Separation without benefits. Separation without benefits occurs if the unfitting disability existed prior to service, was not permanently aggravated by military service, and the member has less than 8 years of Active Service (active duty days); or the disability was incurred while the member was absent without leave or while engaging in an act of misconduct or willful negligence. If the member has more than 8 years of Active Service, he/she may be medically retired (if eligible) or medically separated with severance pay, even if the condition was pre-existing or hereditary.
Separation with severance pay. Separation with disability severance pay occurs if the member is found unfit, has less than 20 years of service, and has a disability rating of less than 30%. Disability severance pay equals 2 months basic pay for each year of service not to exceed 12 years (a maximum of 24 months basic pay). The member may also be eligible to apply for monthly disability compensation from the Veterans Administration (VA), if the VA determines the disability is "service-connected."
Permanent disability retirement. Permanent disability retirement occurs if the member is found unfit, the disability is determined permanent and stable and rated at a minimum of 30%, or the member has 20 years of military service (For Reserve Component members, this means at least 7200 retirement points).
Temporary disability retirement. Temporary disability retirement occurs if the member is found unfit and entitled to permanent disability retirement except that the disability is not stable for rating purposes. "Stable for rating purposes" refers to whether the condition will change within the next five years so as to warrant a different disability rating. However, stability does not include latent impairment--what might happen in the future. When placed on the Temporary Disability Retirement List (TDRL), the law requires the member to undergo a periodic medical reexamination within 18 months at a minimum followed by PEB evaluation. The member may be retained on the TDRL or a final determination may be made. While the law provides for a maximum tenure of 5 years on the TDRL, there is no entitlement to be retained for the entire period.
Retirement pay computation. For permanent retirement or placement on the TDRL, compensation is based on the higher of two computations: Disability rating times retired pay base; or 2.5 x years of service x retired pay base. Soldiers on the TDRL receive no less than 50% of their retired pay base.
The computation of retired pay base depends upon when the member entered the service, and for Reserve members, the law under which they were retired. For those members who entered prior to 8 September 1980, retired pay base is the highest basic pay received. For those who entered after 7 September 1980, it is the average of the high 36 months of basic pay.
For reserve members retired under 10 USC 1201 or 10 USC 1202 (on ordered duty of plus 30 days), the last 36 months of active duty days and the associated basic pay is used to determine the average. If retired under 10 USC 1204 or 1205, the average is calculated as if the member had been on active duty the last 36 months.
Differences Between Military Disability Ratings and VA Disability Ratings
While both the Department of Defense and the Department of Veterans Affairs (VA) use the Department of Veterans Affairs Schedule for Rating Disabilities, not all the general policy provisions set forth in the Rating Schedule apply to the military. Consequently, disability ratings may vary between the two. The military rates only conditions determined to be physically unfitting, compensating for loss of a military career. The VA may rate any service-connected impairment, thus compensating for loss of civilian employability. Another difference is the term of the rating. The military's ratings are permanent upon final disposition. VA ratings may fluctuate with time, depending upon the progress of the condition. Further, the military's disability compensation is affected by years of service and basic pay; while VA compensation is a flat amount based upon the percentage rating received.