Veterans face challenges long after they have finished their service. The ordeals become far worse especially when it comes to claiming their benefits from the government. Therefore, it is not surprising to understand why a war veteran would be quite overwhelmed to find a deposit of $60,434.35 by the VA. But this brings up the question: “Is this normal?”
In case you are a veteran and are asking yourself such questions pertaining to how usual such a payout is, then you are not alone. Most veterans have similar questions. Here is what you need to know and the possible reason behind such a large amount of payment, and what to expect if you find yourself in such a situation.
What is VA retroactive pay?
According to the Veterans Affairs Department (VA), retroactive payments are payments for the time between when we processed your intent to file – that is, the moment you started your application process, and when the VA approved your claim. So basically, is the payment you receive from the VA when there has been a delay in receiving your correct disability compensation. This could be due to several reasons like the duration it takes to process your claim, a disability rating increase, or filing for a new claim being processed. The key point is that retroactive pay covers the time when a veteran was disabled but not yet receiving benefits for it.
In this case, a veteran receiving $60,434.35 might have had their disability rating adjusted, or they may have won an appeal for a claim that had previously been denied. The lump sum reflects the benefits they should have received during the period their claim was pending.
Why was the payment so large?
The size of a retroactive payment depends on various factors, including the length of time the VA took to process the claim, the veteran’s disability rating, and any changes to the veteran’s dependent status during that time. The larger the gap between the effective date (the date the VA recognizes the veteran was eligible for benefits) and the date the claim was approved, the bigger the payment will be.
For example, a veteran who filed a claim 10 years ago and only recently had it approved would be owed for all those missed months of benefits. That payment could also increase if the veteran’s disability rating changed during that time. The VA pays retroactive benefits according to the pay rates from the years the veteran was owed, not just the current rate, so inflation and cost-of-living adjustments over the years are also factored into the total amount.
How does the VA calculate back pay?
The VA uses a simple calculation for determining retroactive benefits. First, they establish the effective date of the veteran’s claim. For most veterans, this is the date the VA received their claim. However, it could also be the date of a medical diagnosis or an appeal decision if the claim had been delayed.
Then, the VA multiplies the number of months between the effective date and the current approval date by the monthly compensation the veteran would have received during that period. These rates can vary depending on the severity of the disability and whether the veteran had dependents during that time. Calculate your payback amount here.
For instance, a veteran rated 70% disabled in 2014 but not paid until 2024 would receive back pay based on the rates for each year from 2014 to 2024, which could lead to a sizable amount like the $60,434.35 in this veteran’s case.
Is this payment taxable?
According to the VA, your disability back pay is entirely tax-free. This applies to both the monthly payments and any retroactive sums. Veterans receive these benefits as part of the government’s promise to care for those who served, especially if they have incurred disabilities related to their military service. So, if you have received a lump sum like this, rest assured that it will not affect your tax liability.
What should you do after receiving retroactive VA pay?
If you’ve received a large sum like $60,434.35 in retroactive pay, it’s important to double-check that everything is correct. Here’s a quick checklist to follow:
- Verify the details: Check your VA decision letter or log in to your VA account to ensure the payment matches what the VA has documented for you.
- Consult with a VA benefits specialist: If you have any questions or doubts, reach out to a veteran service organization (VSO) or legal representative who specializes in VA claims.
- Plan how to use the funds: It’s tempting to celebrate, but these funds are meant to compensate for lost time. Consider using them for any overdue bills or medical care that may have been delayed while awaiting your benefits.
Common reasons for VA retroactive payments
Veterans receive retroactive payments for various reasons. Here are some of the most common:
- New disability rating: If a veteran files a claim for a new disability or if their existing disability worsens, they may be entitled to a higher rating. Once the VA approves the claim, they will pay for the time between the claim filing and the approval.
- Appeal decisions: If a veteran appeals a denied claim and wins, they can receive back pay for the time they spent waiting for the appeal to be processed.
- Service-connected presumptive conditions: The VA often updates its list of conditions that are presumed to be related to military service. If a veteran has a condition that was not originally recognized but now qualifies, they can receive back pay for the time they were suffering from that condition
RELATED ARTICLES:
- VA Disability chart: What are the current benefits for veterans with a 80% disability rating?
- VA Disability chart: What are the current benefits for veterans with a 100% disability rating?
- VA Disability Claim Status: What are the 5 stages of the VA claim process?
- VA Disability Benefits: What is the difference between 100 VA and 100 P&T benefits?
