Reaching age 65 is a major milestone for many veterans. In addition to becoming eligible for Medicare, turning 65 also affects VA disability benefits for some veterans. Here is what you need to know about how your VA disability payment may change after turning 65.
Your VA disability payment itself does not change at age 65
First, it’s important to understand that simply turning 65 does not automatically reduce or eliminate your VA disability compensation. The monthly VA disability payment itself is not affected by reaching age 65. The VA disability rating system is intended to compensate veterans for injuries, illnesses, or conditions incurred during military service. Your disability rating and monthly payment amount do not go down just because you hit a certain age. As long as the medical conditions that are the basis for your VA disability rating still exist, your monthly payment continues regardless of your age.
Concurrent receipt of military retirement pay and VA disability
One way that turning 65 can impact VA disability benefits is through concurrent receipt rules. Some veterans receive both military retirement pay from DoD and VA disability compensation. However, there are rules in place that prohibit receiving both payments in full at the same time, which is known as “concurrent receipt.” If you receive military retired pay and VA disability, your retirement pay is usually reduced by the amount of your VA compensation.
For veterans eligible for both military retirement pay and VA disability who are under age 65, the retirement pay offset still applies in most cases. However, when you reach age 65, the offset is phased out. At 65, you become eligible to receive both payments in full, without any reduction in retirement pay. This allows veterans with a military retirement and a VA disability rating to receive full compensation from both programs after hitting the milestone age.
Example of VA disability payment increasing at age 65
Here is an example of how concurrent receipt rules can lead to an increase in benefits from the VA at age 65:
- John is a retired Army veteran who began receiving his military pension at age 60. His monthly pension amount is $1,500.
- John also has a VA disability rating of 40% and receives a monthly VA compensation payment of $600.
- Since John is under 65, his $600 VA payment is subtracted from his $1,500 military pension, reducing it to $900.
- When John turns 65, the offset is eliminated. He now receives his full military pension of $1,500 and his full VA disability payment of $600, for a total monthly income of $2,100.
So in this example, John sees his income increase by $600 per month solely as a result of turning 65 and becoming eligible for concurrent receipt of both retirement pay and VA disability pay.
Effect on VA disability pay from earned income
Another way that reaching age 65 can impact VA disability is through earned income rules. The VA places limits on how much outside income a veteran can earn before it begins reducing the VA disability payment amount. But at age 65, the income thresholds are increased.
Here are the current income thresholds that apply to VA disability beneficiaries:
| Veteran’s Status | Income Threshold |
|---|---|
| Under age 65 | $14,450 per year |
| Age 65 or older | $18,735 per year |
As you can see, the income limit increases by over $4,000 once the veteran reaches age 65. This higher threshold allows veterans collecting VA disability compensation to earn more income from other sources, like part-time work, without seeing a reduction in their monthly VA payment.
VA disability income reduction formula
If your income does exceed the VA limit, your payment is not immediately eliminated. Instead, the VA uses a formula to phase out the payment gradually as income rises. For every $1 over the income threshold, your VA disability payment is reduced by $0.50. So at age 65, the offset would not kick in until income exceeds $18,735 and then the reduction is gradual based on how much income exceeds the limit.
Enrollment in Medicare at age 65
Turning 65 also comes with eligibility for Medicare health insurance coverage. This can impact your VA medical benefits and any health insurance you currently have. Here are some key points on how new Medicare eligibility at 65 interacts with VA health care:
- The VA health care system does not require you to enroll in Medicare at 65 in order to keep your VA benefits.
- You can stay on your current non-Medicare insurance plan past 65 while also keeping your VA health benefits.
- If you do enroll in Medicare Part A and/or Part B at 65, you can still use your VA health coverage. The VA will bill Medicare for any services, procedures, or medications covered under Medicare rules.
- Prescription drug coverage under Medicare Part D does cause you to lose eligibility for VA pharmacy benefits.
- The VA recommends veterans enroll in Medicare Part A and Part B to allow the VA to bill Medicare and free up resources in the VA system.
So newly gaining Medicare at 65 does not reduce or eliminate your core VA medical benefits, but it can change some coordination between VA care and outside insurance.
VA disability and Social Security
In addition to Medicare, Social Security benefits are another government program that veterans gain access to at age 65. But Social Security income has no effect on VA disability compensation. You can receive full VA disability pay along with any Social Security retirement benefits without any offset between the two programs. Your eligibility for Social Security or your benefit amount is also not affected by receiving VA disability pay.
Other veteran benefits at age 65
A number of other programs are available to veterans once they reach age 65:
- The Civilian Health and Medical Program of the Department of Veterans Affairs (CHAMPVA) provides health coverage to dependents and survivors of disabled veterans. Eligibility begins at age 65.
- Veterans pension benefits from the VA are available at age 65 with limited income and either wartime service or a service-connected disability.
- Veterans aged 65+ may qualify for property tax exemptions offered by some states to reduce their tax burden.
- Discounts on various products and services may be offered to senior veterans by local businesses especially around Veterans Day.
Planning for the impact of age 65 on VA benefits
The arrival of your 65th birthday will likely bring about some changes to your VA benefits and overall financial situation as a veteran. Here are some tips on planning ahead for this milestone:
- Review your retirement income, VA disability pay, health coverage, and other benefits well before turning 65 to see how programs may interact.
- Make decisions about enrolling in Medicare or continuing other health insurance in light of your VA medical benefits.
- Consider working with a financial advisor or benefits expert to map out your optimal mix of VA, Social Security, Medicare, and other income sources.
- Plan for changes in your income, taxes, healthcare expenses, and insurance coverage to make the most of your benefits.
- Contact the VA, Social Security Administration, and your current health plan with questions about how benefits adjust at 65.
Conclusion
While VA disability compensation itself does not change due to age, turning 65 is still an important milestone for veterans collecting disability pay. Concurrent receipt rules, earned income thresholds, health insurance options, and eligibility for other benefits all see changes at age 65. Planning ahead and understanding how to navigate these changes is crucial to make the most of your benefits as a veteran once you reach this major birthday.
