Chapter 61 Disability Retirement (PDRL) in a Divorce

What is a Military Disability Retirement?

When a military member has gone through the disability evaluation system (first, the MEB, or medical evaluation board, then the PEB, or Physical Evaluation Board) and is unfit for duty, and has either 20 years of service, or a disability rating of 30% or higher, the member is separated with a medical retirement, also known as a Chapter 61 disability retirement (named after the section of the federal law governing such retirements).

You may hear several different terms for a military disability retirement - they are interchangeable:

• Medical Retirement
• Disability Retirement
• Chapter 61 Retirement
• PDRL (or Permanent Disability Retired List)

A military member who is medically retired is placed on either the Temporary Disability Retired List (TDRL) or Permanent Disability Retired List (PDRL). For a detailed discussion of the disability evaluation system, see our TDRL article.

Qualifying for the Permanent Disability Retired List (PDRL)

A Chapter 61 medical retirement is governed by 10 U.S. Code § 1201. The criteria are that the military member is:

1. Unfit for duty with a permanent condition (because a temporary condition would result in being placed on the TDRL), and
2. Either (a) the member has at least 20 years of service, or (b) the disability rating is at least 30% and incurred in the line of duty.

Disability Retirement Payment Amount

Members on the PDRL receive disability retirement as set forth in 10 U.S. Code § 1401, calculated by multiplying the member’s high three pay (final pay if entered the military prior to 9/8/1980) by the higher of either

1. Years of service x 2.5% (the “longevity method”), or
2. Member's disability rating, up to a maximum of 75% (the “percentage of disability” method).

See the Disability Retirement page on the DFAS website for more information about PDRL.

How to Tell a Disability Retirement vs Normal Retirement

Believe it or not, simply looking at a military member’s retiree account statement will NOT be sufficient to tell if the retiree is receiving a normal longevity retirement, or a Chapter 61 disability retirement. The statements look identical, although if you really closely examined the numbers, you may realize that there was something amiss and they would not make sense for a normal 20-year retirement.

If you are the spouse of a military retiree, beware of waiving maintenance or giving up other property in return for a share of the military retirement unless you are certain that the retirement is actually divisible. The disability retirement process is laborious, and involves a Physical Evaluation Board and Medical Evaluation Board, so if the spouses are still living together, the spouse would almost certainly remember the member going through it, talking about it, etc.

However, if the spouses are already separated or divorced, then the former spouse may not have any knowledge of the disability retirement, and be counting on receiving a share of a benefit which does not exist.

The easiest way to tell for sure is to examine the member’s DD214 Certificate of Release or Discharge from Active Duty. With a Chapter 61 retirement, the narrative reason for separation, circled below, indicates a permanent disability.

By contrast, the DD214 narrative reason for retirement for a member with a standard longevity (20+ year retirement) has language to the effect of "sufficient service for retirement".

VA Waiver of Disability Retirement

What the government gives, the government takes away. Just like regular retirement can have a VA waiver in return for receiving VA disability, so too can a disability retirement.

Disability Retiree with Under 20 Years of Service

A member who is medically retired with fewer than fewer than 20 years of service must waive retirement, dollar for dollar, by the amount of VA disability received, for all disability ratings. 10 U.S. Code § 1414(b)(2). This is in contrast to a member who is eligible for a normal 20-year retirement who waives retirement only with a disability rating of under 50%.

Because a disability retiree with fewer than 20 years must have at least a 30% disability rating, she will invariably be entitled to VA disability payments, and therefore face a waiver.

From a practical perspective, this means that a medically-retired member will end up receiving an amount equivalent to the higher of:

1. The disability retirement (although part of the payment may be comprised of VA disability benefits, the total of both will not exceed the disability retirement limit), or
2. The VA disability.

Potential Partial VA Waiver for Medical Retiree with More than 20 Years of Service

A disability retiree with at least a 50% disability rating may receive full VA disability benefits as well as the full disability retirement. 10 U.S. Code § 1414(b)(1). As with a regular 20-year retiree, DFAS will add Concurrent Retirement and Disability Pay (CRDP) to the retirement to negate the VA waiver.

But there is a limit to this which often results in a partial VA waiver. To ensure that a disability retiree does not receive more retirement than a regular retiree, that same statute applies a partial VA waiver, but only to the extent that the disability retirement exceeds the regular retirement. 10 U.S. Code § 1414(b)(1).

EXAMPLE: Assume a member whose high three pay is $5000/mo is medically retired with a 90% disability rating after 21 years of service, and both are receiving VA disability payments.

• A regular retiree with 21 years of service would receive $2625/mo (2.5% x 21 years x $5000).
• A disability retiree would receive $3750/mo without a VA waiver (90% rating x $5000)

To equalize the two, the disability retirement is reduced by a VA waiver of $1125/mo, bringing it down to the same $2625/mo that a regular retiree receives. And in both cases, the retirees are also receiving VA disability based upon a 90% disability rating.

Division of Chapter 61 Disability Retirement in a Divorce

Federal Law Precludes Dividing % of Disability Portion of Medical Retirement

The Uniformed Services Former Spouses Protection Act, 10 U.S. Code § 1408(a)(4)(iii), provides that states cannot divide Chapter 61 disability payments, to the extent they are based upon the member’s percentage of disability.

What this means is that disability retirement payments received under the percentage of disability method are not divisible in a divorce. However, if the member is receiving payments based upon the longevity method, then to the extent those payments exceed the percentage of disability method, that excess is divisible.

