Articles by Ryan Guina

Ryan is the founder and editor of this site. He is a writer, small business owner, and entrepreneur. He served over 6 years in the USAF and also writes about money management, small business, and career topics at Cash Money Life.

You can find him around the web at, Ryan Guina on Twitter, The Military Wallet on Twitter, and on Google.

Tax Filing Deadline for Extensions – October 15th

Every year, millions of American taxpayers mark April 15th as the deadline for filing their income tax return.  While the vast majority of taxpayers meet this deadline, it is actually possible to request an extension to file your tax return.  For those taxpayers, time is just about up to get their taxes filed.  The final deadline for those who requested an extension is October 15th.  Here we review the process of requesting an extension and what happens if you miss the final deadline.

How do you get a tax deadline extension?

Tax extension deadline - file by October 15th

File your tax return by October 15th if you requested an extension

Taxpayers who know they will be unable to make the April 15th deadline for filing their income tax can request a six-month tax deadline extension by filing Form 4868 by the April 15th deadline.  Once the IRS receives your extension request, the deadline for filing your taxes is pushed back to October 15th.

Military extensions may extend beyond October 15th. While the majority of US tax payers are required to file by the October 15th deadline, some military members may be eligible for an automatic extension if they were deployed to a tax free combat zone for part of the previous or current tax year. There are several rules for this extension, so be sure to visit the IRS website for specific information.

Note: According to the IRS, this extension may “also apply to individuals serving in the combat zone in support of the U.S. Armed Forces, such as merchant marines serving aboard vessels under the operational control of the Department of Defense, Red Cross personnel, accredited correspondents, and civilian personnel acting under the direction of the U.S. Armed Forces in support of those forces.”

Why File an Extension?

In most cases a person files for an extension when they have a tax liability that they owe, yet are unable to pay by the April 15th deadline.  It is important to note that just because you are granted extra time to file your taxes, you do not get an extension for paying taxes owed.  When you request an extension to file, you will avoid the penalty for failing to file, however you will still be held liable for any taxes that are owed.  Taxes owed that are not paid in full by April 15th will accrue interest and penalties until the time at which they are paid in full.

What You Need to Know about the October 15th Deadline

If you have requested an extension, it is very important that you file your taxes on or before the final deadline.  The IRS has already granted additional time to prepare your tax return and any filers who miss this extended deadline will be subject to a 25% failure to file penalty.  For this reason it is imperative that anyone who has not yet filed to get their taxes in order and filed before the deadline passes.

Options for Those Who Owe Back Taxes

If you do not have the money to pay taxes owed by the deadline, consult with a tax professional to learn what options are available to you.  Again, the most important thing to remember in this situation is that an inability to pay cannot justify not filing your taxes by the established deadlines.  The IRS views failure to file as a serious offense, which may be punishable by one year in jail and a fine of $10,000 per year.  To avoid this, you need only file your taxes in a timely manner.  A tax specialist will be able to help you navigate the many options available to taxpayers who owe taxes but are unable to pay in full.  By filing on time, you reduce the penalties and fees and possible jail time that results from failure to file.

Understand There Are No Other Extensions

October 15th marks the deadline for filing extended tax returns. There are no additional extensions offered to individuals who fail to file by October 15th, except those noted above regarding combat zone tax extensions.  If the IRS does not receive your tax return by the deadline, they may file a return for you.  Understand that when the IRS files a “Substitute for Return,” you are not off the hook for taxes owed.  Any tax liabilities owed remain your responsibility and will grow over time until the issue is addressed and resolved. See more about penalties for not filing taxes.

New In-State Tuition Rule for GI Bill Recipients

Last month, Congress passed a new rule for GI Bill benefits, the Veterans Access, Choice and Accountability Act of 2014. In effect, the rule requires states to offer the “in-state” tuition rate for all military veterans using the GI Bill, regardless of their actual state of residence. This will go into effect during the fall semester of 2015. The delay gives colleges and universities time to review their policies, and time for state legislatures time to amend applicable laws.

What the New GI Bill Rule Does

This new rule requires colleges and universities that accept the GI Bill to allow veterans using the GI Bill to pay only the in-state tuition rate while attending classes. There are currently 27 states that offer non-resident veterans the in-state tuition rates. So the primary benefit of this new rule will extend to students in the 23 states that don’t currently have similar provisions.

States will have until July 1, 2015 to offer non-resident veterans the lower in-state tuition rates if they want to continue to be eligible to participate in the Montgomery GI Bill or the Post-9/11 GI Bill programs. The GI Bill generally provides a lot of guaranteed cash flow to colleges and universities, so it is expected that virtually all states will comply with these new GI Bill rules.

Who is Affected

The primary beneficiaries of this new GI Bill rule are students who have recently left military service. This is because veterans often move to a new state after leaving the military, and it typically takes up to one year to establish residency for schooling purposes. Under the current system, many veterans are paying the higher, out-of-state tuition rates because they haven’t had time to establish in-state residency yet. Transfer students are also among those who are hit hard by the higher out-of-state rates for tuition and fees. The new rule allows these veterans to save a lot of money on tuition and fees while they wait to establish residency.

Dependents would also be eligible for in-state rates. The in-state resident rate rule will also be extended to non-resident dependents of veterans who use the Post-9/11 GI Bill. Learn more about transferring post-9/11 GI Bill benefits to your dependents.

More about the Veterans Access, Choice and Accountability Act of 2014

The Veterans Access, Choice and Accountability Act of 2014 also includes provisions that require the VA to provide veterans with access to timely health care, and it provides accountability measures to hold senior VA officials accountable for poor performance or misconduct. You can learn more about the the Veterans Access, Choice and Accountability Act of 2014.

AAFES to Allow Veterans to Shop Online?

AAFES Online ShoppingLike many retailers, the Army and Air Force Exchange (AAFES) is looking for ways to improve their business model. But unlike many other retailers, better business for AAFES means better quality of life for military members, as some of the profits are distributed back to the military communities. Due to the changing environment and force reductions, Thomas C. Shull, the AAFES CEO, recently proposed allowing honorably-discharged military veterans to shop at their online store.

Currently, only active duty servicemembers, members of the Guard and Reserves, military retirees, and the families of these groups are eligible to shop at AAFES locations, either online or on base. Note that this proposal only includes allowing veterans to shop online, not at the physical stores located on bases. There is no current proposal to allow veterans to shop at on-base locations.

Impact of Allowing Veterans to Shop at AAFES Online Stores

AAFES officials estimate there are approximately 18.8 million veterans with an Honorable Discharge who would be allowed to shop at AAFES online stores under this proposal. Allowing these veterans to shop at AAFES online stores would give these veterans access to savings on a variety of products and could provide an additional $100 million for base Morale, Welfare, and Recreation (MWR) and quality of life programs. Increased sales could also allow AAFES to negotiate discounts on larger, bulk orders of goods.

This proposal is an important part of supporting the military community. AAFES distributes dividends to the MWR programs and other military activities. Over the last few years, AAFES sales have decreased substantially as military members and their families shop at other locations, and as the size of the military continues to decrease. The continued drawdown will have a dramatic impact on AAFES sales and how much money they can give back to the military community. AAFES officials estimate their sales could drop to one third of their current levels within the next few years. Extending the privilege of online shopping to qualified veterans would be a good way to thank veterans for their service, increase sales for AAFES, and increase distributions to base programs.

