spouse.

Q. When the assignment of “net disposable pay” is “Incident to Divorce”, what are the specific statutory criteria for such division by a court of competent jurisdiction?

A.
1. either as property solely of the member or as property of the member and his spouse in accordance with the law of the jurisdiction of the court

2. for the payment of child support (more on this below)

3. for the payment of alimony (more on this below)

Q. Regarding payments to a Former Spouse that are attributable to a property division are there requirements as to the format of such assignment?

A. Yes. In the case of a division of property, the award to an Former Spouse should be expressed in dollars as a finite amount or as a percentage of disposable retired pay, from the disposable retired pay of a member. When the percentage method is used the format will be either “Coverture Fraction” or “Time Line”. These are two terms that are interchangeable.

Q. Does USFSPA permit a court to create any right, title, or interest which can be sold, assigned, transferred, or otherwise disposed of (including by inheritance) by a spouse or former spouse.

A. No.

Q. May a court mandate the immediate retirement of a member or require him or her to retire at a particular time in order to effectuate any payments made pursuant to the USFSPA?

A. The USFSPA does not authorize any court to order a member to apply for retirement or retire at a particular time in order to effectuate any form of payment to a Former Spouse.

Q. What USFSPA jurisdictional criteria must be met before a court may assign a portion of the member’s disposable retired pay to a Former Spouse?

A. A state court may not assign a portion of the net disposable retired pay of a member unless the court has jurisdiction over the member by reason of:

1. his or her residence (other than because of military assignment, in the territorial jurisdiction of the court)

2. his or her domicile in the territorial jurisdiction of the court

3. his or her consent to the jurisdiction of the court.

Q. Does 10 U.S.C.A. 1408(b)(2) bar pension payments to a Former Spouse incident to divorce who fails to meet the “10-10” rule?

A. No. That said the practitioner must be mindful of the military’s “10-10” rule. This rule provides that pension payments will not be paid to a Former Spouse directly from the military (DFAS) if the Former Spouse was not married to the member for a period of 10 years or more during which the member performed at least 10 years of service creditable in determining the member's eligibility for retired pay. Absent meeting the 10-10 rule a Former Spouse may still be eligible for and receive military retirement pay. The difference is for those Former Spouse’s who do not meet this rule the payments will not come directly from DFAS, rather they will be paid to the Former Spouse directly by the member.
Practice Pointer:
Absent meeting the “10-10” criteria reliance on the member to make payments pursuant to a property settlement, alimony agreement or child support may be a cause for concern. Should occasional, periodic or full default occur the Former Spouse is not without recourse. Central to the cost and effectiveness of the remedy is the content of the Property Settlement Agreement. Troyan, Inc. has a number of provisions that may be added to your Property Settlement Agreement to facilitate prompt remediation of such default(s).

Q. What is the maximum amount of disposable retired pay that is subject to assignment pursuant to USFSPA?

A. The amount of the disposable retired pay of a member payable under all court orders pursuant to USFSPA may not exceed 50 percent of such member’s disposable retired pay.
Practice Pointer:
The above referenced limitation is not the total limit. Rather it is the limit pursuant to the USFSPA. The 50% limitation is revised upward when support (alimony or child support) is an element of the case, there has been default and a garnishment or equivalent action has been instituted. The practitioner should be clear that although awards for Alimony and Child Support are permitted under the USFSPA that does not increase the 50% limit. Thus awards incident to divorce of alimony and or child support do not change the USFSPA limit as it relates to Equitable Distribution or Community Property. Rather the USFSPA recognizes other potential obligations of the member at 10 U.S.C.A. 1408(e)(4)(B).
Caution: the reference at 1408(e)(4)(B) to 42 U.S.C. 662 is dated. Reference instead 42 U.S.C.A. 659.
It is this recognition that raises to 65% the amount of net disposable pay subject to Court Orders. The increased limit is thus attributable to two sources:

