Disability retirement - Getting out, military retirement, military to civilian transition - Navy Times

Disability retirement

Permanent disability. This is one of two types of disability retirement available through the Defense Department. Service members officially rated at least 30 percent permanently disabled, according to guidelines, are entitled to disability retirement pay from the Defense Department. To qualify, they must have spent at least eight years in the military or the disability must have been incurred in the line of duty.

If one of the requirements is met, retirees can receive retired pay based on the larger of two formulas: multiplying the retired pay base either by the percentage of the disability rating or by 2.5 percent of the number of years of service, up to a 75 percent ceiling.

The retired pay base is final basic pay for those who entered service before Sept. 8, 1980, and average basic pay over the three highest-earning years for those who entered service on or after that date.

The Defense Department and VA disability retirement systems have had important differences, chief among them the fact that the services assign ratings only to medical conditions deemed “physically unfitting,” with the intent of compensating for the loss of a military career. VA may rate any service-connected condition to compensate for the loss of civilian employability.

Also, military disability retirement ratings are final upon disposition, and VA ratings can vary over time, depending on how the condition progresses.

Finally, military disability compensation varies not only by the percentage disability rating, but also by a member’s years of service and basic pay; VA payments are based on the percentage rating of the disability and the veteran’s family status.

Temporary disability. This is a second form of disability retirement available through the Defense Department.

Some service members have medical problems that prevent them from carrying out their military duties but may not be permanent. They are placed on the temporary disability retirement list maintained by each service and Defense Department paymasters.

The amount of monthly pay for those on the temporary retired list is determined by different rules from those that govern permanent disability.

The minimum payment is 50 percent of the last amount of basic pay before the member was taken off duty; the maximum is 75 percent.

Those who receive temporary disability retirement pay must undergo medical exams every 18 months to determine the status of their disability. Within five years, doctors must determine whether the disability is permanent. At that point, they can be returned to duty, given a disability rating that qualifies them for either permanent disability retirement pay or disability severance pay, or separated with no benefits.

Military disability retirement pay is usually taxable; however, military disability retirement pay that is based on a combat-related disability is tax-free.

Disability severance. This is paid to members with less than 20 years of service and disabilities rated less than 30 percent.

The 2008 Defense Authorization Act changed the minimum and maximum levels of disability severance pay.

Previously, the payment was equal to two months of basic pay for each year of service, up to 12 years (a maximum of 24 months of basic pay). The minimum severance pay is now 12 months of basic pay for troops separated for a disability incurred in a combat zone and six months of basic pay for all other members.

In addition, the maximum severance pay has been increased from 24 months of basic pay to 38 months. This fully compensates members with as much as 19 years of service whose payments would have been capped at 12 years of service under the old formula.

Service members who receive severance pay also may be eligible for monthly VA disability compensation if their disabilities are deemed service-connected.

Generally, severance pay must be repaid before members can begin receiving VA disability compensation. However, the 2008 Defense Authorization Act has carved out an exception to that offset for members who receive severance pay for a disability incurred while serving in a combat zone. Severance pay for disabilities incurred outside a combat zone will remain subject to the VA disability compensation offset.

Service members with limited disabilities may be retained by their service, depending on individual circumstances.