Roadblocks to Allowing Veterans to Shop at AAFES Online Stores

Right now this is just a proposal. AAFES first needs to obtain approval, then find a way to implement the program. Let’s start with approval: There are some officials who fear “benefits creep,” if veterans are allowed to shop at AAFES online stores. Basically, they fear this would be the start of veterans gaining access to other military support programs. Implementing this could also prove to be problematic. AAFES would need to find a fool-proof method of verifying veterans’ identity and discharge status before allowing them to shop at online stores. Doing so would possibly require a method of collecting and securing sensitive information, including veterans’ names, addresses, and Social Security numbers.

Will it Happen?

It’s too early to say right now. But overall, I see this as a positive development. The implementation could be tricky, but hopefully that would be a one-time up-front cost, followed by annual maintenance. But the increased revenues from additional sales should more than make up for the added administration expenses. Beyond the added admin costs, there isn’t much negative impact. Online stores scale easily, which means added sales, and potential costs savings on the part of AAFES. The proposal also doesn’t include access to shopping on base, so there is no negative impact to the active duty counterparts, such as buying up base inventory, more crowded stores, and increased reliance upon military resources (security, parking, traffic, etc.).

We should know more soon. The Executive Resale Board meets on Nov. 4, 2014. They hope to make a decision on this proposal shortly afterward. Implementation could take up to a year.

What are your thoughts—should honorably-discharged veterans be allowed to shop at AAFES online stores?

How to Protect Yourself From Identity Theft

You may not know it, but you are at risk. In recent months there have been major hacks in a variety of industries. Target had more than 40 million credit card and debit card numbers and related information stolen over the course of several months. Home Depot admitted hackers got access to over 60 million credit and debit card numbers (source).

Prevent identity theft

You are at risk of Identity Theft.

In 2006, the VA lost a laptop that contained medical records, disability ratings, and social security numbers of over 26.5 million veterans (source). In 2014, hackers broke into a medical network’s computer system and stole over 4.5 million records, including names, birth dates, addresses, Social Security numbers, and phone numbers – everything thieves need to steel your identity (source).

Chances are high that your records, or the records of someone you know were exposed at some point.

Military members and veterans at greater risk. You have also likely been exposed if you served in the military. The default form of identification used by the military is Social Security numbers. I remember having to sign in with my name and Social Security number when I ate in the chow hall. My name and Social Security number is probably floating around on hundreds or even thousands of documents. I am at risk. And so are you.

The High Cost of Identity Theft

Having a stolen credit card is an inconvenience. But you should be protected by your credit card company. Having your debit card stolen can be worse, because thieves can empty your bank account in a matter of days or hours – causing you to bounce checks or overdraft your account. Talk about expensive and embarrassing!

But having your identity stolen can be far worse. It can decimate your credit score, cause legal issues, and cost you an untold number of hours as you try to clean up the mess. The cost has often been measured in thousands of dollars and hundreds of hours.

So what can you do?

LifeLock is your one-stop shop for protection against identity theft. Learn more here.

How to Protect yourself From Identity Theft

Prevent identity theft

Shredding documents is a must!

You can’t protect against every data breach. Some things are out of your control. But you can try to limit who has access to your data, and you can take personal actions to limit your exposure. Let’s cover what you can do to protect yourself.

Guard your private information. Safeguard all documents that can be used to steal your identity, including your checks, Social Security Card, birth certificates, marriage certificates, passports, and other personal documents, including military records. Keep these under lock and key in a fireproof safe or safety deposit box.

Shred anything you don’t need. I shred anything and everything someone could use against me. This includes personal documents, old medical or financial statements, duplicate checks, etc. Do the same.

Be wary of unsolicited phone calls or emails. I never give my personal or account information over the phone or email, unless I initiate the action. No reputable company will call you and ask to confirm your credit card or account number.

Additional Tips:

  • Don’t carry your Social Security Card in your wallet.
  • Review your Account Statements Regularly
  • Opt out preapproved credit card and insurance offers by going to com.
  • Don’t use public computers for confidential information, such as banking.
  • Use secure passwords and change them frequently.

LifeLock will protect your good name from identity theft and fraud. Learn more here.

Actively Monitor Your Credit Profile

The most proactive way to protect yourself is by monitoring your credit profile. Each of the three major credit bureaus will give you a free credit report once a year. You can stagger these and get one report every 4 months.

If you want to take things a step further, you can sign up for active monitoring and identity theft insurance. There is a monthly fee for this type of service, but it comes with active monitoring and insurance that will help you cover the cost of getting all fraudulent charges removed.

LifeLock Identity Theft ProtectionOne of the longest running and best companies in the industry is LifeLock, which monitors your credit profile and certain banking accounts and notifies you of any suspicious activity.

LifeLock Ultimate™ Protection offers:

  • Alerts for checking and Savings account applications under your name and information
  • 24/7 online access to your annual credit report and updated monthly score
  • Expanded credit alerts for new account inquiries
  • Alerts when contact information changes on existing checking and savings accounts
  • And more

They back this up with a $1 Million Total Service Guarantee. The guarantee is a no-deductible insurance policy. If you become a victim of identity theft while a LifeLock member, they will spend up to $1 million to hire experts, lawyers, investigators, consultants and whomever else it takes to help your recovery.

Limited-time Military-friendly offer: LifeLock also features a military friendly offer, good for 30 days free, + 15% off. This offer is good for all military members, veterans, and their families. You do have to submit your credit card information when you sign up, and you will be automatically enrolled after your trial period. But you are free to cancel without penalty at any time by calling 1-800-LifeLock.

You can learn more by visiting their military discount page – http://www.lifelock.com/offers/military15/

LifeLock Identity Theft Protection

How VA Disability Compensation Affects Military Retirement Pay

If you have a VA service-connected disability rating of 10% or higher, you are eligible to receive a monthly compensation check from the VA. The monthly compensation payments vary by your disability rating—and if your rating is 30% or higher—the rates are increased, depending number of dependents you have filed on your claim.

VA Disability Compensation Affect Mliitary Retirement Pay

You can be eligible to receive VA disability compensation even if you didn’t retire from the military. But if you are retired from the military and are also eligible for VA disability compensation, determining how much you get paid, and from where, can seem complicated. You see, until 2004, it was against the law to receive military retirement pay and VA disability compensation at the same time. Retirees had to choose which pay they wanted to receive, and if they chose to receive their VA disability compensation, those funds were “offset,” or deducted, from their military retirement pay.

There have been two major changes to this law in the past decade, and some veterans may be eligible to receive their full military retirement pay along with their VA disability compensation. These laws are:

It is possible to be eligible for both of these programs, however, you can only receive the additional monetary compensation from one of them. Veterans who qualify for both plans will be given the choice of which they wish to receive when they apply for their benefits. But you can also change your election if your situation changes. CRDP sends out open season letters annually each December; veterans must select their choice by the end of January.

Let’s examine your options if you are eligible for military retirement pay and VA disability compensation: There are a lot of rumors, myths, and misconceptions about how VA disability compensation affects military retirement pay. So let’s take a look at some of those rumors and misconceptions and break them down so you have a clear understanding of how these forms of compensation work together.

Comparing VA Disability Compensation and Military Retirement Pay

Military retirement pay and VA disability compensation are entirely separate forms of compensation. They are paid from different agencies, and paid from different buckets of money. They also represent two different forms of compensation. Military retirement pay is a pension that is based on your years of service. VA disability compensation is a monetary award that is based on your decreased ability to perform work after leaving the military.

Taxable vs. Non-Taxable Income: Military retirement pay is taxable by the federal level, and is taxed by most states (some states do not have an income tax or do not tax military retirement pay). VA disability compensation, however, is considered non-taxable income by the federal government (I am not aware of any states that tax VA disability compensation). This has a big advantage: dollar for dollar, VA disability compensation gives veterans more spending power than military retirement pay because VA compensation is never taxed.

