Money Matters
Common topics/questions around VA money matters.
IMPORTANT NOTES:
Your VA education and VA disability benefits CAN be paid into different accounts. Further, the VA does NOT share banking information internally - meaning you MUST inform the VA where you want your money to go for BOTH benefits! Failure to do so will result in you getting paper checks.
This article is limited in scope and is specifically about monies paid directly to the Veteran/dependent AND monies that are paid to or withheld by the Department of Veteran Affairs.
VA Disability
The main source of money from the VA to Veterans.
IMPORTANT NOTES:
VA disability is paid in arrears. Translated - your bank pays you at the end of the month and NOT at the first of the month!
Example: Januaries disability payment is paid at the end of January.
If your claim was decided mid-month; that month may not be processed in time. Resulting to that month having to be paid out later as back pay.
If a end of a month lands on a weekend. Your bank should pay you no later than the Friday going into that weekend. Of course, your bank may clear things sooner.
You CANNOT be paid by the military/DoD and VA at the same time! Unless you are a retiree who served at least 20 years AND have at least a 50% Combined VA rating.
If you are a civilian working for DoD you CAN receive your VA and civilian pay.
If you are return to active duty - your VA pay will be put on pause.
If you are National Guard or a Reservist - you will need to elect which pay you want to keep!
If your increase claim was decided around the 20th of the month, your increase pay will likely NOT show up in that month's payment as that month's payment may have already been set to the US Treasury. This 'missed' payment will be paid out as back pay which may result in you getting two separate back payment amounts.
Pay Tables
Special Monthly Compensation (SMC)
For information on what SMC is, click HERE.
Back Pay
When the VA finally decides your claim. You may be owed back pay.
IMPORTANT NOTES:
VA disability NEVER prorates! It does not matter, if your Effective date is the first or the last of the month - that ENTIRE month is not paid out!
Once a claim has been decided and closed out, it can take as short as a couple of days or up to two weeks before the money arrives in your account.
However, if you or your claim fall into one of the following situations your back pay may take upward of a month due to requiring additional verification and auditing:
Your back pay is greater than $9,999;
You are a DoD retiree; and/or
You received Separation/severance pay.
Adding VA Disability Pay Dates to your Google/Outlook Calendar
To learn how to add VA Disability Pay Dates to your Google/Outlook Calendar click HERE.
VA Pension
For Veterans who are unable to qualify for VA disability compensation or whose monetary benefit is greater via pension.
Pay Tables
Education Benefits (GI Bills and VR&E)
Housing Benefits are paid directly to the person who is claiming the benefit
IMPORTANT NOTES:
You CANNOT get housing allowance while you are still Active Duty!
The VA DOES prorate your housing allowance!
In order to get the Monthly Housing Allowance (MHA) you must be enrolled OVER HALF TIME! Those who are enrolled half time or less will NOT GET ANY MHA!
MHA is prorated on a 30 day calendar. No matter how many days are actually in the month. So if a course started on Feb 21, you would be paid 9/30 the normal MHA amount for the month of Feb.
Those who have courses that start/stop on different dates may have their amount of MHA reduced, if they fall below full time status.
Dependent/Survivor Benefits
Money paid directly to dependents
Pay Tables
Current Chapter 35 (DEA) rates.
Current Dependency and Indemnity rates.
Current Survivor pension rates.
Debts
When you owe the VA money!
IMPORTANT NOTE:
Administrative errors occur when VBA creates an overpayment due to mistakes in judgment or not applying laws properly. Veterans are NOT generally responsible for repaying overpayments that are found to be the result of administrative errors!
However, mistakes are generally NOT considered to be administrative errors if veterans are at fault because they took or failed to take an action, committed fraud with the intent of achieving financial or personal gain, or knew or should have reasonably known they were not entitled to the erroneous benefit.
Handling Debt
Once the VA has identified that you owe a debt you will be sent a letter from the VA's Debt Management Center (DMC) informing you:
How much you owe;
When your first benefit check will be withheld/reduce, if you do you do not pay; and
Your options going forward.
You have three options to handle debt:
Pay the debt;
In full; or via a
Payment plan.