EXAMPLE: Consider two hypothetical examples for a servicemember with a base pay of $5000/mo:

• One has 20 years of service, and an 80% disability rating.
  • The longevity formula pays $2500/mo (2.5% x 20 x $5000).
  • The percentage of disability formula pays $3750/mo (75% max x $5000). He will receive the higher $3750/mo, and since the full payment is based upon the percentage of disability, none is divisible in a divorce.
• The other has 24 years of service, and a 50% disability rating.
  • The disability formula pays $2500 (50% x $5000).
  • The longevity formula pays $3000/mo (2.5% x 24 x $5000). He will receive the higher $3000/mo, but since the amount is higher than the percentage of disability formula, that $500/mo excess is divisible by the court as a normal military retirement.

Colorado Law on Dividing Disability Retirement

In Colorado, any PDRL payment for a disability retired member with under 20 years is not divisible in a divorce. The first Colorado case to consider the federal statute reversed a trial court’s determination that disability retirement was divisible, and remanded for the court to exclude from the division any medical retirement which was “based and computed on husband's disability.” Franz, at 919.

In 2009, the Colorado Court of Appeals held that the disability payments of a member with under 20 years of service was not divisible marital property at all, regardless of the formula used for the payments. Williamson. The reasoning was that because the member was not entitled to a longevity retirement, all of his disability was due to disability, and therefore excluded from division:

“In this situation, since husband is completely ineligible for any military retirement benefits but for his disability, we conclude that all of his benefits are based on his disability, and therefore, are not divisible as marital property”

Williamson, at 542 (Emphasis in original).

Applying 10 U.S. Code § 1408(a)(4)(iii), the Colorado Court of Appeals subsequently held that the Chapter 61 disability retirement payable to a member with more than 20 years of service was partially partially divisible, only to the extent the payments exceeded the percentage of disability formula:

“We conclude, based on 10 U.S. Code § 1408(a)(4)(C), that an amount equal to the amount of TDRL pay, as calculated based on husband's percentage of disability when he was placed on the TDRL, must be excluded from the marital property, but that any amounts in excess of that amount may be divided under the decree.”

Poland, at 649.

Note that while both Poland and Williamson involved Temporary Disability Retired List (TDRL) payments, the same rationales apply to PDRL payments as well, since they are paid under Chapter 61 and involve the same exception to the USFSPA.

Is PDRL “Voluntary?”

Some cases involving a disability retirement may be post-decree, and the spouse may argue that the military member voluntarily received the payments. In Poland, for example, the spouses had already divorced, and their decree prohibited the member from taking steps to decrease the retirement, requiring indemnity if he did (as discussed in our VA Disability in a Divorce article), such clauses are no longer valid under the U.S. Supreme Court’s 2017 Howell decision.

The Colorado Court of Appeals rejected the wife’s argument that the member had somehow voluntarily converted his retirement to TDRL payments: “The service member does not voluntarily choose TDRL status.” Poland, at 650. Similarly, in the context of a PDRL disability retirement, the Court of Appeals in an unpublished decision noted: “A military member does not unilaterally choose to become Chapter 61 retired.” Longmire, ¶ 12.

Moreover, the Colorado Court of Appeals held in a different case that the distinction between a voluntary vs involuntary conversion of retired pay to disability is moot following Howell, where the U.S. Supreme Court rejected indemnity for disability payments, regardless of whether they were voluntary or not. Tozer, ¶ 19.

Chapter 61 Disability Pay is Income for Child Support & Maintenance

Disability payments count as income for purposes of calculating child support and maintenance - the fact that they are tax-free means they are “invisible” to the IRS, but not invisible to other agencies or for other purposes. While most of the case law pertains to VA disability payments, the rationale is the same for PDRL payments.

In Rose, at 630, the U.S. Supreme Court found that disability payments were intended not just for the veteran, but as the law stated, to “provide reasonable and adequate compensation for disabled veterans and their families.”

Colorado's definition of income for purposes of calculating child support and maintenance is broad: “Gross income' means income from any source and includes, but is not limited to…”, followed by a long laundry list of items which covers basically everything, including non-taxable payments such as trust income and gifts. [sv slug="crs-14-10-114"](8)(c) (for maintenance) and [sv slug="crs-14-10-115"](5)(a)(I) (for child support). And PDRL is not on the very, very short list of payments excluded from income.

In 1991, the Colorado Court of Appeals rejected the argument that counting disability payments as income was effectively a backdoor division of the disability payments themselves:

“The federal law relied upon by husband is limited to a consideration of the treatment of military disability as marital property, rather than as a resource to be considered in determining the propriety and amount of an award of spousal maintenance, and therefore, it is inapplicable to the issues presented here. In addition, because of the qualitative difference between a maintenance award and a division of property, we are not persuaded by husband's argument that by awarding maintenance to wife, the court is indirectly accomplishing what it may not do directly.”

Nevil, at 1123.

In 2020, the Court of Appeals expanded on this in a case holding that disability payments count as income: “We conclude that veteran’s disability benefits fall within the broad definition of gross income.” M.E.R.-L., ¶ 21.

In its lengthy reasoning, the Court discussed and rejected every single argument that the retiree proposed to try to exclude disability from income, and noted that not only did the retiree have no case law from anywhere in the nation supporting his position, but the same arguments he was making had been rejected by every court which had considered them. For a complete discussion of the M.E.R.-L. case, see our blog post VA Disability and Child Support – It’s Income.

Military Disability Retirement - Frequently Asked Questions

If you need a Colorado Springs attorney for your family law case, we would be honored if you would consider the veterans divorce lawyers at Graham.Law. Military family law is not easy, but whether you are active duty, retired, a veteran receiving benefits, or a family member, our attorneys know what they are doing.