How does DFAS calculate which benefit (CRDP or CRSC) pays more for retirees eligible for both?

1. How the two benefits are calculated, in broad strokes

CRDP restores a retiree’s retired pay by eliminating the VA “offset” for eligible retirees (generally those with a VA rating of 50% or greater), meaning DFAS increases the monthly retired pay amount up to the portion based on years of service; this adjustment is automatic for qualifying retirees ^{[3] [1]}. CRSC, in contrast, is a separate, tax‑free payment awarded only after an application and a service‑department determination that specific disabilities are combat‑related; CRSC reimburses some or all of the VA waiver but is issued as a distinct payment and is limited so that CRSC plus reduced retired pay does not exceed the total retired pay amount ^{[2] [4] [5]}.

2. What DFAS actually compares when deciding which pays more

DFAS compares the dollar amount the retiree would receive under CRDP (the restored retired pay amount) against the sum the retiree would receive under the CRSC regime (retired pay with the VA waiver still deducted, plus the CRSC reimbursement check issued by the service); DFAS will pay the greater of the two benefit amounts when a retiree is eligible for both, though administrative rules and prior elections can affect implementation ^{[5] [6] [2]}.

3. Important technical and tax variables that change the comparison

The headline comparison is gross dollars, but two technical differences commonly change which option is better in practice: CRDP is taxable because it increases DFAS‑paid retired pay, while CRSC is generally tax‑free because it is a disability reimbursement from the service; and CRSC calculations only reimburse combat‑related portions of a VA rating as determined by the service, which can make CRSC smaller even when the VA overall rating is high ^{[4] [2]}. Additionally, retirees with retired pay that was calculated with an in‑service disability factor may find CRDP only restores the years‑of‑service portion and not the disability‑based portion, which affects the DFAS calculation ^{[7] [4]}.

4. Elections, timing, and administrative reality

CRDP is automatic for qualifying retirees and will be applied by DFAS unless the retiree has an active, approved CRSC award or makes a different election during the designated open season; by contrast, CRSC requires a claim and a service‑level determination, and once approved those payments and DFAS processing rules can shift which benefit appears higher or is paid by default ^{[3] [2] [8]}. DFAS or the services may implement awards retroactively, and year‑to‑year changes in VA ratings, tax circumstances, or service determinations can change which program is financially superior after the fact ^{[4] [8]}.

5. Where disputes and confusion come from, and what to check

Confusion arises because CRDP is automatic but taxable, CRSC requires application but is tax‑free, service determinations about what portion of a VA rating is combat‑related can be partial (reducing CRSC), and DFAS will by rule pay whichever option yields the larger monthly benefit unless a valid election says otherwise—retirees should therefore review DFAS pay statements, any CRSC approval letters from their service, and the annual open season notices to confirm which program was applied and whether the gross or net (after‑tax) outcome is actually better for their circumstances ^{[3] [2] [8]}.

Conclusion

DFAS’s operational rule is straightforward on paper—compute the CRDP amount and compute the CRSC package and pay the larger—yet the devil is in the details: eligibility rules, the need to apply for CRSC, service determinations of combat‑relatedness, and tax differences all influence which program produces the higher effective income for any individual retiree, so DFAS’s comparison is a dollar‑by‑dollar administrative calculation informed by those upstream determinations ^{[5] [2] [4]}.