To medically retire from the Army, a service-connected condition has to make you unfit to perform your job, and you need either a disability rating of 30% or higher or at least 20 years of service. The determination isn’t something you apply for. A treating physician or profiling officer refers you into the Integrated Disability Evaluation System (IDES), where the Army and the VA evaluate your condition, assign ratings, and decide whether you are retired, separated with severance, or returned to duty.
Who Qualifies
Three things have to line up. First, the condition has to be unfitting, meaning it prevents you from reasonably performing the duties of your grade and position. Second, it has to be service-connected, caused or aggravated by your military service, and not the result of intentional misconduct or willful neglect. Third, either your disability rating is 30% or higher, or you have 20 or more years of active federal service.1
If your rating comes in below 30% and you have fewer than 20 years in, you don’t get retired. You’re separated with severance pay instead. With 20 or more years, you can be medically retired at any rating percentage.
There’s one more piece: the condition has to be permanent and stable before you can be permanently retired. If it hasn’t reached maximum medical improvement, the Army may place you on the Temporary Disability Retired List while your condition is monitored. That distinction changes your long-term pay significantly, and it’s covered further down.
How the Process Starts
You don’t file for medical retirement. It begins when a treating physician or profiling officer decides your condition fails to meet Army retention standards under AR 40-501, Chapter 3. Chronic musculoskeletal injuries, traumatic brain injury, PTSD, cardiovascular conditions, and permanent physical limitations that keep you from doing your job are common triggers. Once a provider flags a condition below retention standards, your case is referred into IDES.
The Medical Evaluation Board
The Medical Evaluation Board (MEB) is the first formal step. A Physical Evaluation Board Liaison Officer (PEBLO) is assigned to you and becomes your main administrative point of contact through the whole process. Your MEB package includes a Narrative Summary written by your treating physician that details your condition and how it affects your ability to serve, a statement from your commander about your duty performance, and your own personal statement.
Take the personal statement seriously. It’s your chance, in your own words, to explain what you can and cannot do. Service members routinely underestimate how much weight it can carry.
The MEB compares your records to retention standards. If your condition meets standards, the process ends and you go back to duty. If it doesn’t, the case moves to the Physical Evaluation Board.
The Physical Evaluation Board
The Physical Evaluation Board (PEB) is where fitness is actually decided. It reviews your MEB package, your medical records, and the VA’s ratings, then determines whether you are fit or unfit. If unfit, the PEB applies VA Schedule for Rating Disabilities (VASRD) percentages to your unfitting conditions and recommends one of four outcomes: return to duty, separation with severance pay, permanent disability retirement, or placement on the Temporary Disability Retired List.
The Informal PEB and Your 10-Day Window
The PEB starts with an Informal PEB, a paper review with no hearing. You get the findings in writing and have 10 calendar days to accept or appeal. The presiding officer can extend that window for good cause, but don’t rely on it. Many service members accept findings they disagree with because 10 days feels too short to act. If something in those findings is wrong, appeal. Don’t let the clock decide for you.
Formal PEB and Legal Representation
Appealing brings you to a Formal PEB hearing, where you can present new medical evidence, call witnesses, and argue your case in person. You are entitled to free legal representation from the Office of Soldiers’ Counsel, which assigns a Physical Evaluation Board Counsel to your case. Communications with that attorney are protected by attorney-client privilege. You can also hire a private attorney at your own expense, but the OSC representation costs nothing.
Why You’ll See Two Different Ratings
Under IDES, the VA examines you and rates every service-connected condition, then combines them into one VA disability rating. The Army PEB only looks at the conditions it decides are unfitting for duty, and only those ratings feed into your DoD disability rating.
Your VA rating will almost always be higher, because it covers more conditions. The DoD rating drives whether you are retired or separated and how much military retired pay you get. The VA rating drives your VA disability compensation. Both matter to your finances, and they are calculated independently.
Permanent Retirement vs. the Temporary Disability Retired List
If the PEB finds you unfit at 30% or higher but your condition hasn’t stabilized, you go on the Temporary Disability Retired List (TDRL) instead of being permanently retired. TDRL exists for conditions that could improve or get worse.
While on TDRL, you have to undergo periodic physical examinations at least once every 18 months, and they can happen as early as six months in. If you were placed on TDRL after January 1, 2017, the maximum time on the list is three years. For those placed before that date, the limit was five years.
Each re-evaluation ends one of three ways. You go back to active duty if you’ve recovered enough. You are permanently retired if the condition stabilizes at 30% or higher. Or you are separated with severance if it stabilizes below 30%. If no final decision is made before your three- or five-year clock runs out, the law terminates your retired pay and retiree benefits. That deadline cannot be waived, so track your re-evaluation schedule closely.
One important protection: while on TDRL, your retired pay is guaranteed to be at least 50% of your retired pay base, even if your rating is only 30%. That floor exists because your condition is treated as unstable.
