Close-up photo veteran in a wheelchair.

Federal law is pretty clear – a military disability retirement (also known as a “Chapter 61” retirement) is not divisible property in a divorce, with a limited exception to the extent that the longevity method results in a higher payout than the percentage of disability method. See our article on Chapter 61 retirement in a divorce in the Military Divorce Guide for more details).

By contrast, a regular military retirement (i.e. a “20-year” retirement) is divisible in a divorce. We have a whole military retirement section in the Military Divorce Guide explaining the law and how military retirements are divided.

And a military retiree who receives disability payments from the Veterans Administration is required to waive military retired pay, dollar for dollar, in return for the disability benefits. However, for members with a VA disability rating of at least 50% and at least 20 years of service, there is effectively no waiver, thanks to “Concurrent Retirement and Disability Pay”, or CRDP, restoring the retirement lost to a VA waiver. For more information, see our VA disability article in the Military Divorce Guide.

CRDP is not a separate payment, but is instead included in the gross military retirement payment – not even as a line item, just with a note in the comments section of a military Retiree Account Statement indicating how much of the gross retired pay was Concurrent Retirement and Disability pay. In other words, CRDP is effectively little more than an accounting mechanism used to restore the amount otherwise lost to a VA waiver.

Here’s a sample of the language from the bottom of a Retiree Account Statement.

Military Disability Retirement & CRDPMilitary Disability Retirement & CRDP
Retiree Account Statement Showing CRDP Amount.

These concepts intersected recently in a case before the Department of Defense Claims Appeals Board, Redacted (not a helpful name, I realize, but at least the claims case number is in the hyperlinked decision).

DFAS Rejected Application for Share of CRDP

In the Redacted case, there was no dispute that the VA disability payments received by the member were not divisible in the divorce, nor were the Chapter 61 payments themselves. At issue, however, was the CRDP, which reimbursed the member for his Chapter 61 disability retired pay which would otherwise be waived by receiving the VA disability.

The relevant facts and procedural history are as follows:

  • Upon divorce in 2011, the wife was awarded a share of the member’s military retirement.
  • In 2014, the husband received a military disability retirement after 23 years of service. He had a 100% VA disability rating, so elected the percentage of disability method, which paid him his percentage of disability (up to a maximum 75%) times his high-36 months of pay.
  • Shortly thereafter, the wife applied to the Defense Finance & Accounting Service (DFAS) for her share of the retirement, but was denied on the grounds that the husband was receiving a Chapter 61 disability retirement, so there was no disposable retired pay to divide.
  • The husband applied for VA disability payments, and received disability benefits based upon his 100% disability rating.
  • DFAS then determined that the husband was entitled to CRDP to make up for the waived retired pay.
  • In 2016, the wife resubmitted her application for a share of the retirement, and was again rejected by DFAS on the grounds that while CRDP is generally divisible in a divorce, that’s only for regular retirements, not when the retiree has a Chapter 61 military disability retirement.
  • The wife appealed to the Defense Office of Hearings and Appeals, which overruled DFAS and allowed her claim. DFAS then requested reconsideration.

DFAS has long held the position that since a Chapter 61 disability retirement cannot be divided in a divorce, neither can the CRDP received by a disability retiree, as CRDP is simply restoring the same non-divisible payments which would otherwise be reduced by a VA waiver. And a change to that interpretation would require Congressional action.

CRDP Payments Are Regular Retirement, Not Disability Retirement

The Claims Appeals Board issued a reconsideration decision upholding the decision that CRDP payments are divisible retirement, and not treated as Chapter 61 disability retirement benefits:

“As a restoration of retired pay, CRDP is considered disposable retired pay under 10 U.S.C. § 1408, the USFSPA, and subject to the laws and regulations governing military retired pay The express language contained in the CRDP statute specifically includes members who are retired under Chapter 61 with 20 years or more of service and defines the amount of CRDP they are entitled to receive as the amount of retired pay to which they would be entitled if they had not retired for disability. Therefore, a member retired under Chapter 61, with more than 20 years of service, is no longer receiving Chapter 61 retired pay as calculated under 10 U.S.C. § 1201(b)(3); but is being paid CRDP based upon the principles and calculations under 10 U.S.C. § 1414. Thus, the exception to disposable retired pay contained in 10 U.S.C. § 1408(a)(4)(A0(iii) does not apply.”

Redacted. (Cleaned Up) (Emphasis added).

In short, a Chapter 61 disability retirement is not divisible. But when the member is also receiving VA disability payments, if CRDP restores the retirement payments lost to a waiver, the CRDP is treated as regular divisible retirement, and not as indivisible disability retirement.

As the CRDP payment is often less than the full disability retirement, this does not make a spouse completely whole, but it does provide some funds which would otherwise not be divisible. Here’s a hypothetical to show how this works:

  • Former spouse awarded a 40% share of the retirement.
  • Military member with 20+ years of service receives Chapter 61 retirement of $4000/mo – this is not divisible.
  • Member has a VA disability rating of 50% or higher, receiving $1400/mo – this is not divisible.
  • Member must waive $1400 retirement to receive the $1400 VA disability.
  • Member receives $1400 CRDP to compensate for the VA waiver – this is divisible under this claims appeals board decision.
  • Ultimately, the former spouse receives $560/mo (40% x $1400 CRDP), still less than the $1600 (40% x $4000) she would have received if the full retirement were divisible.

Note that in the above hypothetical, by bumping the member’s disability rating up to 100% with $3700/mo of disability payments, then virtually the entire retirement (the $3700 CRDP amount out of the $4000/mo total payment) would be divisible, with only the $300 remaining not divisible by the courts.

The Future of Disability Retirements in a Divorce

The takeaway? First, we should note that this decision is binding only on the specific litigants involved in the case, so it is not a court decision that would be binding on all Chapter 61 retirees in a divorce.

If this decision is the final word, and DFAS applies it beyond the specific parties at issue, it has major implications, as it applies to a broad category of retirees who meet the following criteria:

  • Is receiving a chapter 61 disability retirement
  • Has 20+ years of service (otherwise there is no CRDP, and the VA waiver is in effect)
  • Has a VA disability rating of 50% or higher (otherwise there is no CRDP, and the VA waiver is in effect)
  • Is not qualified for Combat-Related Special Compensation (which is mutually-exclusive from CRDP)

While a military member with a disability rating of 30-40% who is unfit for duty could receive a Chapter 61 retirement but not receive CRDP payments since the VA waiver would still be in effect, those cases are truly few and far between. So pretty much any divorce case where there is a Chapter 61 retirement for a non-combat-related disability will now result in at least some of the retirement payments being divisible.

Thanks to military family law guru Mark Sullivan for bringing this case to my attention. His helpful write-up described this decision as a “Sea Change” for CRDP vs military disability retirement. I think that may be an understatement.

Finally, note that the title of this post is not, literally, accurate. The Redacted decision does not formally divide military disability retired pay. Dividing CRDP is effectively a backdoor way of partially dividing Chapter 61 disability payments, and to members affected, the distinction between CRCP and disability retirement payments will appear to be a very technical one indeed.

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