What Happens When You Are Eligible to Receive Retirement Pay & Disability Compensation?

To best answer this question, we need to examine your disability rating. If you have a combined disability rating of 50% or greater, you should be eligible to receive Concurrent Retirement Disability Pay (CRDP). If you receive CRDP, you will receive your full military retirement pay along with your full VA disability compensation. There will be no reduction to your military retirement pay.

If you have a combined VA service-connected disability rating of 40% or lower, then you are not eligible for CRDP. However, if you have a service-connected disability that is considered a combat-related disability, then you may be eligible for Combat Related Special Compensation (CRSC). CRSC also replaces the VA disability offset, and will increase your total compensation, even if you don’t have a combined rating of at least 50%. We will explain CRSC in more detail later in the article, and link to a full length article that gives even more detail.

If your combined disability rating is 40% or lower and you do not have a combat-related disability, then your military retirement pay will be offset, or deducted, by the amount of VA service-connected disability compensation you receive.

Let’s take a look at these special conditions in more detail, and run some numbers to show you how valuable these benefits are.

Concurrent Retirement Disability Pay (CRDP)

Concurrent Receipt Laws: Up until 2004, the law prevented military retirees from receiving part or all of their military pay if they also received disability compensation from the VA. Military members had to choose which payment they wanted to receive: military retirement pay, or VA disability compensation. If they chose to receive both forms of payment, they had to offset, or waive, a portion of their military retirement pay equal to the amount they received from the VA. Basically, it prevents servicemembers from double-dipping and receiving compensation from both the VA and the military.

In 2004, the law was changed, and military retirees were eligible to receive both military retirement pay and VA disability compensation, but only if they had a VA service-connected disability rating of 50% or higher.

Here is how the compensation breaks down if you are eligible to receive both types of compensation:

  • VA disability rating of 40% or lower. Military retirees who choose to receive VA disability compensation will have their military retirement pay offset by the amount of compensation they receive from the VA. Most retirees choose to receive their VA disability compensation because it is tax-free income, while their military pension is taxed by the federal government and by most states. They still receive the same amount of total compensation they otherwise would have received, however, the VA compensation portion is tax-free, giving them more spending power.
  • VA disability rating of 50% or greater. Military retirees with a disability rating of greater than 50% are eligible to receive both payments under CRDP. They will receive their full military retirement pension, along with 100% of their VA disability compensation. They do not need to offset their military pay by the amount of the compensation they receive from the VA.

The difference between a disability rating of 40% and 50% can literally mean a difference of thousands of dollars per year because the difference comes in the form of the increased disability compensation at the higher rate, along with the full military pension that is not offset by the concurrent receipt laws. Let’s run through an example.

Example: How is Military Retirement Pay Offset by VA Compensation?

If your VA disability rating is 40% or lower, your military retirement pay is offset by the amount of your VA compensation. In other words a 40% disability rating doesn’t mean 40% of your retirement pay is tax free. It means you receive tax-free compensation from the VA at the 40% rate, and your military retirement pay is deducted by that amount.

Let’s look at an example.

Let’s say our retiree earns a monthly retirement check of $2,000. Let’s also assume he has a VA service-connected disability rating of 40%, and he has one dependent (a spouse). His VA disability compensation would be $641.28/mo (2014 rates; see full rate chart here).

He would receive $641.28 from the VA, which would be tax-free. He would then receive $1,358.72 as his military retirement pay ($2,000 – $641.28 = $1,358.72).

The total amount still equals $2,000 per month. But $641.28 of that is tax-free income. The overall affect gives the veteran more spending power.

You can also see how this uniform method for computing the VA disability offset is easier than awarding retirees a percentage of their pay as tax free.

The Value of Concurrent Receipt is Enormous

As you can see from the example above, the main benefit of the VA disability offset is receiving the tax-free pay from the VA. The final dollar amount is the same, but the tax-free portion gives the veteran greater spending power than if he received the full value of his pension from the military with no VA offset.

But the amount would be much greater if the veteran received both forms of compensation under Concurrent Retirement Disability Pay laws. The increase would mean the full value of the military retirement pay, plus the full value of the VA disability compensation. Going from a 40% rating ($641.28) to a 50% rating ($901.83) is huge. Not only does the VA disability compensation increase by $260.55 per month, but the $641.28 is not deducted from the military retirement pay. The net effect is this:

  • 40% disability rating: $2,000 total ($1,358.72 taxable; $641.28 non-taxable)
  • 50% disability rating: $2,901.83 total ($2,000 taxable; $901.83 non-taxable)

The difference is an increase of $10,821.96 per year, none of which is taxable income.

Learn more about Concurrent Retirement Disability Pay (CRDP):

Combat Related Special Compensation (CRSC)

Now that we have discussed Concurrent Receipt, we need to add one more special case for receiving both military retirement pay and VA disability compensation: Combat Related Special Compensation (CRSC). To qualify for CRSC, you must have a service-connected disability rating that is considered combat-related. There are a few other eligibility criteria:

  • You must be a military retiree (Active or Reserve with 20 years or creditable service; Chapter 61 medically retired with less than 20 years of service; Retired under Temporary Early Retirement Act (TERA); or  retired under the Temporary Disabled Retirement List (TDRL)).
  • You must have a VA service-connected disability rating of at least 10% that is considered to be combat-related.
  • Your military retirement pay must currently be reduced by the VA disability offset.

Here is the interesting part: the injury doesn’t have to be from direct combat. Disabilities may be considered combat-related for CRSC purposes if they are a direct result of:

  • Armed Conflict / Combat: direct or indirect wounds that happened during armed conflict.
  • Hazardous Duty: demolition duty, diving, parachuting, aerial flight, and more.
  • An Instrumentality of War: An injury sustained from exposure to an instrumentality of war, such as a weapon or weapon systems specifically designed for military duty or warfare. This can include certain military combat vehicles, vessels, aircraft, or an injury or sickness caused by exposure to fumes, gases, or chemicals. Agent Orange exposure would qualify as an instrumentality of war.
  • Simulated War: Activities such as military training, exercises, airborne ops, live fire exercises, hand-to-hand combat training, and more. This does not include standard physical training such as running, jogging, or group sports activities.

Eligibility Dates: Anyone can be eligible so long as they meet the above criteria. This includes military retirees who have been retired for decades, or someone who retired last month. There is even the possibility of back pay, however, it can only be extended back to the effective dates of the laws, which are June 1, 2003 for those with 20 years of service, or January 1, 2008, for those who were medically retired under Chapter 61 with less than 20 years of service.

You must apply with your branch of service. Concurrent Receipt is automatically applied by DFAS and the VA. However, the CRSC program is administered by each branch of the military. You will need to complete an application and send in supporting documentation to receive this benefit.

There is a lot more to this law, so I suggest further reading if you believe it may apply to you.

Will Concurrent Receipt Be Extended to Everyone?

In a perfect world, all military retirees who have a VA service-connected disability rating would be eligible to receive the disability pay in addition to their retirement pay. Unfortunately, the government budget isn’t limitless and the current payment methods are being used to help control budgets. Concurrent Receipt was phased in over a ten year period, with veterans receiving incrementally larger amounts of VA compensation added to their retirement pay each year. If the government were to open Concurrent Receipt to everyone, they would likely do something similar, as it would otherwise be a massive budget increase.

