Who Still Loses Military Retired Pay to the VA Offset, and Where the Star Act Stands

The Major Richard Star Act is still not law, so the rules on keeping both military retired pay and VA disability compensation have not changed. A recent video from Dr. Marshall Bahr of Xterra Health walked through these concurrent receipt rules.

Federal law still requires a military retiree to waive retired pay, dollar for dollar, by the amount of VA disability compensation received, which DFAS calls the VA waiver or VA offset. Before 2004 it applied to essentially every military retiree entitled to VA compensation.

Concurrent Retirement and Disability Pay (CRDP) is the exception Congress created in section 1414 of Title 10. Combat-Related Special Compensation (CRSC), governed by section 1413a, works differently: the waiver stays in place, and CRSC is a separate tax-free payment on top of it.

CRDP lets a retiree with a combined VA rating of 50% or higher receive retired pay and VA compensation with no offset. That covers regular 20-year retirees, Reserve and Guard retirees once their retired pay starts (normally at age 60), and TERA early retirees with 15 to 19 years of service. The phase-in ended December 31, 2013, so eligible non-disability retirees have received full retired pay since January 1, 2014.

CRDP needs no application: DFAS says that once it is notified of your VA compensation, it pays CRDP to eligible retirees on the regular monthly schedule. CRDP is not a separate payment but an increase in retired pay, so it is taxed the same way as your retired pay; DFAS notes that a retiree whose federal tax status is exempt pays tax on neither CRDP nor CRSC.

The first group is lower-rated retirees: at any combined rating below 50%, there is no CRDP, and retired pay is still reduced dollar for dollar by VA compensation. The one remedy at that level is CRSC, which starts at a 10% rating and pays the VA compensation for combat-related disabilities only, up to the retired pay you waive.

Under 10 U.S.C. 1413a(e), a combat-related disability is a VA-compensable disability attributable to a Purple Heart injury, or one incurred, under Defense Department criteria, as a direct result of armed conflict, while engaged in hazardous service, in the performance of duty under conditions simulating war, or through an instrumentality of war.

The second group is Chapter 61 medical retirees with fewer than 20 years of service, who get no CRDP at any rating. CRSC is available for combat-related disabilities, but under 10 U.S.C. 1413a(b)(3)(B), CRSC plus the retired pay left after the VA waiver may not exceed the retired pay percentage for their years of creditable service times their retired pay base.

The third group is Chapter 61 medical retirees with 20 or more years. At 50% or higher, they get CRDP only up to the longevity retired pay they would otherwise have earned. Any disability retired pay above that amount is still offset by VA compensation.

The Star Act is a proposal for Chapter 61 medical retirees with combat-related disabilities, including those with fewer than 20 years of service. The House bill, H.R. 2102, has 340 cosponsors, and its latest action was an April 4, 2025, referral to the Subcommittee on Disability Assistance and Memorial Affairs. The standalone Senate bill, S. 1032, has not moved since it was referred to the Committee on Armed Services on March 13, 2025.

The furthest a version has moved is section 101 of H.R. 9237, the Take Care of America's Veterans Act. On July 16, 2026, a motion to recommit that bill failed 210 to 211, and further proceedings were postponed the same day. As of September 27, 2026, the House has not held a final passage vote.

The section 101 now pending comes from a Rules Committee amendment, deemed adopted on July 16, 2026, and printed in part B of H. Rept. 119-749, which replaced the introduced section. The new section would let a Chapter 61 retiree with a combat-related disability and fewer than 20 years receive, without the offset, the lesser of Chapter 61 retired pay plus VA disability compensation or a 20-year-equivalent retired pay amount plus VA disability compensation. It also adds a rule for Chapter 61 retirees with 20 or more years whose combat-related disability is not rated 50% or higher. If enacted, it would apply to payments for months beginning on or after the date of enactment; the introduced text had set January 1, 2027.

In the Senate, S. 4744, also titled the Take Care of America's Veterans Act, was placed on the Senate Legislative Calendar under General Orders (Calendar No. 433) on June 11, 2026, with no further action.

Section 1414(b)(2) of Title 10, which bars CRDP for Chapter 61 retirees with fewer than 20 years, is unchanged in the law in effect on September 26, 2026.

You cannot receive CRDP and CRSC at the same time. In the first year you qualify for both, DFAS pays the one with the higher gross amount and sends an election form you can return within 45 days to switch. After that, you can switch only during the annual open season, which DFAS says usually takes place in January. If you do not return an open season form, DFAS keeps paying the same program, and a mid-year change in either amount does not reopen the choice. For how the two programs compare in detail, see the CRDP vs CRSC guide.

VA sets your disability rating, your branch of service decides which disabilities are combat-related, and DFAS, or your service's own payment office, computes and pays CRDP and CRSC.

• Confirm your combined rating, years of service and whether you retired under Chapter 61; those facts decide which group describes you.
• If you believe you are eligible for CRDP but are not receiving it, DFAS says to submit a written claim on DD Form 827.
• If any of your disabilities may be combat-related, CRSC is requested from your branch of service on DD Form 2860.
• VA's CRSC page still describes a 6-year limit on CRSC back pay, but on June 12, 2025, in Soto v. United States, the Supreme Court held that the CRSC statute displaces the Barring Act's settlement procedures and limitations period, the source of that limit. DFAS says retroactive CRSC still cannot go back before June 1, 2003, may be limited to your retirement date, and for Chapter 61 retirees with fewer than 20 years cannot go back before January 1, 2008.
• When VA adds new disabilities, a CRSC award does not grow on its own; a reconsideration request goes to your branch.
• The DFAS CRDP page lists 800-321-1080 for retired pay questions and VA's 800-827-1000 for questions about ratings and compensation.