VA Disability Compensation or Military Retirement Benefits: Which One to Choose?

If you're being medically retired from the military due to being found unfit for duty, you may qualify both for disability compensation from the Department of Veterans Affairs (VA) and medical retirement pay from the Department of Defense (DOD).

But even if you qualify for both medical retirement and VA disability, you might not receive the full amount of both benefits.

About Retirement Pay and Disability Compensation

Military retirement pay is calculated based on your military disability rating and your years of service. Disability compensation is determined by your VA disability rating and your number of dependents. The purpose of DOD pay is to compensate you for your career ending early, while the purpose of VA compensation is to compensate for your loss of civilian earnings after service and to pay you for your functional loss resulting from your disability.

Can You Receive Both VA Disability and Military Retirement Pay?

Under Title 38 of the United States Code, sections 5304 and 5305, if you qualify for both DOD retirement and VA disability, you will generally have the amount of any medical retirement pay you're owed deducted from any disability payments you'll get from the VA. (This is called the "VA offset" or "VA waiver" to military retirement pay.)

But you might qualify to have your offset "restored" so you can and receive most or all of your DOD retirement pay in addition to your VA disability pay. Receiving both VA disability and military retirement at once is commonly called the "concurrent receipt" of benefits.

Two programs exist that let eligible veterans recover some or all of their military retirement pay from the VA offset: Concurrent Retirement and Disability Pay (CRDP) and Combat-Related Special Compensation (CRSC). We'll discuss these programs in detail below. You'll still need to waive either your medical retirement benefits from the military or your disability compensation benefits from the VA before you can recover pay under those programs.

Choosing Whether to Waive VA or DOD Benefits

Because VA disability benefits aren't taxable and military retirement pay is taxable, it often makes sense to waive the DOD pay and accept the VA compensation. But this isn't true in all cases.

Even if you waive your DOD pay, you and your dependents will still receive medical benefits from the DOD as long as your disability has been rated at least 30%.

When to Waive VA Disability Compensation

In some circumstances, you might actually receive more money by opting out of VA disability compensation and taking retirement pay—for example, if the military has given you a higher disability rating than the VA has. Waiving VA compensation might also make sense if you're eligible for CRDP or CRSC.

Eligibility for CRDP

If you've served more than twenty years at the time you're medically retired and have a service-connected medical condition that's rated at least 50%, you can minimize the loss of retirement pay through Concurrent Retirement and Disability Pay. CRDP is calculated based on the percentage rating of your service-connected disability. But like military retirement pay, CRDP benefits are taxable.

Your CRDP benefits can't exceed the amount your retirement pay would have been if your retirement pay was based only on your years of service.

Eligibility for CRSC

If you were injured while in a combat zone serving in the line of duty or while performing your duties in a combat-related operation (as determined by the Secretary of Defense), and you have combat-related disability rated at 10% or more, you're eligible for Combat-Related Special Compensation.

You can have the offset to your military pay restored through CRSC while also receiving your VA disability compensation. But your total compensation after your CRSC benefits can't exceed the military retired pay you would have been eligible for based on years of service.

CRDP vs. CRSC

If you're eligible for both CRDP and CRSC, you have to choose which program to use to restore the reduction in your pay, because you can't receive both. Unlike military retired pay and CRDP, CRSC payments aren't taxable. Neither CRSC or CRDP is available as a survivor benefit.

For more information about the amount you can receive, call the Defense Finance and Accounting Service at 800-321-1080 or visit the DFAS webpage on concurrent benefits.

When to Waive DOD Military Retirement Pay

If you have a few years of service and your military disability rating is low, you could potentially receive higher compensation through the VA than the DOD.

If you haven't served at least twenty years, then you don't have the option of using the CRDP program to restore your offset compensation, and unless you have a combat-related condition rated at 10% or more, you're also ineligible for CRSC. In this scenario, it's possible you would be better compensated by the VA than the DOD.

What Pays More, Retirement or Disability?

How much in VA disability pay you'll receive depends on your disability rating and whether you have a spouse, children, or dependent parents. The VA publishes a straightforward chart with monthly pay for different combinations of disability rating and household. For example, in 2023, a 100% disabled veteran with no dependents will receive $3,621.25 (non-taxable) every month, while a veteran with a 50% disability rating, a spouse, and one child will receive $1,215.82 monthly.

DOD retirement pay is more complicated because it's based on your disability rating and your military career, as well as additional factors such as your average base pay over a certain time period. For example, a veteran who recently retired with a 50% disability rating after 5 years at E-8 should receive about $2478.60 (taxable) per month (taking the percentage from the disability rating and multiplying it by an average base pay at E-8).

For help determining whether you'd get more from VA benefits or military retirement, see the 2023 veterans disability compensation rates and the military retirement calculator.

More Information for Disabled and Retired Veterans

You can learn more about VA disability, military retirement, and other compensation for injured or impaired veterans at our overview of all VA benefits for disabled veterans.

_{Updated May 22, 2023}