How Much Is Medical Retirement From the Military?

Military medical retirement provides financial support to service members who are deemed unfit for duty due to service-connected disabilities. Determining the exact amount of medical retirement pay involves understanding various factors unique to each service member’s situation. The process accounts for the severity of the disability and the service member’s career history.

Eligibility for Medical Retirement

To qualify for military medical retirement, a service member must be found “unfit for duty” due to a physical disability incurred or aggravated in the line of duty. This means the medical condition prevents them from performing their duties. Conditions such as post-traumatic stress disorder, traumatic brain injury, chronic pain, or vision loss can lead to an unfitness finding.

The Integrated Disability Evaluation System (IDES), a joint program between the Department of Defense (DoD) and the Department of Veterans Affairs (VA), manages this process. The Medical Evaluation Board (MEB) assesses the service member’s condition to determine if it meets medical retention standards. If the MEB finds the condition medically unacceptable, the case is forwarded to the Physical Evaluation Board (PEB).

The PEB decides if the service member is unfit for duty and assigns a disability rating. This DoD disability rating is a percentage reflecting the severity of the service-connected condition. For retirement, a service member with less than 20 years of service generally requires a DoD disability rating of 30% or higher. If a service member has 20 or more years of service, they may qualify for retirement regardless of their disability rating.

Service members found unfit for duty are placed on either the Temporary Disability Retirement List (TDRL) or the Permanent Disability Retirement List (PDRL). TDRL is for unstable conditions that may improve or worsen, requiring re-evaluation at least every 18 months, for up to five years. During this period, the minimum payment is 50% of the last basic pay. If the condition stabilizes at 30% or higher, or if five years pass and the condition remains, the service member transitions to the PDRL. Those on the PDRL have permanent conditions and receive benefits similar to traditional military retirees.

Calculating Your Medical Retirement Pay

Medical retirement pay is calculated using one of two methods, with the service member receiving the higher amount. These are the Disability Percentage Method and the Years of Service Method. Both calculations utilize a “Retired Pay Base.” For service members who entered military service after September 7, 1980, the Retired Pay Base is generally the average of the highest 36 months of basic pay. For those who entered before this date, it is often their final basic pay.

The Disability Percentage Method multiplies the DoD disability percentage by the Retired Pay Base. For instance, if a service member has a DoD disability rating of 60% and a Retired Pay Base of $5,000, their monthly pay would be $3,000 (0.60 x $5,000). It is important to note that the DoD disability rating is used for this calculation, not the VA disability rating.

The Years of Service Method multiplies 2.5% by the total years of service, and then multiplies that product by the Retired Pay Base. For example, a service member with 15 years of service and a Retired Pay Base of $5,000 would have a multiplier of 37.5% (2.5% x 15 years), resulting in a monthly pay of $1,875 (0.375 x $5,000).

The service member receives the higher of these two calculated amounts. For example, if the Disability Percentage Method yields $3,000 and the Years of Service Method yields $1,875, the service member receives $3,000 per month. Federal law caps disability retirement pay at 75% of the Retired Pay Base. If a calculation results in a percentage higher than 75%, the payment will be limited to that cap.

Additional Financial Considerations

A “VA Waiver” generally requires a dollar-for-dollar reduction in military retired pay for any amount received as VA disability compensation. This rule was historically in place to prevent “double-dipping” from the government for the same disability. However, specific programs mitigate or eliminate this offset, allowing for concurrent receipt of both benefits.

Two programs address this offset: Combat-Related Special Compensation (CRSC) and Concurrent Retirement and Disability Pay (CRDP). CRSC provides tax-free payments to eligible retirees with combat-related disabilities, restoring retired pay that would otherwise be offset by VA disability compensation. To qualify for CRSC, the disability must be directly related to armed conflict, hazardous duty, an instrumentality of war, or simulated war. Eligibility also requires the service member to be receiving military retired pay and have a VA-rated disability of at least 10%.

CRDP allows eligible retirees to receive both their full military retired pay and VA disability compensation without offset. This program is generally available to service members with 20 or more years of service and a VA disability rating of 50% or higher. Unlike CRSC, CRDP does not require disabilities to be combat-related; they only need to be service-connected. Retirees are generally permitted to receive either CRSC or CRDP, but not both.

While VA disability compensation is generally tax-free, military medical retirement pay may be subject to federal income tax. If the medical retirement is based on a disability that is combat-related, or if the service member meets specific criteria related to their entry into service before a certain date or a qualifying disability rating, then the retirement pay may be tax-exempt. Otherwise, it is typically considered taxable income. All military medical retirement pay is subject to annual Cost of Living Adjustments (COLAs), which help maintain purchasing power against inflation.