If you were forced to retire from the Armed Forces due to a disability you incurred during your time serving, you are eligible to all rights and privileges of a military retiree. Some of the benefits available to you include a military pension, survivor benefit plan participation, and even disability pay from Veteran Affairs. You might also be eligible to receive both your military medical retirement pay and disability pair concurrently.
But what is the difference between your army medical retirement pay and your disability pay? Is one better than the other? How do you know which one you qualify for?
In this article, we’re going to try to answer all of the questions you might have regarding your army medical retirement pay vs.VA benefits.
Permanent Medical Retirement Pay
Were you placed on permanent medical retirement? If you were, then this means that your disability was either rated at a 30 percent or more, or you served 20 or more years in service. Permanent medical retirement happens if you experienced a medical condition that was severe enough to interfere with the proper performance of your military duties.
Keep in mind that this is a significant distinction because it affects the computation of your medical retirement pay. The amount of money you receive due to permanent medical retirement is calculated using the percentage or years of active service –whichever number is more beneficial to you. They will then take that number and multiply it by your retired pay base to figure out your pay.
You must also keep in mind that the reason that you were medically retired also impacts whether or not you receive concurrent VA benefits.
Taxation on your Medical Retirement Pay
If you are eligible to receive permanent medical pay, you’re probably curious if there is taxation on it. The answer to that question is no; your military retirement pay is 100% nontaxable – as long as you meet two conditions.
1. Your disability must have come from a combat-related injury, or;
2. You must have been drafted or enlisted into the military on September 24, 1975.
However, if you don’t meet these two conditions – meaning that your disability isn’t from a combat-related injury or you weren’t actively in the military for the Vietnam War or before – then your medical retirement pay is taxable.
If you served for at least four years or have a disability of 10 percent or higher due to injuries incurred in active duty or training, you can receive service-connected disability compensation and benefits from Veteran Affairs (VA). Many benefits are offered to veterans and the family of veterans. For a full list of VA benefits available to you, visit the Veteran Affairs website to gain a better understanding of what is offered.
VA benefits are designed to give you a monetary award for the amount of time that you were in service or for the decreased ability to perform work after you leave the military due to a disability. VA disability benefits are available for both physical and mental disabilities due to service in the Armed Forces.
Taxation on your Medical Retirement Pay
Any compensation that you receive from VA benefits is 100 percent nontaxable – there are no conditions to this; anyone who receives VA disability benefits does not have to pay taxes on it. This means that you have a dollar for dollar advantage over permanent medical retirement pay because you don’t have to give up any of that money to pay taxes on it and, therefore, gives you more spending power.
Are you Eligible to Receive VA Benefits & Medical Retirement Pay?
Since 2004, veterans can receive both VA benefits and permanent medical retirement pay – but only if they meet certain conditions.
To determine if you can receive both, you must take a look at your disability rating. If your combined rating is 50% or higher, you should be eligible to receive Concurrent Retirement Disability Pay (CRDP). This means that you would be eligible to receive your full permanent medical retirement pay along with receiving full VA benefits. Meaning, that you won’t have to deduct your VA benefits from your retirement pay.
If you don’t meet this condition, you could still be eligible to receive the Combat-Related Special Compensation (CRSC). We will not touch on this in this article, but if you would like to learn more, you can find a lot of helpful information in an article written by The Military Wallet.
Finally, if you have a combined disability rating that is 40% or lower and you do not have a combat-related disability, then your retirement pay will be offset, deducted, by the amount of VA disability benefits/compensation that you receive.
There is a benefit to this, especially if you receive more VA benefits than retirement pay. This is because your VA benefits will all be tax-free, whereas you will still have to pay taxes on your retirement pay (unless you met the conditions listed above).
Army medical retirement and VA benefits are very different forms of compensation for veterans. The most significant difference between these two options is if you have a disability because of your active service in the Armed Forces or not. As we’ve learned in this article, if you do have a disability that has completely rendered you unable from being able to perform your service duties you can receive permanent medical retirement pay. However, if you don’t have a disability or your disability isn’t completely debilitating you can still receive VA benefits.
You also need to consider that VA benefits are entirely tax-free, which means that you have a lot more spending power overall than if you were to receive medical retirement pay. This can mean a difference of thousands of dollars between these two different compensation types. However, that doesn’t mean that one is better than the other – in fact, they could both help you depending on your situation.