You can receive both a military pension and VA disability pay, but they are separate payments from different systems

A medically retired service member receives a military retirement pension from the Department of Defense based on years of service and rank. A VA disability rating is a separate payment from the Department of Veterans Affairs based on the severity of service-connected conditions. These are two distinct programs with different rules, and you can draw from both at the same time.

The key difference: your military pension is earned income for completing a service contract, while VA disability compensation is a benefit for injuries or illnesses caused by military service. They do not reduce each other. However, the military has a rule called Concurrent Retirement and Disability Pay (CRDP) that affects how much you receive, depending on your disability rating and length of service.

Key Takeaways

  • Military pensions and VA disability are two separate payments that do not automatically offset each other.
  • Concurrent Retirement and Disability Pay (CRDP) allows you to receive both your full military pension and your full VA disability rating if you meet the requirements.
  • You must have at least 20 years of service and a VA disability rating of 50 percent or higher to be may be able to access for CRDP.
  • If you do not meet CRDP requirements, you may be subject to military offset, which reduces your military pension by the amount of your VA disability pay.
  • You do not have to choose between the two; the military and VA determine your payments based on your service record and disability rating.

How military pensions work for medically retired service members

When the military medically retires you, you receive a pension calculated by a formula: years of service multiplied by 2.5 percent, multiplied by your base pay at the time of retirement. If you served 20 years, you receive 50 percent of your base pay. If you served 25 years, you receive 62.5 percent. This pension is paid monthly by the Defense Finance and Accounting Service (DFAS) for the rest of your life.

Medical retirement is not the same as a disability discharge. Medical retirement requires that you have completed at least 20 years of service or that your disability rating from the military's Physical Evaluation Board (PEB) is at least 50 percent. If you do not meet either threshold, you receive a one-time severance payment instead of a pension.

Your military pension begins the month after your separation date and continues regardless of whether you later file for VA disability or what rating you receive. The military does not reduce your pension based on VA decisions.

How VA disability ratings work alongside military retirement

The VA assigns a disability rating between 0 and 100 percent based on how much your service-connected conditions affect your ability to work and function. The rating determines your monthly disability payment. A 10 percent rating pays less than a 50 percent rating, which pays less than a 100 percent rating. These payments are separate from your military pension and are paid by the VA, not the military.

You can file for VA disability at any time after separation, even years later. The VA looks at medical evidence from your service record and any exams you undergo. Your military medical records are automatically shared with the VA, which speeds up the process. The VA does not care whether you are receiving a military pension; it makes its own decision based solely on your service-connected conditions.

VA disability payments are tax-free, while military pensions are taxable income. This is an important distinction when calculating your total income for tax purposes.

Concurrent Retirement and Disability Pay (CRDP): When you receive both in full

CRDP is a military program that allows you to receive your full military pension and your full VA disability payment without any reduction. To be may be able to access, you must meet both of these requirements: you have at least 20 years of service, and you have a VA disability rating of 50 percent or higher.

If you meet these requirements, the military automatically pays your full pension, and the VA pays your full disability rating. You do not have to explore for CRDP separately; the military and VA coordinate this behind the scenes once your VA rating is established. DFAS receives notification of your VA rating and adjusts your pension accordingly if needed.

CRDP has been in place since 2004 and applies to all service members medically retired after that date who meet the criteria. If you were medically retired before 2004, you may still be may be able to access to request CRDP retroactively, though the process is more complex and requires contacting DFAS directly.

Military offset: What happens if you do not may have access to for CRDP

If you do not meet the CRDP requirements — for example, you have less than 20 years of service or your VA rating is below 50 percent — the military applies an offset. This means your military pension is reduced by the amount of your VA disability payment. You still receive both payments, but the total is the same as your pension alone would have been.

Example: Your military pension is $2,000 per month. Your VA disability rating is 30 percent, which pays $600 per month. With the offset, you receive $1,400 from the military pension and $600 from the VA, totaling $2,000. Without the offset (which would require CRDP), you would receive the full $2,000 pension plus the full $600 disability payment.

The offset applies only to your military pension, not to other military benefits like survivor benefits or dependent benefits. If you have dependents receiving Survivor Benefit Plan (SBP) payments, those are not reduced by the offset.

How to confirm your pension and disability payments

Your military pension is managed by DFAS. You can view your pension payment through the myPay portal at dfas.mil or by calling DFAS at 1-800-321-1080. Your statement will show your monthly pension amount and whether any offset is being applied.

Your VA disability rating and payment are managed by the VA. You can check your rating and payment through VA.gov by logging into your VA account. The VA sends a rating decision letter that explains your rating percentage and your monthly payment amount. If you disagree with your rating, you can file a Notice of Disagreement with the VA.

If you believe your pension is being incorrectly offset, contact DFAS with your VA rating letter. DFAS should have received notification of your rating automatically, but sometimes there are delays or errors in the system. Having your VA rating letter on hand speeds up the correction.

Survivor benefits and dependency considerations

If you elect the Survivor Benefit Plan (SBP) when you medically retire, your spouse or dependents receive a monthly payment if you die. SBP is a separate election from your pension and disability payments. Your SBP payment is calculated based on your military pension amount and is deducted from your monthly pension check.

VA disability payments do not automatically pass to survivors. However, if your disability rating is 50 percent or higher at the time of death, your surviving spouse and children may be may be able to access for Dependency and Indemnity Compensation (DIC) from the VA. DIC is a separate VA benefit and is not reduced by your military pension or SBP election.

When you medically retire, you make an SBP election decision. This decision affects what your survivors receive, so it is worth understanding both SBP and DIC before you choose.

Frequently Asked Questions

Can I receive my full military pension and full VA disability at the same time?

Yes, if you have at least 20 years of service and a VA disability rating of 50 percent or higher. This is called Concurrent Retirement and Disability Pay (CRDP). If you do not meet both requirements, your military pension is reduced by the amount of your VA disability payment.

What if my VA disability rating changes after I retire?

If your rating increases, your VA payment increases, and DFAS is notified. If you were receiving an offset, it may change. If your rating decreases, your VA payment decreases. You can file a new claim with the VA if your condition worsens, or you can appeal a rating decision if you disagree with it.

Do I have to file for VA disability, or does the military do it automatically?

You must file a claim with the VA. The military does not automatically file for you. However, the military's Physical Evaluation Board may assign a disability rating during medical retirement, which is separate from the VA rating. You should file a VA claim to may support you receive VA disability compensation in addition to your military pension.

Are my military pension and VA disability payments both taxable?

Your military pension is taxable income and appears on your 1099-R form. Your VA disability payment is tax-free and does not appear on any tax form. This is why it is important to track them separately when you file taxes.

What happens to my pension if I go back to work?

Your military pension continues regardless of whether you work. There is no income limit or work restriction on military retirement pay. VA disability payments also continue if you work, though earning above a certain amount may affect other benefits like Supplemental Security Income (SSI) if you receive that.