Chapter 61 military medical retirement: the 2026 pay math
Chapter 61 is military medical retirement — a monthly annuity for those found unfit to serve. Your pay is the greater of your disability percentage or your years-of-service percentage, and the 30% threshold decides retirement versus a severance lump sum. Here’s how Chapter 61 pay is computed in 2026, and how the VA offset and CRSC change what you keep.
1. The retirement most people don’t plan for
Most service members plan their retirement around a 20-year career and a longevity pension. But thousands each year reach retirement a different way — through injury or illness that ends a career early. That pathway is Chapter 61, military medical retirement, and its pay rules are nothing like the standard 20-year formula.
Chapter 61 — named for the part of Title 10 that governs it — turns a career-ending disability into lifelong retirement income for those found unfit to continue serving. But how much income depends on a set of rules unique to medical retirement: a 30% threshold that decides between a monthly pension and a lump sum, a pay formula that takes the greater of two methods, a temporary-then-permanent status, and a VA offset that can quietly shrink the check — partly restored, for some, by combat-related compensation.
This guide is about the pay: how Chapter 61 retired pay is computed, the 30% threshold, TDRL versus permanent retirement, the VA offset, CRSC and CRDP, and the tax treatment. The estimator in Section 8 computes your monthly figure both ways. (The medical and physical evaluation board process — the MEB and PEB that get you to a rating — is its own subject; our sister site Warrior Disability walks through it in depth.)
A note on scope: this covers the federal pay framework, not your individual case. Disability ratings, fitness findings, and combat-relation determinations are decided by boards on the facts, and the dollars follow from those findings. Treat the numbers here as the structure, and your board paperwork plus DFAS as the source of truth for your actual payment.
The thing that makes Chapter 61 pay distinctive is the “greater of two methods” rule. A regular retirement pays purely on longevity — years of service times the multiplier. Chapter 61 pays the larger of that longevity figure or your disability percentage applied to the same base. For a member with a serious disability but only a handful of years served, the disability method can produce a far bigger pension than their short service would otherwise justify — a real, lifelong benefit. For a long-serving member with a modest rating, the longevity method simply matches what they’d have earned anyway. Either way, you get the better of the two, which is why two medical retirees with the same base pay can receive very different checks depending on the mix of rating and years behind them.
2. The 30% threshold: retirement or severance
The first fork in Chapter 61 determines whether you get a lifelong monthly pension or a single lump sum. It turns on two numbers: your disability rating and your years of service.
Rated under 30% AND under 20 years → disability SEVERANCE (one-time lump sum)
Disability retirement. If you’re found unfit and rated 30% or higher — or you already have 20 or more years of service — you’re medically retired with a monthly annuity for life, plus retiree benefits including TRICARE.
Disability severance. If your rating is below 30% and you have fewer than 20 years, you receive a one-time disability severance payment instead — computed as 2 × years of service × monthly basic pay (years capped at 19, with a minimum credit). Severance is not retirement: no monthly check, no retiree TRICARE, and the VA generally recoups the severance from your disability compensation unless the disability is combat-related.
That 30% line is enormous. The difference between a 20% and a 30% rating, for a member under 20 years, can be the difference between a lump sum of a few tens of thousands of dollars and a pension worth far more over a lifetime.
3. How the pay is computed: greater of two methods
For those who reach disability retirement, the monthly amount starts from the retired pay base — for virtually everyone serving today, the High-3 average (the average of your highest 36 months of basic pay). The base is then multiplied by a percentage, and the law gives you the greater of two methods.
Method B — Longevity: High-3 base × (years × 2.5%)
You receive the GREATER — multiplier capped at 75%
The disability method applies your military disability rating to the base. A 50% rating yields 50% of the base.
The longevity method applies your years of service times the retirement multiplier — 2.5% per year under the legacy High-3 system, or 2.0% per year under the Blended Retirement System.
You get whichever is larger, and either way the multiplier tops out at 75%. So a high rating with few years leans on the disability method; a modest rating with many years leans on longevity. Here’s how the two methods play out on a $4,000 High-3 base:
| Rating / years | Disability method | Longevity method | You receive |
|---|---|---|---|
| 50% / 8 yrs | $2,000 | $800 (20%) | $2,000 (disability) |
| 30% / 18 yrs | $1,200 | $1,800 (45%) | $1,800 (longevity) |
| 70% / 12 yrs | $2,800 | $1,200 (30%) | $2,800 (disability) |
| 90% / 32 yrs | $3,000 (cap) | $3,000 (cap) | $3,000 (75% cap) |
Note the last row: with a high rating and a long career, both methods hit the 75% ceiling, so the cap — not the method — sets the pay.
4. TDRL vs. PDRL: temporary then permanent
Disability retirement comes in two flavors, depending on whether your condition is considered stable.
TDRL — the temporary list. If you’re found unfit at 30% or higher but your condition might still change, you’re placed on the Temporary Disability Retired List. You draw disability retired pay and are periodically re-examined — under current rules, for up to three years, with a review typically near the 18-month mark. At the end, one of three things happens: you improve enough to return to duty, you move to permanent retirement, or you’re separated.
