Leaving the military for medical reasons can happen through retirement or separation, and the difference significantly affects your benefits. Here's what you need to know.
When a service member is found unfit for duty due to a medical condition, they'll go through the Disability Evaluation System (DES) and be either medically retired or medically separated. The distinction between these two outcomes has major implications for your benefits and compensation for the rest of your life.
Medical retirement happens when the military rates your unfitting condition at 30% or higher (using the DoD rating system, not the VA rating system). Medical retirees receive military retirement pay calculated as either 2.5% times their years of service times their base pay, or their disability percentage times their base pay — whichever is higher. Medical retirees are eligible for TRICARE healthcare, commissary and exchange privileges, and all other military retirement benefits. This is a full retirement, even if you only served a few years.
Medical separation happens when the military rates your unfitting condition below 30%. Instead of ongoing retirement pay, you receive a one-time lump sum severance payment calculated based on your base pay and years of service. Medically separated veterans do not receive TRICARE (though they're eligible for VA healthcare based on their service-connected disabilities). The lump sum severance is typically much less valuable over time than ongoing retirement pay.
Here's the critical part that many veterans miss: the DoD's disability rating is separate from the VA's disability rating, and they can be very different. The DoD only rates the specific condition(s) that make you unfit for duty. The VA rates all service-connected conditions. So you might be medically separated by the DoD with a 20% rating (for one condition), but the VA might rate you at 60% or higher (across all your conditions).
If you were medically separated and later receive a VA disability rating, your VA compensation may offset the severance pay you already received. The VA withholds disability compensation until the amount of severance pay is "recouped." However, Combat-Related Special Compensation (CRSC) is not subject to this offset for combat-related conditions.
Veterans who were medically separated years ago should know that the Physical Disability Board of Review (PDBR) can review separation decisions for service members who were separated between September 11, 2001 and December 31, 2009 with a rating below 30%. If the PDBR upgrades the rating to 30% or above, the separation can be changed to a medical retirement — with back retirement pay.
Understanding these distinctions matters both during the DES process and afterwards. If you're going through a medical evaluation board, work with a Patient Advocate and consider consulting with a military disability attorney to ensure you're properly rated.