How Much Do You Get for Military Medical Retirement?

Military medical retirement provides a pathway for service members whose careers end due to service-connected disabilities. Understanding the financial aspects of this transition is important for those navigating the process. The compensation aims to offer financial stability, involving distinct benefit programs with specific rules. This article outlines eligibility, available financial benefits, and calculation methods.

Determining Eligibility for Medical Retirement

Medical retirement from military service assesses a service member’s fitness for duty due to illness or injury. This evaluation begins with the Medical Evaluation Board (MEB), which reviews medical conditions against retention standards. If a condition does not meet these standards, the MEB refers the case to the Physical Evaluation Board (PEB). The MEB focuses on documenting the medical condition’s nature and impact.

The PEB determines if the service member is physically unfit for continued service and assigns a disability rating. This rating reflects the disability’s severity and its effect on military duties. A service member needs a Department of Defense (DoD) disability rating of 30% or greater to qualify for medical retirement. If the rating is below 30%, the service member is separated with severance pay, unless they have 20 or more years of service.

Service members may be placed on the Temporary Disability Retired List (TDRL) or the Permanent Disability Retired List (PDRL). The TDRL is for conditions not yet stable, meaning they may improve or worsen over time. While on the TDRL, re-evaluations are required periodically, typically every 18 months, for up to five years. For those placed on TDRL after January 1, 2017, the maximum period is three years. If the condition stabilizes and remains at 30% or more, the service member transitions to the PDRL.

The PDRL is for service members whose conditions are permanent and stable, ensuring permanent retirement with associated benefits. Being on either the TDRL or PDRL signifies official military retirement, granting access to various benefits.

Understanding Key Financial Benefits

Medically retired service members typically receive financial benefits from two distinct sources: Department of Defense (DoD) retired pay and Department of Veterans Affairs (VA) disability compensation. DoD retired pay is a pension provided by the military service branch, calculated based on years of service or disability percentage. This pay is generally taxable income at the federal level.

In contrast, VA disability compensation is a tax-free monthly payment from the Department of Veterans Affairs. This compensation is for service-connected illnesses or injuries, with the amount determined by disability severity. Unlike DoD retired pay, VA compensation is not income for tax purposes, offering a financial advantage.

Historically, federal law prohibited receiving both full military retired pay and VA disability compensation simultaneously, known as “duplication of benefits.” To address this, a “VA waiver” or “offset” mechanism required retirees to waive a portion of their DoD retired pay equal to their VA disability compensation. This shifts a portion of the payment from taxable DoD pay to tax-free VA compensation, which can increase a veteran’s spendable income.

Congress later introduced programs to mitigate this offset for eligible retirees. Concurrent Retirement and Disability Pay (CRDP) and Combat-Related Special Compensation (CRSC) allow some retirees to receive both full DoD retired pay and VA disability compensation. CRDP applies to retirees with a VA disability rating of 50% or higher who are otherwise eligible for retired pay. CRSC is for those with combat-related disabilities rated at 10% or more. Retirees eligible for both CRDP and CRSC must choose which program to receive, as they cannot receive both simultaneously.

Calculating Medical Retirement Compensation

Medical retirement compensation involves specific formulas for Department of Defense (DoD) retired pay and Department of Veterans Affairs (VA) disability compensation. For DoD retired pay, service members found unfit for duty with a disability rating of 30% or higher are eligible. Monthly retired pay is computed using one of two methods, with the service member receiving the more beneficial outcome.

The first method uses the service member’s disability percentage. This involves multiplying the disability percentage by the retired pay base. For example, a 60% disability rating with a $4,000 retired pay base yields $2,400 per month (0.60 x $4,000). The second method uses length of service: total years of creditable service are multiplied by 2.5%, then by the retired pay base. For instance, 15 years of service yields a 37.5% multiplier (15 x 2.5%) applied to the retired pay base. The maximum multiplier for either method is capped at 75% of the retired pay base. The retired pay base is the average of the highest 36 months of basic pay for those who entered service after September 7, 1980. For service members on the Temporary Disability Retired List (TDRL), a minimum of 50% is used for payment purposes while on the list, ensuring a baseline income.

VA disability compensation is calculated based on the VA’s assigned disability rating, ranging from 0% to 100% in 10% increments. This monthly tax-free payment increases with higher disability ratings and the number of qualifying dependents. For example, a veteran with a 10% or 20% disability rating receives a flat monthly amount, irrespective of dependents.

For ratings of 30% or higher, additional amounts are added for a spouse, dependent children, or dependent parents. These rates are adjusted annually based on Cost-of-Living Adjustments (COLA) announced by the Social Security Administration, ensuring the purchasing power of the benefits is maintained.

Additional Benefits and Resources

Beyond monetary compensation, medically retired service members gain access to a range of other benefits and resources. Healthcare coverage through TRICARE is a primary benefit for those on the Temporary Disability Retired List (TDRL) or Permanent Disability Retired List (PDRL). Medically retired service members and their eligible family members qualify for the same TRICARE benefits as other retired service members, including options like TRICARE Prime, TRICARE Select, and TRICARE For Life if eligible for Medicare. Enrollment in TRICARE is not automatic upon retirement; individuals must re-enroll within a specified period to ensure continuous coverage.

The Survivor Benefit Plan (SBP) allows a medically retired service member to provide a continuous lifetime annuity to eligible dependents after their death. Military retired pay ceases upon the death of the retiree, making SBP a form of financial protection. SBP premiums are deducted from the gross retired pay, which can result in tax advantages. The annuity paid to beneficiaries is generally 55% of the elected base amount of the service member’s retired pay.

Regarding tax implications, it is important to remember that Department of Defense (DoD) retired pay is subject to federal income tax. Conversely, Department of Veterans Affairs (VA) disability compensation is entirely tax-exempt. This distinction is important for financial planning, as the tax-free nature of VA compensation means more spendable income. Those receiving DoD retired pay will receive a Form 1099-R for tax reporting purposes.

Medically retired service members can also access various other VA benefits, including educational assistance, home loan guarantees, and vocational rehabilitation services. These programs support veterans in their transition to civilian life and help them achieve personal and professional goals. Access to military commissaries and exchanges, offering discounted goods, is another privilege.