1.Equitable Distribution or the division of Community Property
2.A garnishment or equivalent action.
Troyan, Inc. has found this adjustable limit a useful tool to remedy alimony and child support arrearages. Note that even when the Coverture Fraction or Time Line method of allocation is employed it is unlikely that the full 50% limitation will be reached in the initial settlement. Thus, we suggest consideration of supplemental Orders against net disposable pay prior to institution of a garnishment proceeding. This format has several advantages. Again, expert drafting of the Property Settlement Agreement is essential for the implementation of these remedies. For example, the thoughtful practitioner will insert legal fees and other remedial costs into the Property Settlement Agreement to avoid further burdening a Former Spouse already subject to unanticipated income limitations.
FORMER SPOUSE SURVIVOR ANNUITY BENEFITS

ALERT:
Regarding survivor annuity benefits it is essential that the practitioner be clear on the following:
ELECTION OF SURVIVOR ANNUITY COVERAGE FOR A FORMER SPOUSE PRECLUDES SURVIVOR COVERAGE OF ANY NEW OR CURRENT SPOUSE AND/OR CHILDREN OF THE CURRENT SPOUSE.

Q. Are survivor annuity payments to a Former Spouse subject to federal income taxes.

A. Yes. A Former Spouse survivor annuity is taxable. The Internal Revenue Code requires that income taxes be withheld, unless an annuitant elects no tax withholding on a Treasury Department (TD) Form W-4P, Withholding Certificate for Pension or Annuity Payments. The amount of taxes withheld will be computed as if the annuitant is a married person claiming three exemptions (unless the annuitant makes a different election). The amount of taxes withheld may be changed at any time by completing a TD Form W-4P, which may be obtained from the Post Office, the IRS, by contacting DFAS in writing or by calling a toll free number. The practitioner should alert the Former Spouse that the Defense Finance and Accounting Service will mail to Former Spouse annuitants a TD Form 1099-R, Distributions from Annuities, at the end of each year. This is for Federal income tax reporting purposes. At this time State income taxes are not withheld from an annuity.

ALERT: CHANGE IN LAW!
Under prior law a Former Spouse’s survivor annuity was reduced when a Former Spouse attained age 62 and became eligible for Social Security. This was called a “Social Security Offset”. Under prior law this offset reduced the Former Spouse’s annuity payment to 35 percent of the base amount elected by the member. As a result of this offset the Former Spouse’s survivor annuity was significantly reduced upon his or her attaining age 62 unless the attorney representing this Former Spouse required the member to purchase a Supplemental Survivor Benefit Plan (SSBP) policy. This is costly! Unlike the SBP the SSBP is not a subsidized benefit and the costs of the SSBP were comparable to private insurance rates. This automatic reduction due to a “Social Security Offset” has changed as a result of the National Defense Authorization Act of 2005. This Act phases out the reductions to a Former Spouse annuity beginning at age 62. Thus, the need for an SSBP policy has been eliminated. The phase out reduces the Offset in phases as follows:
40 percent in October 2005 (15% Offset)
45 percent in April 2006 (10% Offset)
50 percent in April 2007 (5% Offset)
55 percent in April 2008 (0% Offset)

Practice Pointer::
It is essential that both parties are clear on these changes and their significance. Make clear how the phase in is to be treated in any military order you prepare. If this is not covered or your language is other than clear one of the parties to the agreement will be damaged. At this time there are no regulations covering how DFAS will treat this phase in.
Practice Pointer:
For whatever reason some confusion continues to exist as to which spouse determines the reduction of the survivor annuity. The controlling law is found at 10 U.S.C.A. 1451(a). It is the Former Spouse’s age that determines the offsets that continue until April 2008.

Q. When does a Former Spouse begin receiving his or her monthly SBP annuity?

A. If the administrative aspects are handled properly by DFAS and the potential SBP annuitant, the annuity will begin about 45-60 days after the death of the retired member.

