One question often arising when I’m assisting a retired military veteran with mesothelioma or asbestos lung cancer is whether their military retirement pay will be decreased by the amount they receive in VA Disability Compensation (VADC).

As is the case with most things related to the VA, the answer is … it depends.

What it depends on is what disability rating the VA assigns you. In a nutshell, it boils down to whether you receive a 50% disability rating or higher. If you receive a 50% rating or higher, then your retirement pay will not be affected.  If you receive a 40% rating or lower, it will be affected.

If that’s all you needed to know, you can stop reading here. However, if you’d like a more in depth explanation, keep reading.


How VA Disability Compensation Can Reduce Retirement Pay

Before January 2004, any military retiree receiving VA Disability Compensation had their retirement pay reduced by the amount of their monthly VA disability pay. In effect, this means military retirees were forced to fund their own VA disability pay – paid out of their retirement pay.

For example, let’s say a retiree receives $1,500 per month from DFAS in retirement pay. That veteran then receives a disability rating resulting in $500 per month from the VA. In this case, DFAS will reduce the veteran’s retirement pay by $500 per month. The veteran is now receiving $1,000 from DFAS and $500 from the VA each month. So they don’t really receive any substantial additional monthly payment from VA Disability Compensation in the end.

Why would a veteran in this case even bother to file for VADC? The answer is because the VA pay is nontaxable, whereas their retirement pay is. So, this vet would get a tax break as they would only be paying taxes on the $1,000 they are now receiving from DFAS each month.  

“Big whoop!” said one very salty retired Master Chief Machinist Mate. “That ain’t much.” In his case, he was awarded a 30% rating by the VA, which equates (as of 2023) to $568.05 per month.

In response, I ran the numbers for him and told him that means he will no longer have to pay taxes on $6,816 next year. Given he is in the 22% tax bracket, I told him, “That means you’re going to pay $1,500 less in federal taxes next year, Master Chief.”

“So you’re telling me that I’m supposed to get $568 a month more than I get now, but I’m only going to get the equivalent of $125 per month as a tax break?”

“Well, technically, yeah,” I replied. “But as my mom used to say, ‘It’s better than a sharp stick in the eye.’”

He was only mildly amused.  


Changes to VA Disability Compensation Rules Relating to Retirement

This changed on January 1, 2004, when Concurrent Retirement & Disability Pay (CRDP) was enacted. CRDP restored military retiree’s retirement pay while concurrently receiving their VA Disability Compensation. However, it only did so for military retirees with a 50% disability rating or higher.

Therefore, military retirees who receive a 40% disability rating or lower still have the amount of their VA disability pay subtracted from their monthly retirement check, which is the situation the Master Chief is in.

As far as asbestos-related VA claims are concerned, the VA is only allowed to award veterans a 100% rating for service-connected mesothelioma or lung cancer. Therefore, there is no DFAS offset for these veterans, and they are entitled to CRDP.

However, non-malignant asbestos diseases, such as the Master Chief’s, do not necessarily garner a 100% rating and can be rated anywhere from 0% disabling to 100% disabling. As such, military retirees with service-connected asbestosis, pleural plaque, or pleural effusions may be awarded VA disability ratings less than 50% and still be subject to the DFAS offset of their retirement pay. 

The good news is there have been several proposed bills in U.S. Congress to make CRDP available to all military retirees, regardless of their disability rating. These include H.R. 303, which is the “Retired Pay Restoration Act” sponsored by Rep. Gus Bilirakis (R-FL-12) and its Senate companion S. 1147 introduced by Sen. John Tester and Sen. Lisa Murkowski.  The bad news is neither of these has passed – yet. However, it is encouraging to see this issue is at least on legislators’ collective radar and is something our lawmakers know needs to be rectified.

I’m still hopeful we will soon see CRDP eligibility expanded to all military retirees, regardless of their disability rating, but only time will tell.  

For questions about CRDP or any other VA related question, you can contact me, Carl Jewett, directly at 844-838-6376 or by email at

    Sources & Author

Picture of Retired LCDR Carl Jewett, VA Claims Agent

About the Writer, Retired LCDR Carl Jewett, VA Claims Agent

LCDR Carl Jewett is a retired Naval Officer who serves as the Veterans Department Director and Patient Services Director at Mesothelioma Guide. He is a VA-Accredited Claims Agent with more than 14 years of experience filing asbestos-related VA claims. He has helped over 1400 veterans who have been diagnosed with asbestos-related illnesses get approved for VA Disability Compensation, VA Pension, and/or Aid & Attendance benefits. Because veteran’s are also entitled to compensation through the legal system, Carl has communicated with many mesothelioma law firms across the country. He has gained extensive knowledge of asbestos trust funds, mesothelioma lawsuits, settlements, and the claims process. He provides both veterans and civilians with information regarding their legal options.