Submit a compromise offer; or
Request a waiver
Paying the Debt/Payment Plans
There was three different ways to pay the debt:
Phone: 1-800-827-0648 (or 1-612-713-6415 from overseas). Monday through Friday, 7:30 a.m. to 7:00 p.m. ET. If you have hearing loss, call TTY: 711.
Online through Ask VA.
Snail mail:
U.S. Department of Veterans Affairs Debt Management Center P.O. Box 11930 St. Paul, MN 55111
If you are unable to pay in full you CAN request a payment plan! To set up a payment plan you may contact the VA via any of the previous three methods above.
You can have an amount taken from your VA payments or pay the VA directly.
IMPORTANT NOTE:
If your payment plan would take more than 5 years then you must additionally complete and submit a VA Form 5655.
Submitting a Compromise Offer
When you think a lesser amount is fair AND you are able to pay it all at once.
Contact the VA via one of the above options;
Complete and submit a VA Form 5655; and
A statement about your hardship.
IMPORTANT NOTE:
If the VA accepts your offer you have 30 days to submit the FULL payment!
Requesting a Waiver
If having your benefits withheld/reduced would cause undue hardship you can request a waiver of the debt.
While you do have up to 180 days to request a waiver you should do so IMMEDIATELY!
To request a waiver:
Contact the VA via one of the above options;
Complete and submit a VA Form 5655; and
A statement about your hardship.
After you have requested a waiver one of three things will occur:
VA will forgive the entire debt;
VA will forgive some of the debt; or
VA will forgive NONE of the debt.
Disability
The most common situations a VA disability debt is created are:
If you fail to notify the VA when you lose a Dependent by death or divorce an over payment is created. Once the VA figures out this over payment exists, a debt will be created.
You received pay from DoD due to returning to active duty or by drilling, training, or being activated by the National Guard or Reserves (not retired pay).
If you want to get in front of the situation you can complete and submit a VA Form 21-8951-2.
The VA made a Clear and Unmistakable Error (CUE) in originally granting a claim. This erroneous grant can result in an over payment (debt) being created.
Medical
Depending upon your Combined/Priority group or if your condition(s) are Service-connected. You may owe co-pays for treatment/medications.
Recoupment
When the VA wants to withhold money from you.
IMPORTANT NOTE:
These are not situations of indebtedness. There is no debt as nothing is technically owed to the Department of Veterans Affairs, other agencies, or the federal government. Simply said, VA disability cannot be paid out till the money provided by the DoD has equaled out.
Separation/Severance Pay
For information on this topic click HERE.
Tort Cases (Suing the VA)
If you are awarded a judgment against the United States (VA) in a civil action (Federal Tort Claim) due to the VA causing a disability NO disability benefits will be paid out until the amount paid out to the Veteran via the judgement equals out.
For more information click HERE.
Investing
Generally, there are not any issues with how you invest money you get from the VA. However, there is a limitation in terms of ROTH IRAs.
Limitation
Money obtained from the VA be it via disability or education CANNOT be used to fund ROTH IRAs. UNLESS, you have taxable income from other sources. In which cases, you may contribute up to the amount of your taxable income OR whatever the contribution cap is for a ROTH IRA for the year - whichever is LOWER.
Living Abroad
Living overseas will generally not impact your ability to continue to receive monetary benefits from the VA.
However, in the following cases the U.S. Treasury is permitted to stop sending payments:
The banking system in your country is unreliable and may result in the you never receiving payment; or
You are living in a country identified as a State sponsor of terrorism
IMPORTANT NOTE:
Your payments will be made in U.S. dollars, NOT local currency.
Frequently Asked Questions
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Check your Payment history on va.gov. It will plainly say which agency the money came from. Generally speaking, unexpected money is back pay from a positive outcome on a claim or an audit found that you were underpaid - such as never being paid your book stipend or it being paid incorrectly.
References
31 U.S. Code § 3329 - Withholding checks to be sent to foreign countries
38 U.S. Code § 5112 - Effective dates of reductions and discontinuances
38 U.S. Code § 5304(c) - Prohibition against duplication of benefits
M21-1, Part VI, Subpart iii, Chapter 2, Section C - Debt Collection
M21-1, Part X, Subpart ii, Chapter 6, Section E - Authorizing Awards for Fiduciary Cases