Q. What is the minimum amount of retired pay a practitioner can elect for a Former Spouse? Recall the maximum monthly Former Spouse survivor annuity will be 55% of whatever base amount is selected and the minimum monthly Former Spouse survivor annuity is $165.00.
Explanation of how a Former Spouse Survivor Annuity is Computed:
Illustration #1.
Assume the member’s monthly retired (base pay) is $2,500.00. If the member elects or is required to elect a maximum Former Spouse survivor annuity the calculation is as follows:
$2,500.00 multiplied by 55% = $1,375.00
Thus, for a member with a retired base pay of $2,500.00 the maximum Former Spouse Survivor Annuity would be $1,375.00.

Illustration # 2
What is the minimum Former Spouse Survivor Annuity?
The minimum amount of monthly base pay that can be elected to provide a Former Spouse Survivor Annuity is currently $300.00.
Thus, the minimum annuity would be computed as follows:
$300.00 multiplied by 55% = $165.00.

Practice Pointer:
Be clear that the multiplier will always be 55%. The parties determine the amount of any Former Spouse Survivor Annuity by selecting the base pay to be multiplied by 55%. However, there are cases in which the parties would like to select a specific amount of Former Spouse Survivor Annuity. This is easily accomplished. Here is how to make the calculation:
Assume the parties agree that the Former Spouse should have a Former Spouse Survivor Annuity in the monthly amount of $450.00. To compute the amount of base pay required for this simply divide the desired annuity by .55. For example:

Desired monthly Former Spouse Survivor Annuity $450.00.
So: $450.00 divided by 55% = $818.18. If the member’s retired pay is equal to or greater than $818.18 the desired annuity can be provided.

Example #2
Desired monthly Former Spouse Survivor Annuity $935.00.
So: $935.00 divided by 55% = $1,700.00. If the member’s retired pay is equal to or greater than $1,700.00, the desired annuity can be provided.

Practice Aid:
Recognize the impact of using a specific monthly benefit as in our examples above. The attorney representing the Former Spouse must be aware of the fact that insertion of a specific monthly benefit in the Domestic Relations Order results in denial of post-retirement COLA increases to said Former Spouse’s monthly benefit. This denial of post-retirement COLA to a Former Spouse will impact on two benefits:
The retirement annuity paid to a Former Spouse over the retired life of the member.
Any Former Spouse survivor annuity (this benefit is also annually adjusted for COLA).
Clearly the attorney representing the Former Spouse should press for a formula award to the Former Spouse. Conversely, the attorney representing the member will press for a fixed monthly award the Former Spouse.

Q. What is the maximum Former Spouse survivor annuity?
A. 55% of the member’s gross retired pay.

Q. If the member has survivor spouse coverage, then retires and subsequent to retirement divorces what is the status of the survivor annuity coverage for your now Former Spouse?

A. If the member has spouse coverage and then divorces and wishes to continue SBP for what is now a former spouse, he or she must convert the SBP election from spouse coverage to former spouse coverage within one year of the divorce decree.

Q. How is the conversion from spouse to Former Spouse coverage effected?

A. Since this SBP conversion is incident to divorce it will be an “involuntary” conversion. To effect this conversion the following action is mandatory within one year of the date of the divorce.

Member
He or she must provide DFAS with a copy of the Final Judgment of Dissolution of Marriage, and
He or she must provide DFAS with a written request to convert SBP coverage.

Former Spouse
He or she must provide DFAS with a copy of the Final Judgment of Dissolution of Marriage, and
He or she must make a written request for a “deemed election” of SBP coverage.

Practice Pointer:
If a member elected spouse coverage (SBP) during the marriage, retires and then divorces the member may not increase the base amount. The SBP may not be greater than the amount elected during the marriage.

Q. Will survivor annuity coverage continue if the member simply continues to pay spouse SBP premiums?

A. No!

Q. When are premiums effective for the Former Spouse SBP coverage?

A. Premiums will be retroactive to the month following the date of the divorce decree, regardless of when the election is actually made.

CAVEAT:
If a member subsequently qualifies for Federal civilian retirement he or she may waive the benefits payable from the military and elect to receive benefits exclusively from Federal Civilian service. The prudent attorney representing a Former Spouse will recognize this hazard and draft to bar loss of entitlement to a Former Spouse. Consult Troyan, Inc. for language on this point.

