Current law requires that military retirement pay be reduced (“offset”) by  the amount of VA disability benefits received. Despite the reduction in  military retirement pay, it is often to a retiree’s advantage to receive VA  disability compensation in lieu of military retirement pay. As  such, they are not subject to the offset provisions, and the legislation did  not change the statute that prohibits concurrent receipt. Many Programs Use Offset Provisions When Individuals Are Eligible for Benefits from More than One Program

Among the programs that provide benefits to individuals based on their  previous work experience or their inability to continue working because  of disability, many use offset provisions when an individual qualifies for  benefits under more than one program. The specific rationales for these  offset provisions vary, but they generally focus on restoring equity and  fairness by treating beneficiaries of more than one program in a similar  manner as beneficiaries who qualify for benefits under only one of the  programs. WC  benefits are designed to replace the loss of earnings resulting from work- related illnesses or injuries. Offset provisions are also used by state governments. Modifying the Concurrent Receipt Provisions Has Implications for the VA Disability Compensation Program

In addition to the cost of the benefits, allowing concurrent receipt would  have implications for VA program management. These new claims could further tax VA’s claims  processing system. VA Disability Programs Face Fundamental Problems

While VA has had difficulty making decisions in a timely and consistent  manner, VA’s disability programs also face more fundamental problems. Moreover,  reorientation of the federal disability programs would necessitate the  integration of the many programs and policies affecting people with  disabilities, including those of DOD and VA.
Mr. Chairman, this concludes my prepared remarks. I would be happy to  answer any questions that you or the other Subcommittee members might  have.
Why GAO Did This Study

Because pending legislation would modify current law, which requires that military retirement pay be reduced by the amount of VA disability compensation benefit received, the Subcommittee on Personnel, Senate Committee on Armed Services asked GAO to discuss the treatment of concurrent benefit receipt in other programs. GAO was also asked to discuss its broader work on federal disability programs.

What GAO Found

Three factors are important to weigh in deliberations on the merits of modifying the military offset provision. First, many benefit programs use offset provisions when individuals qualify for benefits from more than one program. Generally, the provisions are designed to treat beneficiaries of multiple programs fairly and equitably in relation to all other program beneficiaries, consistent with the program's purpose. Moreover, eliminating the military retirement offset provision could establish a precedent for other federal benefit programs that could prove costly. Second, the proposed modifications to the concurrent receipt provisions in the military retirement system would have implications not only for the Department of Defense's retirement costs but would also increase the demand placed on the Department of Veterans Affairs' (VA) claim processing system. This would come at a time when the system is still struggling to correct problems with quality assurance and timeliness. Third, such increased demand would come at a time when the VA disability program compensation, along with other federal disability programs, is facing the need for more fundamental reform. Modifying the concurrent receipt provisions adds to the current patchwork of federal disability policies and programs at a time when transformation and modernization are needed. While we are not taking a position on whether military retirement should be modified, as the Congress and other policymakers deliberate this issue, it would be appropriate to consider how modifying the offset would affect the pursuit of more fundamental reforms.