By David Martin and Sydney Smith

            In short, yes VA disability benefits can be an offset if noted in the plan document. That can be an unwanted surprise for a veteran who is injured in service, returns to the work force and then becomes disabled from that job for an entirely different reason.  

What are Veteran Affairs Disability Benefits?

Veterans' Affairs (VA) Disability benefits are a monthly tax-free payment to veterans who suffered permanent sickness or injury while serving in the military or had a condition made worse. It is important to note that VA benefits do not require the person to be unable to work their job or unable to live an active life. Instead, the benefit operates on the basis that the person is no longer physically suited for military efforts. That is in contrast to other disability benefits. The benefit payment rates can vary from $180 to $4,671 a month depending on the level of disability and family status.

How a VA Disability interacts with Short and Long-Term disability.  

In short, VA disability benefits can be used to offset or reduce a long-term disability benefit; however, they must be noted as an offset in the Plan.[1] There may be an offset even if the disability benefit payments being made are not for the same disability.[2] Even if VA Benefit is not listed as an offset, if the Plan allows for the offset under a “Compulsory Benefit Act or Law” provision, then the VA disability benefits could be considered an offset. One state, Texas,[3] has denied the use of VA benefits as on offset if the plan did not specifically mention VA Disability. That is not a rule widely followed.

The question arises if a state can prohibit such an offset. Currently Alabama has no regulation prohibiting a VA disability offset. States do have the right to regulate insurance products available in the state in certain instances. See, 29 USCS § 1144 (b)(2)(A) where ERISA excepts from preemption state regulations of insurance. See also, Ky. Ass'n of Health Plans v. Miller, 538 U.S. 329, 331, 123 S. Ct. 1471, 1473 (2003). It seems to be a worthy cause to prohibit such offsets. A veteran lost part of his function serving his country, and should not be penalized when that loss has no bearing on working.

            If you are a veteran who receives a VA benefit but can otherwise work, it is important to know if your group benefit has such an offset before a claim arises. You can raise the issue with your employer to ascertain if another product could be obtained. Most workers just assume a group long term disability plan benefit will be there when the need arises, but there may be an unwanted surprise ahead. Look to see if VA disability can be used as an offset. Carefully read the Plan documents to understand what is considered an offset, especially if it reduces your benefit to very little or nothing at all. Knowing all possible offsets is an important part of relying on a long-term disability plan to help when a condition arises which makes it impossible to work your job.