PDRL — the permanent list. If your condition is stable at 30% or higher — from the start, or after TDRL — you go on the Permanent Disability Retired List: the final, lifelong disability retirement with no further scheduled re-examinations.
TDRL is a waystation, not a destination. You draw the same disability retired pay, but a re-examination can still change your status. PDRL is the settled, permanent version — the point at which your medical retirement stops being provisional.
While on TDRL, your rating is generally protected at a minimum level, but because a re-examination can change your outcome, TDRL isn’t yet the final word the way PDRL is. Planning around a TDRL pension should account for that possibility.
5. The VA offset: why your retired pay shrinks
Here is the rule that catches most Chapter 61 retirees off guard: you generally can’t collect full military retired pay and full VA disability compensation at the same time.
The offset. Your military retired pay is reduced, dollar for dollar, by the amount of your VA disability compensation — the so-called VA waiver. Because VA disability is tax-free and military retired pay is often taxable, most retirees still come out ahead taking the VA money, but the DFAS retired-pay check itself shrinks by the VA amount.
The under-20-year problem. The program that eliminates this offset — Concurrent Retirement and Disability Pay (CRDP) — requires 20 or more years of service and a 50%+ VA rating. Chapter 61 retirees with fewer than 20 years of service are not eligible for CRDP. For them, the offset is generally not restored at all — with one important exception, covered next.
This is the hardest financial reality of an early medical retirement. A member retired under Chapter 61 with, say, 10 years of service and a 70% VA rating sees their retired pay offset by the full VA disability amount — and because they’re under 20 years, CRDP doesn’t restore it. They still receive the (tax-free) VA compensation, so they’re rarely worse off in total dollars, but they don’t get the “both checks, no offset” treatment that a 20-year retiree with the same rating would. The one path to recovering part of the offset is Combat-Related Special Compensation, and it only applies to the portion of disability that is combat-related. If any of your conditions trace to combat, combat training, or hazardous service, pursuing a CRSC determination can be worth real money — sometimes the difference between a heavily-offset pension and a meaningfully restored one. It’s the single most important thing for an under-20-year Chapter 61 retiree to investigate.
6. CRSC and CRDP: what you can get back
The two concurrent-receipt programs determine how much of the offset you recover. They work very differently for Chapter 61 retirees.
CRDP restores retired pay so you receive both military retirement and VA disability without offset — but only for retirees with 20+ years of service and a 50%+ VA rating. Chapter 61 retirees with 20+ years can qualify (though their CRDP is limited to the longevity portion of their pay); those under 20 years cannot.
CRSC reimburses the offset for combat-related disabilities, and it’s available to Chapter 61 retirees regardless of years of service — including the under-20-year cohort. For a Chapter 61 retiree, CRSC pays the lesser of the dollar value of the approved combat-related percentage or the longevity portion of retired pay.
You can’t have both. A retiree eligible for both CRDP and CRSC must choose the more advantageous one, and can switch during the annual open season. (For the full comparison, see CRDP vs CRSC.) For most under-20-year medical retirees, CRSC is the only option on the table — which is why establishing the combat-relation of your conditions matters so much.
7. Is it taxable? The disability exclusion
Whether your Chapter 61 pay is taxable can change its real value substantially, and the rules are specific.
VA disability is always tax-free. That part is simple. The complexity is in the military retired-pay portion.
The disability exclusion. Disability retired pay calculated on your military disability percentage can be fully excluded from taxable income if you meet a qualifying condition — most commonly that your disability is combat-related or results from armed conflict, or that you were a member of (or under contract to join) the armed forces before September 25, 1975. If you don’t meet an exclusion condition, the portion attributable to the disability percentage may still be excludable, while the rest is taxable like ordinary retired pay.
Why it’s worth confirming. Because the taxable amount interacts with the two pay methods, the VA offset, and CRSC, it’s genuinely intricate, and even DFAS occasionally gets individual cases wrong. A fully tax-free pension is worth substantially more than a taxable one of the same gross amount, so it’s worth verifying your specific treatment with DFAS and a tax professional. (For the broader picture of how retirement income is taxed, see how retirement income is taxed.)
8. Estimate your Chapter 61 pay
The calculator below runs both methods on your numbers and shows which one wins — the basis of your monthly Chapter 61 retired pay before any VA offset.
Your figures
Educational estimate of gross retired pay before any VA offset, CRSC, or CRDP. Multiplier capped at 75%. If rated under 30% with under 20 years, the outcome is severance, not this monthly figure. Not advice.
Remember that this is the figure before the VA offset. What lands in your account depends on your VA rating, whether CRSC applies, and the tax treatment — the levers covered above.
9. Five questions about Chapter 61
What is Chapter 61 retirement?