Will Concurrent Receipt Laws Change? There are many military organizations and lobbying groups that are working hard to get the Concurrent Receipt laws extended to all retirees, regardless of their disability rating. But it has yet to be approved by Congress. The Military Officer’s Association of America (MOAA) has repeatedly attempted to get the law repealed that requires military retirees to forfeit their military retirement pay in order to receive their VA disability pay. You can read about their most recent efforts here.

Do you think Concurrent Receipt should be extended to all military retirees? Leave us a comment below and tell us why.

Combat Related Special Compensation (CRSC) Benefits – Replaces VA Disability Offset for Military Retirees with Combat-Related Disabilities

Did you know that if you are a military retiree with a combat-related disability you may be eligible to receive additional compensation through the Combat Related Special Compensation (CRSC) program? This is a relatively new law that many retirees are not aware of.

Combat Related Special Compensation (CRSC) Benefits

You may be eligible to receive additional compensation.

Until 2004, there was a law on the books that prevented military retirees from receiving both military retirement pay and VA service-connected disability compensation at the same time. Military retirees could choose to receive VA disability compensation if they were eligible, but their military retirement pay would be offset by the exact amount of compensation they received from the VA. The veteran received the same total compensation as their full retirement pay, however, the spending power was greater because VA disability compensation is tax-exempt.

In 2004, a law called Concurrent Retirement Disability Pay (CRDP) was passed. CRDP allows military retirees to receive both military retirement pay and VA disability compensation if they held a VA disability rating of 50% or greater. This is a substantial increase in compensation for these veterans who are eligible to receive their full military retirement pay and their full VA disability compensation.

But retirees with less than a 50% disability rating were left in the dark when it came to receiving greater compensation. While lawmakers didn’t extend the concurrent receipt laws to cover all disability ratings, they did create a similar law for veterans with a “combat related” disability, even if they do not have an overall disability rating of 50%. In 2008, Congress passed a law called the Combat-Related Special Compensation (CRSC) (10 U.S. Code § 1413a), which allows military retirees to receive monthly compensation to replace some or all of their VA disability offset if they have a combat-related injury. Let’s take a deeper look at CRSC, what it is, who it affects, and how to apply for this benefit.

What Is Combat Related Special Compensation?

Combat-Related Special Compensation was created to replace the VA disability offset for service-connected disabilities that are a direct result of combat related injuries, to include injuries that occur during combat or armed conflict, or during combat training, training that simulates war, while performing hazardous duty, or from exposure to an instrumentality of war (such as military combat vehicles, agent orange exposure, etc.).

Combat-Related Special Compensation provides compensation to eligible military retirees that will replace some or all of the VA disability offset. Their military retirement pay will no longer be deducted by the amount of their VA disability compensation. Instead, they will receive their full military retirement pay, and a CRSC payment based on the percentage of their disability rating that is considered combat-related. It’s important to note that CRSC payments only apply to the disabilities that are considered combat related. So it is possible that your CRSC payment can be less than your overall VA disability rating, and thus less than your VA disability offset. Like VA Disability compensation, CRSC payments are tax free.

Combat Related Special Compensation Eligibility

Here are the eligibility requirements, according to DFAS — To qualify for CRSC:

  • You must be entitled to and/or receiving military retired pay (Active or Reserve with 20 years or creditable service; Chapter 61 medically retired with less than 20 years of service; Retired under Temporary Early Retirement Act (TERA); or  retired under the Temporary Disabled Retirement List (TDRL)).
  • You must have a VA service-connected disability rating of at least 10 percent
  • Your military retirement pay is currently being reduced by your VA disability compensation (VA disability offset)
  • You must file a CRSC application with your Branch of Service

Disabilities that may be considered combat related include injuries incurred as a direct result of:

  • Armed Conflict / Combat: This can include direct or indirect wounds which occurred during armed conflict.
  • Hazardous Duty: This can include activities such as demolition duty, diving, parachuting, aerial flight, and more.
  • An Instrumentality of War: An instrumentality of war is a device such as a weapon or weapon systems specifically designed for military duty or warfare. This can include certain military combat vehicles, vessels, aircraft, or an injury or sickness caused by exposure to fumes, gases, or chemicals. Agent Orange exposure would qualify as an instrumentality of war.
  • Simulated War: This can activities such as military training, exercises, airborne ops, live fire exercises, hand-to-hand combat training, and more. This does not include standard physical training such as running, jogging, or group sports activities.

Eligibility Based on Service Dates and Back Pay: Anyone can be eligible to receive benefits under CRSC as long as they meet the eligibility requirements. This means it can apply to veterans who retired decades ago, or as recently as a month ago. There is even the possibility of receiving back pay if you are determined to be eligible for this benefit. However, if you retired with full longevity (20 or more years of service), you can only receive back pay as early as June 1, 2003, which was the effective date authorized by Congress. If you were medically retired under Chapter 61 with less than 20 years of service, back pay can only go back to January 2008, which was the effective date for authorizing veterans who retired with a medical retirement.

How to Apply for CRSC Benefits

Combat-Related Special Compensation is not automatic. You will need to apply for these benefits with your respective branch of service. They will assess your claim and determine your eligibility. To apply, you will need to fill out DD form 2860, along with the required documentation mentioned below, and send it to your respective military branch.

CRSC can be a complicated benefit because each case is unique. As always, it would be a good idea to consider using a Veterans Service Officer to help you with your benefits claims. They are often well-versed in applying for military and veterans benefits, and usually offer free assistance to veterans.

Documentation of Combat-Related Injury Required: You must be able to show a causal link between your service-connected disability rating and a combat-related event. You will need to provide documentation of your military service, including your Form DD-214 or Form DD-215, military medical records pertaining to your injuries, military personnel files, line of duty determinations, safety mishap (accident) reports, military personnel data system printouts, prior military disability board decisions, casualty reports, official orders or travel vouchers, VA summary letters, or other official documents that can substantiate your claims. Here is the important thing to remember: your records must clearly show your injury is combat-related.

Here is the contact info for submitting your CRSC claim:

Air Force
CRSC Program Office
HQ AFPC/DPSDC
550 C Street West, Suite 6
Randolph AFB
TX 78150-4708
Phone: 1-800-525-0102
Website: http://www.afpc.af.mil/library/combat.asp

Army
Department of the Army
US Army Human Resources CMD
ATTN: AHRC-PDR-C (CRSC)
1600 Spearhead Division Ave
Dept 420
Fort Knox, KY 40122-5402
Phone: 1-866-281-3254
Fax: 1-502-613-9550
Email: crsc.info@us.army.mil
Website: https://www.hrc.army.mil/TAGD/CRSC

Coast Guard
COMMANDER (PSC-PSD)
Personnel Service Center
U.S. Coast Guard Stop 7200
4200 Wilson Blvd., Ste 1100
Arlington, VA 20598-7200
(703) 872-6626
Website: http://www.uscg.mil/adm1/crsc.asp

Navy and Marine Corps
Secretary of the Navy Council of Review Boards
Attn: Combat-Related Special Compensation Branch
720 Kennon Street SE, Suite 309
Washington Navy Yard, DC 20374
Fax: 202-685-6610
Email: crsc@navy.mil
Website: http://www.public.navy.mil/asnmra/corb/CRSCB/Pages/CRSCB%20main%20page.aspx

More Info About Combat Related Special Compensation

Here is some additional information about CRSC:

What Happens When You Fail Out of AIT or Tech School?