Q. If a Former Spouse who is receiving an SBP annuity remarries, is the SBP annuity lost forever?

A. No. If remarriage occurs before age 55, the annuity is suspended and can be reinstated if the remarriage ends by death or divorce. If remarriage occurs at age 55 or older, the annuity continues uninterrupted for the duration of the Former Spouse’s life.

Practice Pointer:
Further, at the time of divorce it is suggested that the attorney representing a Former Spouse provide the following instruction to said spouse:
A Former Spouse who is currently receiving a Former Spouse survivor annuity must comply with the CERTIFICATE OF ELIGIBILITY (COE) requirements. A Former Spouse’s failure to comply with the COE requirements will result in loss of entitlement to a Former Spouse survivor annuity. Make clear to your client the Former Spouse that each year he or she will receive a COE. This form is sent to the Former Spouse shortly before his or her birthday. Failure to complete and return the COE promptly to DFAS will result in an interruption of annuity payments and eventual suspension of such payments to the Former Spouse. Advise the Former Spouse of the need to read the instructions on the COE to make sure it has been properly completed. The Former Spouse should return the completed form to:
Defense Finance and Accounting Service
US Military Annuitant Pay
PO Box 7131
London, KY 40742-7131

Q. Can a surviving Former Spouse receive both the uniformed service SBP annuity and a civil service/FERS SBP annuity?

A. Yes, provided the uniformed services member did not waive military retried pay for a combined civil service annuity.

Q. How do I compute SBP costs for a Former Spouse survivor annuity?

A. If the member entered service on or after March 1, 1990, and retires for length of service (not for disability), the cost for Former Spouse-only coverage is 6.5 percent of the amount of base annuity elected. For example assume the base monthly pay to be used to determine the Former Spouse’s annuity is $2,000.00. Thus, the Former Spouse’s survivor annuity would be $2,000 multiplied by 55% or $1,100.00. The monthly cost of this Former Spouse survivor annuity would be $2,000.00 multiplied by 6.5% = $130.00.

Alternate Computation Method.
If the member entered service prior to March 1, 1990 a more complex formula that is revised annually may be applied if it produces a lower cost.

COMMENTARY:
Regardless of the methodology employed to compute the cost of a Former Spouse survivor annuity the attorney representing the respective spouses should be clear on the procedure employed by the military to reflect the cost of any Former Spouse survivor annuity elected. The cost is deducted from the base annuity otherwise payable to the member. For example: Assume the Member’s base monthly retirement annuity $2,400.00. The Former Spouse annuity is $1,320.00. The cost is $2,400.00 x .065 = $156.00. Thus, the actual annuity of the retiree is $2,400.00 less $156.00 = 2,244.00. At this point notwithstanding other valid reductions to net disposable pay the monthly annuity of the retiree is $2,244.00. It is from this figure of $2,244.00 that any award to a Former Spouse that is to be paid over the lifetime of the member is computed.

COMMENTARY:
Regardless of the methodology employed to compute the cost of a Former Spouse survivor annuity the attorney representing the military spouse should consider how this cost is in fact allocated between the spouses. In this process the base annuity is reduced to reflect the cost of the amount of Former Spouse Survivor Annuity elected. Absent other valid deductions this reduced sum will be the member’s net annuity. Thus, the parties proportionately share in the SBP’s cost. However, the attorney representing the Former Spouse should be mindful of Congressional action that becomes effective October 1, 2008. Premium costs for the SBP will end when a retiree is age 70 and has paid into the SBP for 360 months (30 years). However, there is a second feature of this legislation that should be clear to the attorney representing the military member. If a retiree with less than maximum coverage increased the level of his or her coverage during an open enrollment period or after remarriage, the premiums will continue for that portion of the survivor annuity that represents the increased coverage (even after termination of premiums for the original coverage).

Q. Is this premium cost of a Former Spouse survivor annuity fixed at the member’s retirement?

A. No. The member’s retirement annuity is annually adjusted by a post-retirement COLA. Since, the 6.5% is measured against the base annuity and this increases annually in retirement so too does the absolute amount of the annual premium cost.