Chapter 61 retirement is military disability retirement, named for Chapter 61 of Title 10 of the U.S. Code. It applies when a service member is found unfit to continue serving because of a disability, through the Disability Evaluation System (the medical and physical evaluation boards). If the member is found unfit and the military assigns a disability rating of 30% or higher — or the member already has 20 or more years of service — they are medically retired and receive a monthly retirement annuity for life, plus retiree benefits like TRICARE. If instead the rating is below 30% and the member has fewer than 20 years of service, they receive a one-time disability severance lump sum rather than a monthly retirement. The monthly Chapter 61 retired pay is computed as the greater of two methods: the disability percentage applied to the retired pay base, or the longevity percentage (years of service times the retirement multiplier). Chapter 61 is the formal pathway by which an injury or illness that ends a career converts into lifelong retirement income.
How is Chapter 61 disability retirement pay calculated?
Chapter 61 retired pay starts from your retired pay base — for almost everyone serving today, that’s your High-3 average (the average of your highest 36 months of basic pay). The base is then multiplied by a percentage, and the law gives you the greater of two methods. The disability method multiplies the base by your military disability rating (for example, a 50% rating gives 50% of the base). The longevity method multiplies the base by your years of creditable service times the retirement multiplier (2.5% per year under the High-3 system, 2.0% under the Blended Retirement System). You receive whichever produces the larger payment, and the multiplier is capped at 75% either way. So a member with a high disability rating but few years of service benefits from the disability method, while a member with a lower rating but many years benefits from the longevity method. For example, on a $4,000 High-3 base, a 50% rating with 12 years of service yields $2,000 a month (the disability method wins over the 30% longevity figure), while a 30% rating with 18 years yields $2,250 (the 45% longevity method wins).
What’s the difference between TDRL and PDRL?
Both are forms of Chapter 61 disability retirement; the difference is whether your condition is considered stable. If you’re found unfit at 30% or higher but your condition might still change, you’re placed on the Temporary Disability Retired List (TDRL). You receive disability retired pay while on the TDRL and are periodically re-examined — under current rules, for up to three years, with a review typically around 18 months. At the end of the TDRL period, one of three things happens: your condition has improved enough to return to duty, you’re moved to permanent retirement, or you’re separated. If your condition is stable from the outset (or stabilizes during TDRL) at a rating of 30% or higher, you go on the Permanent Disability Retired List (PDRL), which is the final, lifelong disability retirement with no further scheduled re-examinations. The practical distinction is permanence: TDRL is a temporary, reviewable status; PDRL is the settled, permanent retirement. While on TDRL, your rating is generally protected at a minimum level, but a re-examination can change your status, so it’s not yet the final word the way PDRL is.
Why is my Chapter 61 retired pay reduced by my VA disability?
This is the VA offset, and it surprises many Chapter 61 retirees. By law, you generally cannot receive both full military retired pay and full VA disability compensation for the same period — your military retired pay is reduced, dollar for dollar, by the amount of your VA disability compensation (this reduction is called the VA waiver). Because VA disability is tax-free and military retired pay is often taxable, most retirees still come out ahead taking the VA compensation, but the offset means your DFAS retired pay check shrinks. The critical wrinkle for Chapter 61 retirees with fewer than 20 years of service: they are not eligible for Concurrent Retirement and Disability Pay (CRDP), the program that eliminates the offset for 20-year retirees rated 50% or higher. So a sub-20-year medical retiree’s offset is generally not restored — except through Combat-Related Special Compensation (CRSC), which can reimburse the offset for the portion of disability that is combat-related. Understanding whether your disabilities are combat-related, and whether CRSC applies, is often the single biggest factor in what a Chapter 61 retiree actually keeps.
Is Chapter 61 disability retired pay taxable?
It can be tax-free, but the rules are specific. VA disability compensation is always tax-free. For the military retired pay portion, disability retired pay calculated using your military disability percentage can be fully excluded from taxable income if you meet certain conditions — most commonly if your disability is combat-related or results from armed conflict, or if you were a member of (or under contract to join) the armed forces before September 25, 1975. If you don’t meet an exclusion condition, the portion of your retired pay attributable to the disability percentage may still be excludable under the tax code, while the rest is taxable like ordinary retired pay. Because the calculation interacts with the two pay methods, the VA offset, and CRSC, the taxable amount can be genuinely complicated, and DFAS sometimes gets individual cases wrong. The safe approach is to confirm your specific situation with DFAS and a tax professional familiar with military disability retirement, rather than assuming either that it’s all taxable or all exempt. The distinction matters because, for a retiree, a fully tax-free pension is worth substantially more than a taxable one of the same gross amount.
- DoD Military Compensation, “Disability Retirement”
- DoD Military Compensation, “Disability Retired Pay Formula”
- Congressional Research Service, “Concurrent Receipt (R40589)”
- Congressional Research Service, “Concurrent Receipt Primer (IF10594)”
- Army HRC, “CRSC and Chapter 61 Retirement”
- DFAS, “Disability Retirement Pay”
- IRS, “Publication 525 (Military Disability Retirement)”
- Cornell LII, “10 U.S.C. Chapter 61”
- VA.gov, “VA Disability Compensation”
- DFAS, “CRSC and CRDP”