I recently received an email from a reader who was interested in what type of discharge he would receive if he failed out of Army Advanced Individual Training, or AIT (also called Technical School or Tech School by other branches). Here is his full question, and my answer:

Fail out of AIT or Tech School

Question: I’m in AIT and on my 9th week here and I realized that the Army is not for me. Do you know what discharge I would get for failing out? I have one negative counseling and it was for being late. Will the discharge affect my career outside the military?

Answer: The first and most important thing I can tell you is that technical training is not the same as the operational military. Things are much different, and in most cases, much better, once you leave training. Start with Basic Training: you learn all the basics of being in the military—discipline, customs and courtesies, how to dress, how to march, how to maintain and fire a weapon, teamwork, and on and on. You will be whipped into shape both physically and mentally.

By default, Basic Training must be rigorous and rigid in its format and teaching. You will be yelled at. You will be put under stress. You will be force fed your branch’s history, and structure, and way of life. In short, you must learn all you can learn about living and functioning in your branch of service in just a few short weeks. It is stressful because it has to be. It is stressful because the military needs to weed out those who aren’t cut out for the military way of life. They aren’t trying to weed out people who decide one day they don’t want to be in the military—they are weeding out those who can’t physically or emotionally meet the criteria. You made it through Basic Training, and that is an accomplishment.

What You Really Need to Know About AIT & Tech School

Here is something your recruiters probably never told you: AIT and Tech School are in some ways an extension of what you learned in Basic Training. You see, the Army or any other branch of service just can’t let you cut loose right after leaving Basic Training. If they did, they would have a huge problem on their hands. Trainees would go crazy and unlearn everything the Army just put them through. Instead, the Army must ease their training population into the active duty service. And this means they must enforce standards on their trainees that won’t be found outside of a training environment. Things like falling into formation at O-Dark-Thirty for crazy fun runs. Marching to class. Remaining in uniform 24-7 for the first few weeks or months of class, confinement to base, room inspections, and all kinds of details that seem over-the-top to trainees. It also means more yelling, quick-paced learning, lots of tests, and lots of stress.

In many ways, the military keeps the stress level high on purpose. There are several reasons for this: They need to keep students focused on completing their training. Otherwise students will let their newly found discipline slack, and they will fail out of their training and be kicked out of the military. That costs everyone a lot of time and money.

The quick pace is designed to put students through the course as quickly as possible—again to see if they can handle it, but also because it costs the military a lot of money to train their troops. Finally, the stress level is high because each branch needs to see if their trainees are physically, mentally, and emotionally tough enough to handle the stress the military will throw at them. You are training for war, after all. And if you can’t handle the stress of AIT or tech school, how can you handle being in a war zone?

Can You Fail out of AIT / Tech School?

The answer, as you well know, is yes. You can fail AIT or Tech School. But I’m not going to recommend it, for several reasons. First, it takes a lot to fail out of AIT. If you fail a section, they will simply roll you back a couple weeks and you will repeat those weeks of training. During that time you can expect tutoring or extra homework to make sure you pass.

If that isn’t enough and you fail the same section more than once, you may fail your AIT. At that point, the Army is simply going to reclass you into a different MOS. This can take several weeks, or even a couple months. During your waiting time, you will have the honor of performing details around the squadron, including fun tasks such as cleaning, checking passes, and whatever else they can find for you. All the while you have to watch everyone on your squadron graduate and move on to the operational Army while you wait around for your next assignment. Not only will this be boring and make you hate the Army more, it will feel demeaning to bear the social stigma of being someone who couldn’t hack it through the training.

Then you get your assignment and get shipped off to your next Tech School. At that time, you start over at the beginning in a new career field. It’s likely you will also have to start your restrictions back at week one (meaning you must wear the uniform 24/7, must remain on base, etc), until you reach the same level as the rest of your classmates.

What happens if you fail a second AIT? At that point they may look to separate you from the service, or they may try one more time to reclass you into another career field. Either way, it will take several more weeks for them to process you. That’s several more weeks that you have to perform mind-numbing details. And that’s several more weeks you will be stuck in the training environment that you don’t like.

Did you join the Guard or Reserves? In that case, you may or may not be reclassed into a new job immediately. The Army may send you back to your unit for them to determine what to do with you. That could mean reclassing you into a new job, or it could mean kicking you out. Either way, it will probably not be a quick process.

What About Failing Your PT Test?

Sure, you can get kicked out of the military for failing your PT test. But don’t try it at AIT / Tech School. You wouldn’t be the first person to try it. All they have to do is look at your scores from Basic Training and where you are now, and they will see that you aren’t trying. All that means is you will get put on remedial physical fitness training, which will be monitored, and you will have to test every week or every other week until you pass. It will be very difficult to fail your test under these conditions. Sure, you could fail on purpose, but that’s not a good idea. I’ll cover that when we discuss discharges.

What Type of Separation Do You Get from AIT / Tech School?

And now to answer your question… There are a couple types of discharges you could get if you are forced to separate from AIT / Tech School. The most common type of separation is an Entry-Level Performance and Conduct Separation, which is also commonly referred to as “failure to adapt.” This is an uncharacterized separation, meaning it is neither good, nor bad.

But here’s the deal: you can’t request a “failure to adapt” discharge. This can only be initiated by your Commander. Here’s the other thing you need to know: to grant this discharge, the Commander must view your actions as unintentional. In your case, he must believe you simply cannot pass your training. A commander will not grant this type of discharge if he believes you are intentionally failing your coursework.

If your Commander believes you are purposely failing through AIT, then it’s possible you may receive a non-judicial punishment, a court-martial, or a more punitive discharge. If you are very lucky, that could be a general discharge. But more than likely, it would be an Other than Honorable Discharge. This can have a negative impact on your future employment potential, especially if you want to ever work for a state or federal government, both of which will require you to disclose any and all military service, including your discharge status.

Final note on discharges: yes, it is possible to get a discharge upgraded. But don’t listen to the barracks lawyers who “know everything about everything,” including how to get out the military and get your discharge upgraded. It can be done, but it is usually a lengthy process and requires you to prove there was an error during the discharge process. In short, don’t count on it.

(Here is the Army Reg on Enlisted Separations; read this to understand the types of discharges, and what they mean for you).

Say Goodbye to Military and Veterans Benefits

If you are like most people who joined the military, you probably did so for several reasons, including a sense of honor and duty to your country, to face and pass a major challenge, and possibly for the numerous benefits you are eligible to receive through your military service. But most of those benefits are only available while you are serving, or after you serve a minimum amount of time. You won’t qualify for most, of not all, of the major military and veterans benefits if you throw in the towel during training.

Say goodbye to your Tuition Assistance benefits, and the opportunity of earning a free college degree while you are on active duty. Say goodbye to the Montgomery GI Bill and all the money you paid into it if you signed up for the MGIB in Basic Training. Say goodbye to the Post-9/11 GI Bill and the opportunity to transfer it to your wife and/or children (this could be a huge benefit, even if you aren’t married or don’t have children right now). You can also say goodbye to a variety of other benefits, including access to home loans through the VA loan program, job training, and various veterans benefits programs.

Do You Really Want to Set This Precedent for the Rest of Your Life?

I’m all for freedom of choice. We make decisions big and small everyday. And these decisions define us in the long run. I chose to join the Air Force. It was difficult at times. Sometimes very difficult. But I don’t regret that decision at all. In fact, I’m proud I pressed through, even when times were hard. I am a better man because of it. And I believe you will be too, if you stick with it.

Here’s the deal. Basic training is tough. So is AIT / Tech School. But it’s designed that way for all the reasons listed above, and more. The military wants to weed people out. They want people to quit, because it means their force is stronger than it would be if they opened the doors to everyone.

