The departments of Defense and Veterans Affairs have worked out a plan for sharing the cost and delivery of about $500 million in back pay to more than 100,000 military retirees with VA-rated disabilities.

The retroactive payments are owed to nearly half of all recipients of Combat-Related Special Compensation, or CRSC; and of Concurrent Retirement and Disability Pay, or CRDP, since those programs began in 2003 and in 2004.

The departments of Veterans Affairs and Defense "are looking to make this happen as soon as possible. No one wants to delay it," said an official who attended an Aug. 1 decision meeting between the two departments, the Defense Finance and Accounting Service and representatives from every branch of service.

Retirees awaiting their retroactive payments won't have as long a wait as was expected just a few weeks ago. A streamlined computer process on complex calculations of back pay involving CRSC and CRDP will significantly reduce earlier projections that the repayment process could take up to six months.

The departments of Veterans Affairs and Defense aren't ready to announce the date. Their new estimate on dollars to be distributed is about a half-billion.

Veterans Affairs is expected to cover 60 percent of that, and Defense, the remainder. The size of payments, which might average between $4,000 and $5,000, will depend on rank, level of disability, and the period covered by retroactivity.

Some retirees could receive payments from both departments, but officials hope to synchronize the process to minimize confusion for retirees. The back pay will be deposited electronically. A Veterans Affairs official said retirees will receive a letter explaining the back payments.

No one should have to apply for the money. Also, if retirees have died before receiving their full CRSC or CRDP entitlement, the money likely will go to surviving spouses or to the deceased retirees' estates.

For many years, military retirees saw their annuities reduced, dollar for dollar, by amounts they received in tax-free VA compensation for service-related disabilities. Congress enacted CRSC and CRDP to end this so-called ban on "concurrent receipt," but only for certain retirees who served 20 years or more: those with combat-related injuries or ailments; and those with non-combat-related conditions rated at least 50 percent disabling.

CRSC took effect June 1, 2003. Initially, payments went solely to active duty retirees who applied and were deemed to have combat-related disabilities rated at least 60 percent disabling or disabilities for which they received the Purple Heart. Eligibility later was expanded to any retiree having a combat-related disability to include reserve component retirees.

CRDP took effect Jan. 1, 2004. It is payable to retirees with 20 or more years of service and noncombat-related disabilities rated 50 percent or higher. CRDP payments are being phased in based on degree of disability. By 2014 it will end the retired pay reduction for all retirees rated at least 50 percent disabled.