Military Disability Retirement and Severance Pay

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Individuals who are separated from military service for medical reasons may be eligible for either military disability retirement benefits or a one-time severance payment.  The benefit was created to help service members who had to give up their military careers for medical reasons.

Permanent Disability

Service members who are 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.

Temporary Disability

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.

Disability Severance Pay

This is paid to members with less than 20 years of service and disabilities rated less than 30 percent. 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. The maximum severance pay has been increased from 24 months of basic pay to 38 months.

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, severance pay for a disability incurred while serving in a combat zone does not have to be repaid. Severance pay for disabilities incurred outside a combat zone will remain subject to the VA disability compensation offset.

If your Disability Rating is 20% or less

A new policy allows for review of military disability ratings of 20% or less. For more information about this review, which is conducted by the Physical Disability Review Board, click here.

Go here for information about VA disability, Social Security Disability and how these programs compare to the Military programs