But how will you handle quitting? Knowing that you went back on the oath you swore to your country when you enlisted? Knowing that you could have performed better, but you chose to take the easy way out? Will taking the easy way out now make it easier for you to quit when things get hard in the future? Because they will. You will face difficult times many times in your life. The decisions you make now will impact your future decisions.

Only you can answer these questions. But I would encourage you to stick with your training, graduate from AIT, and enter into the operational military. You will quickly see that life on the other side of training is much different than living and working in a training environment. You will also gain the satisfaction of staring down a difficult task, and defeating it. Give it a shot. It’s much easier and more beneficial than purposefully failing your way out of the military.

Podcast 004: Funny Math – VA Disability Ratings. When 30 + 20 Doesn’t Always Equal 50

If I asked you the answer to 30 + 20, you would quickly tell me 50. And you would be right in just about every instance. But for veterans with service-connected disability ratings, the math doesn’t always work out quite so easily. In fact, 30 + 20 might only equal 44, which rounds down to 40. Or it might equal 48.4, which rounds up to 50. Confused yet? Welcome to the world of VA Math!

VA Math - combined disability ratings

Understanding VA math is essential for understanding your benefits.

The VA Service-Connected Disability rating system is complex. There are many reasons for this, and that’s a topic best left for another day, and another website. But there is one aspect I would like to address today: the somewhat confusing math used to determine the final service-connected disability rating awarded to veterans. This is the rating used to determine compensation payments and access to certain other benefits. It’s enormously important you understand how your rating is determined so you can make sure your benefits are calculated properly. The difference can literally be worth hundreds, or even thousands of dollars a year in compensation payments and other benefits.

Let’s dive in.

What Do Disability Ratings Represent?

The first thing to understand is what your disability rating represents. In short, the VA takes each individual injury or illness into consideration and gives it a numerical disability rating. Each rating is represented by a percentage divisible by 10 (ex: 10%, 20%, 30%, 40%, etc.). These disabilities are racked and stacked, then the VA does “VA Math” to determine your overall disability rate. We’ll get to the math later in this article.

A good way to look at this is to consider how the disabilities affect your ability to perform work and daily activities. To do this, the VA takes into account your overall efficiency after the disability or disabilities are considered. Let’s say you are a normal 40 year-old retiree with no major service-connected injuries or illnesses. Your efficiency would be rated at 100%. Now let’s assume you just retired from the military after 20 years of service and had some service-connected disabilities.

For example, let’s say you tweaked your knee while you were deployed and had arthroscopic surgery. You still have some pain and stiffness in that knee and the VA grants you a 10% service-connected disability rating. Assuming this is your only service-connected disability rating, your service-connected disability rating would be 10%. This is determined by looking at your efficiency, which is 90% (efficiency rating of 100, times 10% disability rating = 10%. You subtract 10% from 100% and end up with 90%). The math is simple when you only have one disability rating to consider. We’re going to come back to the math in a moment because it changes dramatically with each new service-connected rating we consider.

More than one disability rating? Each injury or illness is rated by itself, without consideration of other illnesses or injuries, unless they contribute to further injuries. We will also need to take into consideration whether or not the injuries are bilateral, which means they affect limbs on both sides of the body (for example, disabilities on both arms, or both legs). All of your disability ratings are listed in descending order, then the VA math begins.

How the VA Rates Multiple Disabilities

The above example covers the most basic situation – a single disability rating. In the previous example, it seems like you can just subtract the 10% from 100% and come up with 90%. But notice that we didn’t do the math that way. Things get more interesting when you have more disability ratings. Let’s run through an example, building on the previous profile.

Example profile: We’re going to stay with our example of a 40 year old military retiree. Above we said he had a disability in his knee. Let’s add a few conditions and do some math.

Let’s say our retiree has the following service-connected disability ratings:

  • 30% rating for a back injury,
  • 20% rating for right shoulder injury,
  • 10% rating for his right knee, and
  • 10% for hearing loss.

Now for the math: The VA uses a descending efficiency scale for its calculations. The VA will rate each injury or illness, giving each a numerical rating. When it comes time to determine the overall rating, the VA will start with the highest rating, then work its way down. You start with an efficiency rating of 100, then work your way down. Each new disability gives you a new baseline.

We start by racking and stacking the disabilities.  In the example above, we have ratings of 30%, 20%, 10%, and 10%. We start with the 30%, then factor in the 20%, the 10%, then the final 10%. Again, we aren’t subtracting here, we’re doing VA math. At the bottom of this article is the VA Combined Ratings Table, which we will use to complete our calculations (you may find it easier to open this article in two browser tabs so you can follow along, or download and print the Combined Ratings Table, which we have a link to).

We start with the 30% disability. Look at the Combined Ratings Table and scroll down the left column until you find the number 30. Then go to the right column until you find the 20. The 30 and 20 combine for 44. If those are your only two ratings, you would have a 44% Va service-connected disability rating, which would round down to 40%. But we’re not done. We still have to add two 10% ratings.

Start on the left column again. This time, you will look for the 44 in the left column. Then find the intersection point with the 44 and 10. Your new rating is 50%. Repeat this one more time, starting with 50, and meeting up with 10. Your new combined rating is 55%, which rounds up to 60%.

How does this add up? Again, we aren’t doing normal subtraction here. We are doing VA math. You start with your efficiency rate of 100, multiple it by your disability rating, then subtract the result from your original rating. In this case, you would multiple 30% times 100, and get 30. You subtract that from 100 and come up with 70. Your new efficiency rating is 70 and your disability rating is 30. This is the starting point for the next calculation. You repeat the process for the next rating. You take 20%, multiply it by 70, and come up with 14. You subtract 14 from 70, and you get 56. Your new efficiency rating is 56, and your disability rating is 44. You repeat the process for each additional disability rating.

The math can be a bit confusing if you try to do it manually. The best thing to do is use the VA Combined Ratings Table, which does the math for you.

How Bilateral Disabilities Affect Your Rating

There is one more issue we need to consider – the bilateral factor. The bilateral factor can have a big impact on your rating, so don’t dismiss it.

What is the Bilateral Factor? The bilateral factor is considered when the veteran has disabilities on both limbs (for example, both arms, or both legs, or of paired skeletal muscles). The disabilities don’t have to mirror each other. For example, they don’t need to occur on both knees to be considered bilateral. A left foot disability and a right knee disability satisfies the requirement they injuries be on both legs.

With the bilateral factor, the VA combines two or or more ratings, adds a bilateral factor to the outcome, and considers them as one rating when using the Combined Ratings Table (found below). It’s best if I quote the regulations the VA uses, then we’ll use this in an example:

§4.26 Bilateral factor (Source).

When a partial disability results from disease or injury of both arms, or of both legs, or of paired skeletal muscles, the ratings for the disabilities of the right and left sides will be combined as usual, and 10 percent of this value will be added (i.e., not combined) before proceeding with further combinations, or converting to degree of disability. The bilateral factor will be applied to such bilateral disabilities before other combinations are carried out and the rating for such disabilities including the bilateral factor in this section will be treated as 1 disability for the purpose of arranging in order of severity and for all further combinations. For example, with disabilities evaluated at 60 percent, 20 percent, 10 percent and 10 percent (the two 10’s representing bilateral disabilities), the order of severity would be 60, 21 and 20. The 60 and 21 combine to 68 percent and the 68 and 20 to 74 percent, converted to 70 percent as the final degree of disability.

