Medical Retirement: DoD retirement, VA compensation, and how they interact

Understand how a Medical Evaluation Board and Physical Evaluation Board lead to a DoD disability rating.

• A Medical Evaluation Board (MEB) documents a condition and refers your case to a Physical Evaluation Board (PEB) when your fitness for continued service is in question.
• The PEB decides whether you are fit or unfit for duty, and if unfit, assigns a DoD disability rating using the same rating schedule (VASRD) VA uses.
• DoD's rating generally covers only the specific condition(s) that make you unfit for continued service, not every service-connected condition you may have. This is a key reason your eventual DoD rating and VA rating for the same period of service are often different numbers; VA separately rates every service-connected condition regardless of whether it affected your ability to serve.

Understand the threshold that separates Medical Retirement from disability severance pay.

• Medical Retirement and Medical Separation (IDES) are different outcomes of the same DoD disability evaluation process, and which one applies to you depends on your DoD disability rating and years of service, not on how you feel about your condition.
• If a Physical Evaluation Board (PEB) finds you unfit for duty with a DoD disability rating of 30 percent or more, or you have 20 or more years of service, you generally qualify for Medical Retirement: a monthly retirement annuity.
• If the PEB finds you unfit with a DoD disability rating under 30 percent and you have fewer than 20 years of service, you generally receive disability severance pay instead: a one-time lump sum, not a monthly retirement annuity. This pathway is covered on the Medical Separation (IDES) page, not this one.

Understand TDRL, used when a condition is not yet considered stable.

• If your unfitting condition is not yet considered stable, you may be placed on the Temporary Disability Retired List (TDRL) rather than given a final, permanent rating right away.
• While on TDRL, you are reexamined at least once every 18 months to check whether your condition and rating have changed.
• Under current law, TDRL lasts a maximum of 3 years, at which point a final determination must be made. This 3-year cap applies to members placed on TDRL on or after January 1, 2017; members placed on TDRL before that date were subject to an earlier 5-year maximum.

Understand PDRL and what happens when TDRL's final determination is made.

• The Permanent Disability Retired List (PDRL) is where a member goes once their unfitting condition and disability rating are considered final and stable, generally at 30 percent or more (or with 20+ years of service).
• When a final determination on TDRL is made: a rating that stabilizes at 30 percent or more generally moves you to PDRL; a rating under 30 percent with fewer than 20 years of service generally results in separation with disability severance pay instead of retirement; a member with 20 or more years of service is generally retired regardless of the final rating.
• Being found fit for duty at any point in this process, whether at the initial PEB or at a later TDRL reexamination, results in separation with no DoD disability retirement and no severance pay from this process.

Understand the two formulas used and which one you actually receive.

• Medical retirement pay is generally calculated under one of two formulas, and by law you receive whichever produces the higher amount; this is an automatic entitlement, not something you have to actively request.
• Formula one: your DoD disability percentage, capped at 75 percent for this calculation regardless of your actual combined rating, multiplied by your retired pay base.
• Formula two: the standard years-of-service formula used for regular military retirement, generally 2.5 percent per year of service multiplied by your retired pay base.
• Which pay system determines your retired pay base (for example, High-3 or an earlier legacy system) depends on when you entered military service. This page does not resolve every historical pay-system variation; review your specific base-pay calculation with DFAS or an accredited representative.

Understand the baseline offset rule that CRDP and CRSC each modify in different ways.

• By default, when a retiree receives both military retired pay and VA disability compensation, VA disability compensation is deducted dollar-for-dollar from retired pay; the two amounts do not simply add together.
• CRDP and CRSC each restore some or all of that offset, but through different eligibility rules and mechanics, covered in the next two modules.
• Understanding this baseline offset first is what makes CRDP and CRSC's purpose clear: both exist to give qualifying retirees back some or all of the amount that would otherwise be withheld.

Understand what CRDP restores, and who it does not cover.

• CRDP requires a VA disability rating of 50 percent or more to qualify at all.
• Length-of-service retirees (20+ years) meeting that rating generally receive the full offset restoration.
• Chapter 61 disability retirees with 20 or more years of service also qualify, though through a formula that compares their disability-based retired pay to a hypothetical length-of-service retirement amount, rather than automatically restoring their full disability-based amount.
• Chapter 61 disability retirees with fewer than 20 years of service do not qualify for CRDP under any circumstance, regardless of their VA disability rating. Their only potential path to offset relief is CRSC, covered next, and only if their disability is combat-related.

Understand what makes a disability "combat-related" for CRSC, and how its rating threshold differs from CRDP.

• CRSC may be available to eligible military retirees, including Chapter 61 disability retirees with fewer than 20 years of service, unlike CRDP.
• CRSC requires the specific disability to be combat-related, defined by statute as attributable to a Purple Heart award, or incurred as a direct result of armed conflict, hazardous service, conditions simulating war, or through an instrumentality of war.
• Unlike CRDP's 50 percent threshold, DFAS lists a VA rating of at least 10 percent among CRSC eligibility requirements. Eligibility also depends on the combat-relatedness of the specific disability.

Understand why these are not both available at once, and how the annual election works.

• CRDP and CRSC are two different programs that address the same underlying problem in different ways, and a retiree cannot receive both for the same period at the same time.
• By default, VA disability compensation is deducted dollar-for-dollar from military retired pay when a retiree receives both. CRDP (Concurrent Retirement and Disability Pay) restores some or all of that offset for retirees with a VA rating of 50 percent or more. But Chapter 61 disability retirees with fewer than 20 years of service do not qualify for CRDP under any circumstance, regardless of their VA rating.
• CRSC (Combat-Related Special Compensation) is a separate program open to eligible retirees, including Chapter 61 retirees with fewer than 20 years of service, but only for disabilities that are combat-related as specifically defined by statute. DFAS lists a VA rating of at least 10 percent among its eligibility requirements, rather than CRDP's 50 percent threshold.
• A retiree eligible for both CRDP and CRSC cannot receive both at the same time. DFAS initially applies the entitlement with the higher gross amount, and retirees can change that election during the annual CRDP/CRSC Open Season.

Avoid the most common point of confusion between these two programs.

• CRDP and CRSC solve the same underlying offset problem but through different, non-overlapping eligibility rules; qualifying for one does not mean you qualify for, or should expect the same treatment from, the other.
• A Chapter 61 retiree with fewer than 20 years of service and a non-combat-related disability may qualify for neither program, even with a high VA disability rating.
• This page does not tell you which program is more advantageous for your situation or how to time an election; that depends on your specific retirement type, rating, and disability history.