If Your Rating Comes In Below 30%
With fewer than 20 years of service and a rating under 30%, you’re separated rather than retired. You receive a one-time lump-sum disability severance payment: years of service multiplied by twice your monthly basic pay. A partial year of six months or more counts as a full year.
Separation looks nothing like retirement. There’s no ongoing retired pay, you lose TRICARE retirement benefits, and you’re not placed on the retired list. You can still file for VA disability compensation separately, and separated service members often end up with VA ratings well above their DoD rating. If you believe your rating should be 30% or higher, contest the PEB findings before accepting the outcome. Once you accept, your options narrow considerably.
How Disability Retired Pay Is Calculated
If you qualify for medical retirement, your monthly retired pay uses whichever of two formulas pays more, and you pick:
- Disability percentage method: your retired pay base multiplied by your disability rating, capped at 75%.
- Length of service method: your retired pay base multiplied by 2.5% for each year of creditable service, with partial years prorated by month.
For most service members who entered after September 8, 1980, the retired pay base is the average of your highest 36 months of basic pay, the “high-3.” The disability percentage method usually pays more for shorter careers with higher ratings. The length-of-service method tends to win for longer careers with moderate ratings. Run both.
On TDRL, the same two options apply, plus that 50% floor while you remain on the list.
The VA Offset, CRDP, and CRSC
This is the piece that surprises almost every medically retired soldier. Federal law generally bars receiving full DoD retired pay and VA disability compensation at the same time. If you are entitled to both, your DoD retired pay is reduced dollar-for-dollar by your VA compensation. This is the VA waiver, or VA offset, and it can shrink or eliminate your retired paycheck entirely.
Two programs restore some or all of that lost pay:
- Concurrent Retirement and Disability Pay (CRDP) restores your DoD retired pay if your VA rating is 50% or higher. But if you were retired under Chapter 61 for disability, which covers most medical retirees, you also need 20 or more years of creditable service. Medical retirees with fewer than 20 years are not eligible for CRDP and take the full offset.
- Combat-Related Special Compensation (CRSC) provides tax-free payments to offset the VA waiver when your disabilities are combat-related. Qualifying injuries include those from armed conflict, hazardous duty such as parachute operations or demolition work, training that simulates combat conditions, or an instrumentality of war. Purple Heart recipients automatically qualify for any disability tied to the Purple Heart injury.
You can’t collect both CRDP and CRSC. If you qualify for both, DFAS pays whichever is higher. For medical retirees under 20 years, CRSC is often the only route back to your full income, so apply if any of your conditions have a combat link.
How Disability Retired Pay Is Taxed
Your disability retired pay is excluded from federal taxable income if your disability is combat-related (armed conflict, hazardous service, training simulating war, or an instrumentality of war), or if you would be entitled to VA disability compensation if you applied for it. In that second case, the tax-free portion equals the VA compensation you would receive.
If you retired based on years of service and later get a retroactive VA rating, you can exclude the equivalent portion of retired pay and file amended returns using Form 1040-X for prior years, subject to the normal statute of limitations. CRSC payments are entirely tax-free. Standard military retirement based purely on length of service stays taxable.
Health Care, Life Insurance, and Survivor Coverage
Medical retirees on either the Permanent Disability Retirement List or the TDRL qualify for TRICARE as retired service members, and dependents qualify as retiree family members. Keep your family information current in DEERS to avoid coverage gaps. You can also use VA health care for service-connected conditions.
Converting SGLI to VGLI
If you carried Servicemembers’ Group Life Insurance on active duty, you can convert it to Veterans’ Group Life Insurance after retirement. You have to apply within one year and 120 days of leaving the military or being placed on TDRL. Apply within the first 240 days and no health screening is required. After 240 days, you’ll need to prove good health, which is a real problem when you’re retiring for a serious medical condition. Apply early.
Survivor Benefit Plan Election
The Survivor Benefit Plan (SBP) pays ongoing income to your spouse or children if you die after retirement. Your election has to be made before your retirement date on DD Form 2656. If you make no election, the law automatically enrolls you in full spouse or child coverage. Married service members who want less than maximum spouse coverage, or child-only coverage, need their spouse’s written concurrence. Premiums come out of your retired pay pre-tax, and for disability retirees the cost is generally 6.5% of the elected base amount.
Appealing a PEB Decision After the Fact
If you’ve exhausted the formal PEB process and still believe the result was wrong, you can apply to the Army Board for Correction of Military Records (ABCMR). The ABCMR is the highest level of administrative review inside the Army and can correct errors or remove injustices from your records, including disability rating determinations and retirement dispositions. You file on DD Form 149, and the law requires you to submit within three years of the error or the date you discovered it. The ABCMR can waive that deadline for a case with merit, but filing promptly helps you.
The ABCMR is separate from the VA claims system. If your VA rating is too low, you appeal that through the VA. If your DoD fitness determination or military disability rating was wrong, the ABCMR is the right venue. Many veterans pursue both at once, since the two systems evaluate your conditions independently.