Disability Retirement Update

If you have been found to be physically unfit for further military service and meet certain standards specified by law, you will be granted a disability retirement. Military members with 20 or more years of active service (service retirement eligible) can retire, regardless of the percentage level of disability, if they are found to be unfit and removed from the service by reason of physical disability.

People with less than 20 years of active service at the time they are removed from the service by reason of physical disability may be either separated or retired, based on the following:

(1) If you have a disability that is rated by the military disability evaluation system at 20% or lower, you can be discharged (most likely with severance pay, unless the condition existed prior to service and was not permanently aggravated by service or misconduct is involved). Those who are separated for disability may be eligible for monthly disability compensation from the Veterans Administration (VA).

(2) If the condition is rated at or above 30%, and other conditions are met, you will be disability retired. Your disability retirement may be temporary or permanent. If temporary, your status should be resolved within a five-year period.

The amount of your disability retired pay is determined by one of three methods:

(1) Multiply your base pay or average of highest 36 months of active duty pay at the time of retirement by the percentage of disability which has been assigned. However, the minimum percentage for temporary disability retirees will equal 50%. The maximum percentage for any type of retirement is 75%.

(2) Multiply only your years of active service at the time of your retirement by 2.5% by your base pay or average of highest 36 months of active duty pay at the time of retirement.

(3) The third method applies to you if you were eligible to retire/transfer under any other law. FAS will compute your entitlements using both methods above, and use the one which results in the greatest amount of retired pay. If you desire that another method be used, you may request (in writing) that the other method be used.

The difference between temporary and permanent disability is the stability of the medical condition. If you're condition is not deemed "stable" by the PEB, they will recommend you be placed on the TDRL (temporary disability retirement list). When on the TDRL, you are subject to reevaluation every 18 months and limited to 5 years max on the TDRL. At the 5 year point, if not sooner during a re-eval, you are removed from the TDRL and either found fit; permanently retired; or discharged with severance pay. If, on 24 SEP 75, you were either a member of an Armed Force or was under a binding written commitment to become a member, and are discharged/retired by reason of disability by the military disability evaluation system (not VA), your retirement pay may not be taxed. Otherwise, for a tax free retirement, you'd have to have a combat related disability. If you go through the VA disability evaluation system and they grant you disability compensation, it will not be taxed, regardless of whether or not you were in the service on 24 Sep 75.