Disability Retirement is sometimes called Chapter 61 retirement, since the law governing such a retirement is in Chapter 61 of title 10 United States Code. Members who have been determined to be unfit for duty with a disability rated by the Military Service as 30% or greater are eligible for disability retirement. A member whose condition is not stable may be placed on the Temporary Disability Retired List (TDRL) for up to five years at which point they must be discharged, retired or returned to duty. Members whose condition has stabilized at a disability rating of 30% or higher may be placed on the Permanent Disability Retired List (PDRL)
Temporary Disability Retirement List (TDRL)
TDRL is the Temporary Disability Retirement program designed to enable all eligbile members with a rated disability the opportunity to receive retirement benefits including medical coverage for members and dependents and a monthly stipend until medical conditions can become stabilized or corrected. TDRL is enacted by General Military Law under Title 10 USC Chapter 61, section 1200 series, and further outlined by the Headquarters of the Military Departments through Directives and Instructions. The department of the Navy has designated SECNAVINST 1850.4E as the governing instruction for the administration of Disability Evaluation. Under Title 10 USC, TDRL is a maximum of a 5-year program. At the end of the 5 years, General Military law requires all pay and benefits to cease, regardless of reason for a delay in final processing.
Permanent Disability Retired List (PDRL)
PDRL is the Permanent Disability Retirement program designed to provide permanent disability benefits to members of the military with service-connected disabilities. Required determinations of disability are made by the Secretary of the Military Departments and include the following categories according to Title 10 USC:
"Based upon accepted medical principles, the disability is of permanent and stable nature. The disability is not the result of the member's intentional misconduct or willful neglect, and was not incurred during a period of unauthorized absence. The member has at least 20 years of ACTIVE service or the Secretary of the Military Departments rates the disability at least at 30%. The disability cannot be noted at the time of the member's entrance on active duty and the disability is the proximate result of performing active duty."
For Detailed Information: http://uscode.house.gov/download/pls/10C61.txt
For Disability Pay information including Federal Taxation of Diability Retirement Pay:
Navy Personnel Command, PERS-954 has been tasked by the Secretary of the Navy to administratively process the results of the Physical Evaluation Board's (PEB) Notification of Decision. Upon notification, PERS-954 processes the orders to discharge members from active duty to either the Temporary or Permanent Disability Retirement List. Local command Personnel Support Detachments (PSD), upon receipt of the authority, will begin processing members for retirement. Additionally, PERS-954 is responsibile for the processing of all orders directing the Service Member to their Periodic Medical Examiniations. Therefore, it is imperative that the Service Member notify PERS-954 with any changes in their contact information. Inability of PERS-954 to contact the Service Member to issue orders and schedule the Periodic Examination will result in being dropped from the system, susequently losing all DOD benefits, to include pay, Tricare, and ID Card.
PLEASE NOTE: In the event the service member receives a disability rating of 100% from the Department of Veterans Affairs, the service member is still responsible to keep their current contact information with PERS-954 so travel orders for required exams can be provided.