Yes. You can receive both, in full, at the same time. Neither one reduces the other.
I get this question more than almost any other, and I understand why. Veterans who went on to federal civilian careers have spent years hearing about offsets, waivers, and rules that take money from one pocket to fill another. So when a service-connected veteran starts thinking about FERS disability retirement, the first worry is usually the same: am I going to lose my VA check?
You are not. But the confusion comes from somewhere real, and it is worth understanding where, because the same people who ask this question often have other rules to think about that actually do apply to them.
Why people think there is an offset
There is an offset in federal law between VA disability compensation and military retired pay. A military retiree with a VA rating generally has to waive retired pay dollar for dollar to receive VA compensation, unless they qualify for one of the exceptions Congress created in 2004 (CRDP for retirees rated 50 percent or higher with 20 years, and CRSC for combat-related conditions). That rule has been argued about for decades, and almost every veteran has heard some version of it.
FERS disability retirement is not military retired pay. It is a civilian annuity paid by OPM out of the Civil Service Retirement and Disability Fund, earned through your federal civilian job. The military offset in Title 38 does not reach it. Your VA compensation is paid by VA for your service-connected conditions. Your FERS disability annuity is paid by OPM because you can no longer do your federal civilian job. Two agencies, two laws, two separate reasons for paying you.
So if you were never a military retiree, you never had an offset to begin with. And if you are a military retiree, the offset you already deal with is between VA and DFAS. Adding a FERS disability annuity does not change it.
The two programs ask different questions
Receiving both is allowed. Qualifying for both is a separate matter, because the standards are not the same, and a strong VA claim does not automatically make a strong FERS claim.
VA asks whether a condition is connected to your military service and how severe it is on a rating schedule. The rating is about the condition. It does not ask what job you have now or whether you can do it.
OPM asks something narrower. It wants to know whether a medical condition, expected to last at least a year, prevents you from providing useful and efficient service in the specific position you hold, and whether your agency could accommodate you or reassign you to another job at the same grade. That is about your duties, not your diagnosis.
This is where I see veterans get into trouble. A 70 percent VA rating feels like it should settle the question. It does not. OPM will look at your rating decision as evidence, and it can help, but OPM is not bound by it. What OPM needs is a treating physician explaining which specific restrictions keep you from doing specific duties in your position description. A rating letter from VA rarely says any of that, because VA was never asked to.
The reverse is also true. I have seen people with a modest VA rating, or none at all, approved for FERS disability retirement because the medical evidence connected clearly to the job. The rating number is not the case. The connection between your restrictions and your duties is the case.
What actually does interact with your FERS disability annuity
VA compensation does not touch your annuity. A few other things do, and veterans sometimes mix them up with the VA question.
Social Security disability
You are required to apply for SSDI as part of a FERS disability retirement application. For the percentage-based disability computation before age 62, SSDI entitlement generally reduces the FERS amount, subject to the earned-annuity floor. In the first year, the reduction is 100 percent of the SSDI benefit. After that, it is 60 percent of the SSDI benefit until age 62. This is the offset that catches people by surprise, and it has nothing to do with VA. Your VA compensation is not counted in that calculation.
The 80 percent earnings limit
A FERS disability annuitant under 60 can work, but if income from wages or self-employment reaches 80 percent of the current rate of pay for the position you retired from, OPM considers you restored to earning capacity and the annuity stops. VA disability compensation is not wages and it is not self-employment income. It does not count toward that limit. Neither does your SSDI. The test looks at what you earn by working.
Military retired pay and your service credit
If you are also a military retiree and you want your military years counted toward your FERS annuity, you generally have to make a military service deposit and waive your military retired pay. Exceptions include qualifying reserve retired pay and certain combat- or instrumentality-of-war disability retired pay; confirm the statutory conditions with OPM. That decision is about retired pay, not VA compensation. You do not waive VA compensation to get FERS credit for military service, and you do not lose it when you make the deposit.
That distinction matters because a lot of veterans assume the waiver rule applies to everything coming from their military service. It applies to retired pay only.
Taxes
VA disability compensation is not taxable. Your FERS disability annuity generally is. That is not an offset, but it changes what the two checks are worth side by side, and it is worth knowing before you build a budget around them.
One practical thing to think about before you file
Your VA file can be useful in a FERS application, but not in the way most people use it. Do not attach the rating decision and assume it carries the case. Use it as a source of medical history, and then get your treating physician to write the statement OPM actually needs: what you can and cannot do, for how long, and how that collides with the duties in your position description.
If your VA conditions are the same conditions keeping you from your federal job, the C&P exam reports and treatment records from VA can support that nexus. If they are different conditions, keep them separate in your application so OPM does not have to sort out which ones you are claiming.
And if you are already receiving VA compensation, FERS approval ordinarily does not reduce service-connected VA compensation. Continue to meet all VA reporting requirements; employment can matter if you receive Individual Unemployability (TDIU), and VA pension has different income rules.
The short version
- You can receive VA disability compensation and a FERS disability annuity at the same time. Neither reduces the other.
- The offset veterans have heard about is between VA compensation and military retired pay. It does not apply to a FERS civilian annuity.
- A VA rating is evidence in a FERS case, not a decision. OPM needs the link between your restrictions and your specific job duties.
- What does reduce a FERS disability annuity is SSDI. What can end it is earned income at or above the 80 percent limit. VA compensation counts toward neither.
- If you are a military retiree, the waiver question is about retired pay and service credit. VA compensation stays out of it.
Military retired pay and VA compensation offset, CRDP and CRSC: 38 U.S.C. §§ 5304–5305, 10 U.S.C. § 1414, 38 CFR 3.750; Congressional Research Service, “Concurrent Receipt of Military Retirement and VA Disability” (IF10594). FERS disability retirement standard and annuity computation, including the SSDI reduction and the 80 percent earning-capacity test: 5 U.S.C. §§ 8451–8456, 5 CFR Part 844. Military service credit and retired-pay waiver: 5 U.S.C. § 8411(c). VA compensation exempt from taxation: 38 U.S.C. § 5301(a). This article is educational information from a non-attorney consultant and is not legal, tax, or financial advice. Individual outcomes depend on the facts and evidence in each case.