Military service members who retire—either after at least 20 years of military service under the longevity-based retirement program or early because of a disability—are eligible for retirement annuities from the Department of Defense (DoD). In addition, veterans with medical conditions or injuries incurred or that worsened during active-duty military service may be eligible for disability compensation from the Department of Veterans Affairs (VA).
Until 2003, military retirees eligible for disability compensation could not receive both their full retirement annuity and their disability compensation. Instead, they had to choose between receiving their full retirement annuity from DoD or receiving their disability benefit from VA and forgoing an equal amount of their DoD retirement annuity; that reduction in the retirement annuity is typically referred to as the VA offset. Because the retirement annuity is generally taxable and disability compensation is not, most retirees chose the second alternative.
Sourced through Scoop.it from: www.cbo.gov