By Yosefi Seltzer
Legal Assistance Attorney
There is a common misconception that surrounds the word “disabled.”
In a legal context, disabled has different definitions depending upon which regulations are being reviewed. The Department of Veterans Affairs explains that:
“Disability compensation is a tax-free monetary benefit paid to veterans with disabilities that are the result of a disease or injury incurred or aggravated during active military service.
“Compensation may also be paid for post-service disabilities that are considered related or secondary to disabilities occurring in service and for disabilities presumed to be related to circumstances of military service, even though they may arise after service.
“Generally, the degrees of disability specified are also designed to compensate for considerable loss of working time from exacerbations or illnesses.”
What is misleading is when someone receives a disability rating from the VA, some observers incorrectly conclude the veteran is unable to work.
Although some disabled veterans have serious medical or psychiatric challenges that prevent them from working, many do have full- or part-time employment. Disability payments from the VA are not taxable and can be paid for partial disability in addition to full disability.
There are other forms of military-related compensation that relate to disabilities incurred during military service. Combat-Related Special Compensation, or CRSC, and Concurrent Retirement Disability Pay, or CRDP, are programs created by Congress to allow eligible military retirees to receive monthly entitlements, in addition to longevity retired pay (20-plus years of creditable military service).
CRSC is a special compensation for combat-related disabilities. It also is not taxable. But instead of applying to the VA, retirees must apply to their branch of service in order to receive it.
CRDP is a restoration of retired pay for longevity retirees with service-connected disabilities. It is taxed in the same manner as retired pay. No application is required. Eligible retirees receive CRDP automatically.
If a military retiree is determined to have Individual Unemployability status, the retiree is eligible for full concurrent receipt of both VA disability compensation and retired pay. To qualify, the retiree must meet CRDP qualifications, be rated by the VA as unemployable, and is receiving VA disability compensation as a result of IU status.
Disability has a different meaning for the Social Security Administration. The Social Security and Supplemental Security Income disability programs provide assistance to people with total disabilities that prevent them from working, not temporary or partial disabilities.
Social Security Disability Insurance, or SSDI, pays benefits to eligible individuals and certain family members if the individual worked long enough and paid Social Security taxes.
Supplemental Security Income, or SSI, pays food, clothing and shelter benefits to aged, blind and disabled people who have little or no income based on financial need. Taxability is determined based upon the income of the recipients.
In one final example, Maryland provides a pension tax exclusion to totally disabled individuals. Maryland defines totally disabled as those who have a mental or physical impairment, which prevents them from substantial gainful activity. The impairment must be long, continuous, indefinite or will result in death.
It would be a mistake to assume that meeting the “disabled” criteria under one legal analysis necessarily meets the definition in a different situation.
To discuss your personal legal questions, schedule an appointment to meet with an attorney at the Legal Assistance Office at 301-677-9504 or 301-677-9536.