(a) The use of the terms “arms” and “legs” is not intended to distinguish between the arm, forearm and hand, or the thigh, leg, and foot, but relates to the upper extremities and lower extremities as a whole. Thus with a compensable disability of the right thigh, for example, amputation, and one of the left foot, for example, pes planus, the bilateral factor applies, and similarly whenever there are compensable disabilities affecting use of paired extremities regardless of location or specified type of impairment.

(b) The correct procedure when applying the bilateral factor to disabilities affecting both upper extremities and both lower extremities is to combine the ratings of the disabilities affecting the 4 extremities in the order of their individual severity and apply the bilateral factor by adding, not combining, 10 percent of the combined value thus attained.

(c) The bilateral factor is not applicable unless there is partial disability of compensable degree in each of 2 paired extremities, or paired skeletal muscles.

Example using the Bilateral Factor

Let’s stick with the example profile from above, but let’s add another knee disability, one on each leg. This would qualify for the bilateral factor. The disability rating for each knee was 10%, but when combined, they equal 21%, according to the VA’s Combined Rating Table. Here is how we apply the bilateral factor:

Bilateral Factor Applied:

A 10% disability combined with another 10% disability = 19%,

Then you add 10% of 19, or 1.9%.

19% + 1.9% = 20.9%, which rounds up to 21%.

The combined rating for both knees is now 21%, and the VA will use 21% as the rating for those disabilities. It is possible to have more than two disabilities combined in the bilateral factor.

New example with Bilateral Factor: We’ll stick with the previous example, but add the other knee injury and see how it affects the final outcome. Let’s say our retiree has the following service-connected disability ratings:

  • 30% rating for a back injury,
  • 21% (10% rating for his left knee, and 10% rating for his right knee, with bilateral factor applied),
  • 20% rating for right shoulder injury, and
  • 10% for hearing loss.

Using the Combined Rating Table, we start with the 21% and the 30%. This takes us to 45. Follow the left column down to 45 and find where it intersects with 20. You get 56. Repeat the process for 56 and 10, and you get 60. This overall service-connected disability rating for this veteran is exactly 60%.

The previous example was 55%, rounded up to 60%, and this example was exactly 60%. As your disability percentage increases, it takes more disabilities with higher ratings to move the needle. This is the impact of the math the VA uses to determine disability ratings. Here is another example using a bilateral factor.

VA Combined Ratings Table

The VA Combined Ratings Table is where all the math magic happens.

Instructions: List all disabilities in descending order. Start with the highest disability rating, find it in the left column, and find the intersecting point with the next highest disability rating. This is your combined rating for these two disabilities. If these are your only two disabilities, you can round to the nearest number divisible by 10 (anything 4.9 and lower are rounded down; 5 and higher are rounded up). Repeat this process until you have run the numbers for all disability ratings.

(Article continues below table):

102030405060708090
19273543516068768492
20283644526068768492
21293745536168768492
22303845536169778492
23313846546269778592
24323947546270778592
25334048556370788593
26334148566370788593
27344249566471788593
28354250576471788693
29364350576572798693
30374451586572798693
31384552596672798693
32394652596673808693
33404653606773808793
34414754606774808793
35424855616874818794
36424955626874818794
37435056626975818794
38445057636975818894
39455157637076828894
40465258647076828894
41475359657176828894
42485459657177838894
43495460667277838994
44505561667278838994
45515662677378848995
46515762687378848995
47525863687479848995
48535864697479849095
49545964697580859095
50556065707580859095
51566166717680859095
52576266717681869095
53586267727781869195
54596368727782869195
55606469737882879196
56606569747882879196
57616670747983879196
58626671757983879296
59636771758084889296
60646872768084889296
61656973778184889296
62667073778185899296
63677074788285899396
64687175788286899396
65697276798386909397
66697376808386909397
67707477808487909397
68717478818487909497
69727578818588919497
70737679828588919497
71747780838688919497
72757880838689929497
73767881848789929597
74777982848790929597
75788083858890939598
76788183868890939598
77798284868991939598
78808285878991939698
79818385879092949698
80828486889092949698
81838587899192949698
82848687899193959698
83858688909293959798
84868789909294959798
85878890919394969799
86878990929394969799
87889091929495969799
88899092939495969899
89909192939596979899
90919293949596979899
91929394959696979899
92939494959697989899
93949495969797989999
94959596969798989999

Source: 38 CFR 4.25 – Combined ratings table. Downloadable PDF: You can download this table here (pdf, courtesy of PurpleHeart.org).

Online VA Disability Ratings Calculator: It’s great to know how to use the Combined Ratings Table so you can verify your disability rating for yourself. But it’s also nice to be able to use a calculator that takes all of these factors into consideration. Here is a great online calculator that will help you determine your disability rating. This calculator seems accurate for the most part. However, it doesn’t seem to account for the bilateral factor. So you may wish to use the Combined Ratings Table to determine your overall rating if you have bilateral disabilities.

Summary: VA Math can seem confusing at first. But it makes sense when you take some time to run the numbers. When in doubt, use the Combined Ratings Table to do the math for you. If you have further questions about your specific case, then I recommend contacting the VA for clarification, or contacting a Veterans Service Officer at a Veterans Service Organization. VSO’s will help you with your claim free of charge.

Oh, and as for the examples with the 30 + 20: The combined ratings table shows us two disabilities rated at 30 and 20 equal 44%. This rounds down to 40% disability rating. If you apply the bilateral factor to disability ratings of 30 and 20, you would get 48.4% (44% + 4.4%). This rounds up to 50%.

Does the SCRA Allow You to Miss Loan Payments?

I was recently contacted by a new military spouse who wanted to know if the Servicemember’s Civil Relief Act allowed his wife to miss a payment on her credit card and avoid paying the associated fees and service charges. Here is the question:

Servicemembers Civil Relief Act

Q: Hey Ryan, my wife got a credit card about 2 months before she left for basic training. She is active duty Army. She was employed before even entering the Army, but left her job about two weeks before leaving for basic.  She didn’t receive pay for 45 days after leaving for basic. In that time her credit card payments were due. Well, with all other expenses she/we didn’t have the funds to make the payment so they charged her a late payments and have reported the missed payment on her credit report, even though they knew of the situation b/c I had called them to keep them up to date. We have her shipment papers showing she was gone and the bank that we have the credit card through can see where we set her direct deposit up, and when the first payment was deposited. Isn’t there something that protects her from this effecting her and her credit and the charges?

A: Thanks for contacting me.The Servicemember’s Civil Relief Act offers a wide range of protections for military members, including some that pertain to loans and interest rates. However, I don’t know if you will be able to get any late fees or interest charges waived in this situation. The SCRA doesn’t eliminate the requirement to make on-time payments for loans entered into before the service. What it does do is allow you to lower your interest rate to 6% for pre-service debt and obligations.

What this means, and what you should do. The SCRA allows you to request that your interest rate be lowered to 6% for all debts incurred before your wife entered the military. This would apply to her credit card, and any other loans she has. Note, this will only apply to loans with her name, this won’t apply to loans that you have only in your name. The lender is required to lower the interest rate to 6%.

This decreased interest rate will only apply to old charges, and will not apply to anything that was put onto the card after she joined the military. But it may help you pay off the credit card balance more quickly. You can contact your base legal department with assistance if your credit card issuer does not readily lower the interest rate. Even though it is the law, some companies push back, either out of ignorance of the law, or because they prefer to use other methods before complying. Don’t let them push you around – this is a law they must comply with!