Q. Are premiums paid for Former Spouse survivor annuities included in the member’s taxable federal income?

A. The member’s monthly SBP costs are not included in his or her taxable Federal income. This is generally true for most state income taxes. However, as covered elsewhere in the text, SBP payments to survivors are taxable income.

Q. Upon the post-retirement divorce of a member will his or her SBP deductions stop?

A. Absent a Final Judgment of Divorce that mandates the continuation of such SBP protection payments end upon divorce. Upon divorce it is suggested that the attorney representing the military spouse advise his or her client to promptly notify DFAS of such divorce at:
Defense Finance and Accounting Service
U. S. Military Retirement Pay
PO Box 7130
London KY 40742-7130

DISABILITY RETIREMENT AND DIVORCE: MAJOR CHANGES

Q. Have there been any major changes in the treatment of a Disability Pension?

A. Yes! These changes will have an immediate and significant impact on members who have retired pursuant to the military’s disability provisions and are receiving their pension benefits pursuant to the Veterans Disability Statutes found at Title 38 U.S.C.A. Let us begin this discussion with the impact of Mansell v. Mansell; 490 U.S. 581, on divorce settlement involving a division of the member’s pension as property. Pursuant to this decision of the U.S. Supreme Court, Military Disability Pensions were not subject to division incident to divorce. Thus, it became possible for a military person to waive his or her regular military pension in favor of a “title 38 Disability Pension”. For each dollar of regular pension waived the member would receive a dollar of exempt (for divorce purposes) disability retirement benefits. The maximum possible waiver was 100%. This has changed as a result of the National Defense Authorization Act of 2005. Beginning in 2005 a member may now concurrently collect both regular retirement benefits and disability retirement benefits. There will be no dollar for dollar offset of regular retirement benefits for Veterans disability benefits. Significantly this change is automatic. For qualifying military retirees there will be an automatic increase in their monthly retirement allowances. The VA disability compensation will automatically be added to the retiree’s regular retirement pay.

Q. What action by Congress may have enabled attorneys representing Former Spouse’s to avoid the obstacles presented by Mansell?

We introduce a new military retirement procedure. This procedure’s official term is: “Concurrent Retirement and Disability Pay” (CRDP)

A. The National Defense Authorization Act of 2005 (P.L. 108-375, October 28, 2004) was the enabling legislation. This Act changed the treatment of disposable retired pay and disability pay. The dollar for dollar offset of disability money for retirement (net disposable pay” is being phased out as “Concurrent Retirement and Disability Pay (CRDP) is phased in. As of January 1, 2005 retiree’s with a 100% VA disability rating will AUTOMATICALLY have their disability compensation added to their “REGULAR RETIREMENT PAY”. Those deemed “unemployable” by the VA also have the phase in of this benefit during the period beginning on January 1, 2004, and ending on September 30, 2009. For those with a VA rating of between 50% and 90% the shift will take place over nine years or until 2014. For those with disability ratings between 50%-90% the phase in is in the form of annually increasing concurrent pay and this phase in will be complete in 2014.

Q. Do all retirees with a VA-rated disability qualify?

A. The law stipulates that retirees must have twenty or more years of active duty (20 years of service for the purposes of computing retired pay). Medical disability retirees with 20 years' or more service are eligible to receive this new compensation. National Guard and Reserves are also eligible if they have completed 20 (or more) good years of service.
Practice Pointer:
There is an interesting gap in this law that should be of interest to attorneys representing a Former Spouse. Some members of the military are eligible for retired pay with only 15-19 years of service (without disability). Such persons are Temporary Early Retirement Authority Retirees (TERA). These individuals would be eligible for Concurrent Receipt of both a length of service pension and a disability benefit. Practitioners are cautioned to ascertain the status of the member to determine if a TERA exception exists.

Q. How will CDRP be paid to the retiree?

A. Veterans Administration disability pay will automatically be added to regular retirement pay.

Q. Is concurrent receipt compensation subject to federal income taxes?

A. Yes. Concurrent Disability and Retirement Pay (CRDP) is not disability pay, it is a reinstatement of retirement pay, since retirement pay is taxed CRDP is also taxed.

