Physical Evaluation Process
The
percentage of disability is determined by the Physical Evaluation
Board of each Service. The Board determines whether a service
member will be separated or retired.
For a member with less than 20 years
of active service, the disability must be rated at 30% or higher to
be recommended for disability retirement. Ratings below 30% will
result in a separation. An exception to this rule is a service
member who has 20 or more years of active service. Such members
will be recommended for retirement regardless of the percentage of
disability awarded.
Temporary Disability Retirement List
(TDRL)
If, as the result of a Physical
Evaluation Board finding, a member is found unfit to perform their
duties by reason of a disability which may not be of a permanent
nature, the member may be placed on the TDRL under the authority of
10 United States Code (USC) 1202 or 1205.
The retired pay is computed under two
different methods. Method A is based on the disability percentage
(minimum of 50% for payment purposes while on the TDRL). Method B
is based on the years of active service. Pay is established by
whichever method provides the greatest entitlement.
While on the TDRL, a physical
examination shall be given at least once every 18 months. Service
members may remain on the TDRL up to 5 years. However, final action
may be taken at any time based on changes to the member's
condition. If, as a result of the periodic examination, the member
is found fit for duty, they may be discharged from the TDRL and
returned to active duty. If the disability has stabilized and is
rated at 30% or greater, the member will be transferred to the
Permanent Disability Retired List (PDRL). If the disability has
stabilized and is rated at less than 30%, and the member does not
have 20 years of service, they will be discharged from the TDRL
with severance pay. If the service member is found fit for duty,
they will be discharged from the TDRL and returned to duty, or
discharged without severance pay.
Permanent Disability Retired List
(PDRL)
If the service member has been
determined to be unfit by reason of disability that is found to be
of a permanent nature and have been rated at 30% or greater, or if
rated at less than 30% but have 20 or more years of service, they
will be placed on the PDRL under authority of 10 USC 1201 or 1204.
This is a permanent status.
Retired pay is computed under the
same two methods stated in the TDRL section above, with the
exception of the 50% minimum. A member of the TDRL whose disability
is now considered to be of a permanent nature will be transferred
to the PDRL and the retired pay is computed using the same retired
pay base utilized while on the TDRL and the new percentage (no
longer a 50% minimum).
Retirement Status
A service member on the TDRL or the
PDRL is a retired member of the Armed Forces. As such, the service
member remains entitled to all rights and privileges of the retired
status. Members are entitled to participate in the Survivor Benefit
Plan and have voluntary/involuntary allotments deducted from
retired pay. Additionally, service members may apply for disability
compensation from the Department of Veterans Affairs. If members
meet the requirements for a non-disability retirement they may also
qualify for Combat-Related Special Compensation or Concurrent
Retirement and Disability Pay.
Survivor
Benefit Plan (SBP)
The Uniformed Services Survivor
Benefit Plan (SBP) was created by Congress in 1972 to put an end to
the category of destitute survivors. SBP is the sole means by which
survivors can receive a portion of military retired pay upon the
demise of the retired member.
Every military member is
automatically enrolled at no cost while they serve on active duty.
Should they die on active duty with an eligible beneficiary, SBP is
payable.
At retirement, the automatic
coverage is applied to all eligible dependents, based upon the full
gross monthly retired pay entitlement on retirement date, unless
reduced coverage or a declination of coverage is elected prior to
the retirement date. The annuity payable is 55% of the base
amount.
Dependency and Indemnity Compensation
(DIC)
The Department of Veterans Affairs
(DVA) pays a benefit called Dependency and Indemnity Compensation
(DIC) to the surviving spouse and dependent children if the member
dies of service-connected causes. This includes deaths after
retirement if the cause of death is due to an injury or disease
contracted while the member was on active duty.
DIC may also be paid if the member
had a 100 % DVA disability rating for ten continuous years, or if
less than ten years, then at least five continuous years from the
date of release from active duty.
DIC Award
The DVA determines entitlement to
and the amount of the DIC award. If DIC is awarded, the SBP annuity
must be reduced by the amount of the DIC award. The SBP annuity is
terminated if the DIC is greater than the SBP. However, if an
annuitant receives DIC based on a member other than the one
providing SBP, there will not be a DIC reduction.
Each annuitant signs a DIC
authorization statement when they submit their annuity application.
This allows DFAS to establish their SBP annuity prior to
notification from the DVA regarding their entitlement to DIC. This
prevents delays in SBP payments.
Since DIC benefits are nontaxable, annuitants are
encouraged to apply.
Cost Refund
Once
DFAS receives all of the necessary information from the DVA, the
annuitant may be due a refund of all or part of the SBP costs paid
into the plan by the member (SBP cost refund) if the DIC award is
made retroactive to date of death. The SBP cost refund will be
applied to any SBP overpayment or other indebtedness, and a payment
for the remaining balance, if any, will be forwarded to the
annuitant. The SBP cost refund is fully taxable and will be
included as taxable income on the TD Form 1099-R annuitants receive
at the end of the year.
