While extremely controversial, disability benefits may be divided up in divorce settlements. 

The treatment of military disability pay in divorce is a complicated issue, which is governed by federal and state laws. However, VA disability benefits may be untouchable when argued in the proper jurisdiction.


Military Retired Pay

The Uniformed Services Former Spouses Protection Act (the “USFSPA”) allows divorce courts in all states to award service members’ former spouses a portion of “disposable retired pay,” which is the amount of retired pay available (after necessary deductions) based on salary and years of service. In order to receive military retired pay, you must have served 20 or more years in one of the four branches of military services OR have been “medically retired” on injuries during active duty service. The exact portion the former spouse receives is decided either by an agreement between spouses or by the state divorce court. 


Military Disability Pay

It’s important to understand that DFAS, the Defense Finance and Accounting Service, is typically responsible for Department of Defense pay. This goes to: the Marine Corps, the Air Force, the Coast Guard and Navy servicemembers. Anything that comes from DFAS is typically taxable, while anything that comes from the VA typically is considered non-taxable. 

The Veterans Affairs is for former servicemembers and is an entirely separate branch of government, with many “non-taxable” protections for the pay and resources they give veterans. 

Under the USFSPA, military disability pay is excluded from the typical definition of disposable retired pay, and therefore, disability pay is not subject to the same rules of division in a divorce. So when a service member waives retired pay in exchange for disability pay (coming from the VA), former military spouses may lose out on hundreds or thousands of dollars they might otherwise have received in the division of disposable retired pay.

There are two different types of military disability pay, both of which are excluded from the USFSPA definition of disposable retired pay: 1.) military disability retired pay, and 2.) VA disability compensation.


Military Disability Retired Pay

Military disability retired pay is available for service members who are so sufficiently disabled that they cannot perform their duties. Members that have enough creditable service (years served) may be placed on the “Temporary Disability Retired List” or “Permanent Disability Retired List” and draw disability retired pay. Military disability benefits are not considered “disposable retired pay” and cannot be divided between spouses in divorce court.


VA Disability Compensation

The second type of disability compensation, as stated above, is from the Department of Veteran’s Affairs (“VA Disability Compensation”). This compensation system is meant to cover injuries or disabilities that occurred while on active duty, or which were made worse by active service, including mental or physical injuries that are service-connected. The injuries do not have to occur while in active combat zones. An example of this may be VA disability compensation covering a shoulder injury that is the result of routine physical training.

The disability rating system used for VA compensation measures the extent of the disability and its effect on the service member’s employability. This is why it is controversial for a spouse to try to claim they are entitled to a veteran’s disability pay, who sacrificed his or her mental and physical health for the country and may be severely injured. Why should the spouse be getting a portion of a veteran’s pay meant for that particular veteran to survive?

Service members must waive a certain amount of retired pay (or even all of it) in order to receive VA disability compensation. As stated above, VA disability compensation cannot be divided between spouses in a state divorce court. If a service member waives any portion of military retired pay in exchange for VA disability, the amount waived is subtracted from the amount available to the former spouse.


Planning for Disability Pay

However, military spouses do have protections and/or remedies for these types of reductions in retired pay! 

First, military spouses may enter into agreements to help avoid these results. Divorcing couples often enter into “separation agreements” or “property settlement agreements” (PSAs), which are written contracts that resolve divorce-related issues (for example, property division, alimony, custody and child support). These agreements may include a provision that states if the service member waives any retired pay for disability pay, or is placed on the disability retired list, the service member would make a monthly payment to the non-military spouse in an amount that makes up for the lost retired pay.

Second, if the military spouse refuses to enter in such an agreement, the non-military spouse (or the spouse’s attorney) could ask the divorce court to retain its jurisdiction (authority) to order the military member to pay spousal support in the future, or to modify an existing alimony order based on any change in the parties’ circumstances. If the military retired pay is reduced as a result of the receipt of disability pay, the non-military spouse may ask the court to “make up the difference” by ordering the military member to pay spousal support (or increased support) in the amount of the retired pay that’s been lost.



In military divorces, it’s essential to have a clear understanding of the issues surrounding military disability retired pay and VA disability compensation. Service members and military spouses going through a divorce should consult a knowledgeable family law attorney with experience in military divorces such as Smith Strong, PLC.


Special Thanks to Law Clerk William Taylor Gleason for his assistance with this article.

H. Van Smith
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