Q. If a retiree is eligible for both CDRP and “Combat Related Special Compensation” (CRSC), can he or she collect both?

A. No. The retiree must elect one or the other.

Q. How does this Act impact on prior settlement in which a Former Spouse lost her benefit upon the member’s waiver of retired pay for disability pay?

A. In cases where an Order was filed with DFAS and payments have been halted or were never paid due to the member’s waiver of retired pay for 100% disability pay, the Former Spouse should write or fax a restart of payment request to DFAS-DGG/CL. This fax should include the Former Spouse’s current address and the retiree’s full name and social security number.

Also regarding defaulted Alimony and Child Support under the USFSPA. If DFAS receives a request to restart child support or alimony payments and they have an Order on file they can restart the payments based on that order. However, if the Order was served prior to January 1, 2004, and it was rejected because no funds were available, it will be necessary to re-serve the withholding order to restart the payments.
Practice Pointer:
If it is necessary to “re-serve” the Order be certain that you have a “raised certified copy” as such is defined in your jurisdiction.
Practice Pointer:
Although DFAS will not pay alimony and child support retroactively, this does not mean the accumulate arrearage cannot be recovered. To collect such arrearages an alternate strategy is necessary. The first step in this process is to obtain a withholding order that includes a payment toward the arrearage. For the balance of this process contact Troyan, Inc..
Practice Pointer:
Retirees from the National Guard or the Reserve with VA disability ratings of 50% or better, may qualify for Concurrent Retired and Disability Pay (CRDP). It now appears (not certain at this moment) that any retired reservist or guardsman having "20 Good Years" and who also meets the remaining eligibility requirements is eligible to get their CRDP benefits just like Regular Component members.

Q. What are the differences between CRSC and CRDP?

A.
CRSC is specifically for military retirees with combat related disabilities,
CRSC is NOT subject to either taxation or division with a Former Spouse
CRDP does not require that disabilities be combat related,
CRDP payments are taxable and subject to division of retired pay with a Former Spouse.

Practice Pointer: The reader will observe that this article is silent on Service members' and Veterans' Group Life Insurance. We have not discussed these valuable benefits because:

SGLI and VGLI are federal programs and operate under federal law. Under federal law, the member has the absolute right to name and change the beneficiary at any time. State divorce decrees, separation agreements or other state or municipal court documents are not binding on the determination of a beneficiary and cannot effectively change a member’s beneficiary designation.

Q. What are the eligibility requirements for Former Spouse medical coverage?

A. There are three different criteria that determine the medical coverage available to a Former Spouse;
Full Coverage Requirements:

Married to the service member for at least 20 years
The service member had at least 20 years of service
There is at least a 20 year overlap between the marriage and military service.
Alert: In addition to the medical coverage a Former Spouse who meets the above requirements is entitled to all military benefits and installation privileges. Be clear “all” as used herein does not mean pension and survivor benefits.

Medical Coverage Only:

Married to the service member for at least 20 years
The service member had at least 20 years of service
There is not less than a 15 year overlap between items @1 & 2 above

COBRA Coverage Only:
1. If a Former Spouse does not meet the criteria for either of the above he or she must apply (use form DD 2837) within 60 days of the divorce to qualify for the Continued Health Care Benefit Program. This is an expensive program but has the advantage of accepting pre-existing conditions. The form must be sent along with a check for the first quarter premium (at the time of writing $933.00 for individuals and $1,996.00 for families).

Q. Which component of the armed forces is not covered by the above?

A. Retirement benefits of members of the U.S. Coast Guard are separate from other members of the armed forces. Coast Guard benefits are not covered herein. Nor are Domestic Relations Orders against members of the U.S. Coast Guard sent to the same source as for other members of the armed forces. Orders regarding members of the Coast Guard are sent to:
United States Coast Guard
Commanding Officer (LGL)
Coast Guard Human Resources
Service & Information Center
444 SE Quincy Street,
Topeka, KS 66683-3591

Last revised
1/18/2006 12:14:24 PM