What about the missed payment? Your best bet would be to contact the lender and ask them to waive the fee and interest charges one time as an act of good faith. Many lenders will do this one time if you otherwise have a good record. You can also offer to set up automatic payments for at least the minimum payment each month, that way he credit card issuer won’t ever have to worry about getting a late payment in the future.

Protect your credit score. You should also request they remove the late payment from your credit report if they are willing to do so. This will help keep your credit score in good standing, as missed payments will hurt your score. Keep in mind that while a missed payment will hurt your score, it won’t necessarily prevent you from opening further lines of credit. Here are tips for improving your credit score, which you may find helpful in this situation. Finally, you should periodically monitor your credit score to see how it is changing. This is good information to have if you are applying for a new credit card or loan. Here is how you can get a free score.

Consider finding a new bank or lender. Finally, you may consider joining a military-friendly bank. These financial institutions offer a wide variety of financial products and services, very competitive rates, and excellent customer service. More importantly, they know what it means to serve, and they are often more lenient with missing a credit card payment one time, or having financial difficulties due to a deployment, temporary duty assignment, or relocation. I recommend looking at your options and seeing if any of those banks meet your needs. Here are some recommended military banks.

I hope you find these tips helpful.

By the way, welcome to the military community! The military truly is a different way of life, and I’m sure there have been some challenges getting acclimated to being a military spouse. I can speak from experience. I was prior active duty Air Force, but I was also a civilian spouse for about a year after I got out of the military. There was a lot I didn’t know, even with my military experience! Thankfully, there are many websites now dedicated to military spouses. Here are a few I recommend looking at for valuable information and for a sense of community:

  • MaleMilSpouse.com (formerly Macho Spouse) – a community dedicated to male military spouses.
  • MilitarySpouse.com – Tons of great information on PCSing, deployments, career tips, and more.
  • SpouseBuzz.com – A Military.com-owned site with lots of great info on military life, family, new laws/policy, and more.

Remember, you can always reach out to the military and military spouse communities for help, large or small. Best of luck to you and your wife in your military journey!

Army Tuition Assistance Benefits – Updates for FY 2015

The Army recently updated their Tuition Assistance (TA) program with a focus on ensuring their Soldiers are more focused on military readiness and training as opposed to spending more time on college classes. Soldiers will still have the opportunity to use Tuition Assistance to achieve their educational goals, however, Soldiers must first meet more stringent criteria to be eligible to participate in the TA program. The most recent updates to the Army Tuition Assistance Benefits program were released in August 2014, and apply to FY 2014.

Army Tuition Assistance Benefits

Big changes are coming to Army TA benefits.

While not everyone will be happy with these changes, the Army was compelled to make these changes to meet readiness goals and to help stretch the ever shrinking budget. Let’s dive in and take a look at what the Army TA program offers, who is eligible, which educational programs are covered, and how to take advantage of this valuable benefit.

FY 2015 Army Tuition Assistance Benefits Updates

The following rates are effective immediately, and are in place from October 1, 2014, through September 30, 2015. (There were no changes to the rates from FY 2014).

2015 Tuition Assistance Rates: Effective January 1, 2014, the Army will fund 100% of the tuition for up to 16 hours of credit, not to exceed $250 per credit hour (for a total of up to $4,000 per fiscal year). This replaces the previous limit of 18 semester hours of credit with a cap of $4,500 per fiscal year (FY 2013 rates).

Starting October 1, 2014, the Army will no longer pay certain fees, including laboratory and course fees. This is in accordance with Department of Defense Instruction 1322.25 (PDF).

Army Tuition Assistance Eligibility

Perhaps the biggest change to the Army Tuition Assistance program pertains to eligibility requirements. The following is applicable to all Soldiers, regardless of component, who apply for Tuition Assistance.

Army Tuition Assistance Benefits Program Eligibility (source):

  • Soldiers will be eligible for TA upon successfully completing one year of service following graduation from Advanced Individual Training (AIT).
  • Soldiers can use TA for a second, higher level degree (post Bachelor’s) once they have 10 years of service, if any portion of the undergraduate degree was funded with TA. There is no 10 year requirement if TA did not fund any portion of undergraduate work. (Beginning January 1, 2015).
  • Soldiers may take up to 16 semester hours (SH) per fiscal year at the rate of $250/SH each year.
  • Soldiers can use TA for 130 SH for a bachelor’s degree and for 39 SH for a master’s degree.
  • This level of funding permits soldiers to complete one degree at each level as part of an approved degree plan.
  • As other fully funded programs are available for first professional degrees (PHD, MD, JD), TA is not designed for this purpose.
  • To be eligible for TA, Soldiers must meet army physical fitness test (APFT) and height/weight standards and not have a DA adverse action flag.
  • TA requests must be submitted and approved prior to the first class date, without exception.
  • Beginning September 6, 2014, reimbursement will be required from the servicemember if a successful course completion is not obtained.
  • The procedures will remain in effect until superseded or rescinded.

As you can see, the focus is on ensuring Army Soldiers first meet Army training standards before they can participate in Tuition Assistance benefits. There are a couple points worth highlighting:

Soldiers must complete one year of service after completing AIT. This doesn’t mean you have to complete AIT and have 1 year of service. You must serve one year after completing AIT. This ensures Soldiers are focused on upgrade training and proficiency before focusing on college.

The 10 year rule is also new, and worth noting. This doesn’t mean you have to wait 10 years after completing your Bachelor’s Degree before the Army will help pay for your Master’s Degree. This simply means you need to reach the 10 year mark in service. This is when the Army considers Soldiers as Career Soldiers. The Army knows they will get a better return on their investment with this rule. This also may not affect many soldiers who started their college courses later in their careers. (No word if there will be exceptions to this rule for prior-enlisted officers who used TA to achieve their Bachelors and receive a commission).

Eligible Study Programs: Tuition Assistance is available programs offered by accredited schools that are registered with GoArmyEd. Professional degrees such as a PHD, MD, or JD were listed as ineligible for the Army Tuition Assistance program. However, these degrees are required for hard to fill billets, and are almost always in high-demand. There are special programs to help Soldiers achieve these degrees.  See your Education and Training Office for more information regarding eligible study programs and schools.

Why the Army Changed The Tuition Assistance Program

Budgets are being crunched from all directions, and each branch of the service has been tasked with doing more with less. The Army TA program was briefly halted last year due to the automatic spending cuts that were part of the Sequestration. After the programs were reinstated, each branch took a long look at how they could reduce the budget while still offering their troops education benefits. Each branch altered their TA program to some degree, with the Air Force making many changes similar to the Army TA Program. The Coast Guard had the most drastic changes, in which they reduced the benefit to a 75% tuition payment with the member paying the remaining 25%. The Coast Guard also reduced the total number of credit hours per year.

Alternative Ways to Pay for College

Army Soldiers who aren’t eligible for the Tuition Assistance program still have options to continue their education while they are serving. For example, the DoD offers military members the opportunity to take credit by examination tests, including the CLEP and DANTES tests. Passing these test gives students college credits at a variety of colleges and universities. They can be a great way to reduce the amount of time needed to achieve a degree. I used these extensively while taking classes on active duty. Many colleges and universities also offer credits for military service.

Other ways to pay for college include using the Montgomery GI Bill, the Post-9/11 GI Bill, military scholarships, federal grants, grants and scholarships from schools, and other tuition assistance programs.

With a little planning, it may be possible to achieve a Bachelor’s Degree with little to no out of pocket expense, without using the Army TA program. This would allow enlisted members to complete a Bachelor’s Degree, then begin working on a post-bachelor’s degree without having to wait to reach the 10 year service mark.