At issue before the U.S. Supreme Court in the case of Howell v. Howell was the so-called veteran-offset and how it impacts a divorce settlement. This issue has been debated for years and became less of an issue when Congress waived the offset for certain cases. I previously wrote on the Concurrent Retirement Disability Pay that ended the offset for those whose disability rating is 50% or greater. What exactly is the offset?
Disabled veterans were required to select either their full retirement compensation from the Department of Defense or their VA disability benefit with a reduced retirement annuity. This penalty became known as the VA offset. Many veterans choose the offset, however, because disability payments are tax free. Congress waived this offset in the 2003 and 2004 defense authorization bills. Now veterans with career-ending combat injuries or those with a disability rating of 50 percent or higher are allowed to concurrently receive both types of payments. Monday’s ruling began in 1991.
Sandra Howell was awarded half of John Howell’s Air Force retirement pay when the couple divorced. In 2005, John, received a 20 percent disability rating from the Department of Veterans Affairs, and elected to waive $250 of his $1,500 per month in retirement pay, which is taxable, in favor of $250 monthly disability pay from the VA, which is not taxable. That reduced Sandra’s monthly divorce settlement by $125. Sandra went back to court, arguing that she should get half of what his retirement pay would have been if he had not opted for disability pay.
John Howell’s attorney argued that Congress intended for veterans to keep their disability pay, as it fills the gap for pay they will no longer be able to make in the future. The goal of protecting a veteran’s pay is not temporal in nature, he said, meaning it has nothing to do with whether the veteran is eligible for disability before or after the divorce. He also argued that the court previously decided, in Mansell v.Mansell, that the Uniformed Services Former Spouses’ Protection Act did not permit state courts to treat retirement pay that had been waived to receive veterans’ disability benefits as something that could be divided.
Sandra Howell’s lawyer tried to distinguish this case from Mansell because her ex-husband hadn’t waived his retirement pay until after the divorce settlement was finalized. But the Supreme Court ruled that state courts did not have the authority to take John’s disability benefits, regardless of its effect on his ex-wife.
If you have questions concerning your military pay or how your military status impacts your legal issues call Don Morrell at the Kendrick Law Group at 407-641-5847. Don is a 30 year veteran and Accredited VA Attorney.