“Military retirees cannot receive VA disability compensation.”
Retirees can absolutely receive VA disability compensation. The real issue is the offset between retired pay and VA pay, and two programs, CRDP and CRSC, let many retirees keep both.
What the regulation actually says
The old rule was an offset: a retiree receiving VA compensation waived an equal amount of retired pay, dollar for dollar. That offset still exists as the baseline, which is where the myth comes from.
Concurrent Retirement and Disability Pay (CRDP), 10 U.S.C. 1414, eliminated the offset for retirees with 20 or more years of service who have a VA rating of 50 percent or higher. It is automatic; eligible retirees receive full retired pay and full VA compensation.
Combat Related Special Compensation (CRSC), 10 U.S.C. 1413a, replaces offset retired pay for disabilities that are combat related, with a rating of 10 percent or higher, including for Chapter 61 medical retirees. CRSC requires an application to your branch of service and is paid tax free.
Retirees rated 40 percent or below with no combat related disabilities still face the waiver offset, so filing is still worthwhile: VA compensation is tax free while retired pay is generally taxable, and the VA rating carries health care and other benefits.
The exceptions
- Ratings of 40 percent or below without combat related conditions remain subject to the offset unless CRSC applies
- Chapter 61 medical retirees with fewer than 20 years have CRDP limits, though CRSC may still apply