Understanding U.S. Military Retirement Benefits

U.S. Military Pension and Health Care Benefits for Military Retirees

Oct 12, 2009 Rebecca Livermore

No one gets rich off of U.S. Military pensions, and medical treatment for retirees may be spotty at times, but the monthly pension and health benefits are great perks.

Benefits associated with retiring from the U.S. military are perhaps one of the biggest sources of motivation for serving in the U.S. Armed Forces. During specific times in the history of the U.S. military, some have been given the option to retire early, but generally speaking, U.S. military personnel may retire after 20 years of active-duty service.

Retirement Pay Formula for U.S. Military Retirees

Retirement pension benefits for those retiring from active duty military service is based on two primary criteria: time in service and rank at the time of retirement.

When U.S. military personnel retire after 20 years of active-duty service, they receive 50% of their base pay. (The base pay is determined by rank and time in service, so people of the same rank have different base pay amounts.) For each additional year after 20 years of active duty military service, a pay increase of 2.5% is given, up to a maximum of 100% of the base pay. For instance, if someone retires from the U.S. military after 22 years of active-duty service, his pension amount is 55% of his base pay. If a person retires after 30 years of active duty military service, his monthly retirement pension is 75% of his base pay, and so on.

Therefore, the longer a person remains active duty and the higher rank he achieves, the higher his military pension. However, U.S. military personnel may be forced to retire after 20 years if they have not achieved sufficient rank within the allotted time.

Health Care Benefits for Military Retirees and Their Dependents

Health insurance coverage is provided for U.S. military retirees and their dependents. The military retiree medical insurance is known as TRICARE and has various options available including options with a monthly premium and heath insurance options that do not have a monthly fee. Regardless of which type of TRICARE a U.S. military retiree signs up for, there is a small annual deductible and a small co-pay for doctor visits, prescription medications, medical tests, and hospital stays. In most cases, TRICARE covers 80% of what the government has determined to be allowable charges for various medical expenses.

At times military retirees and their dependents may run up against the problem of the unwillingness of some civilian doctors to accept TRICARE, but many physicians and clinics accept TRICARE.

Military retirees and their dependents can receive free medical treatment and prescription medications in military hospitals and clinics. However, it should be noted that active-duty military personnel and their dependents are higher priority so if limited resources are available, retirees and their family members are placed at the bottom of the treatment list.

Military dependents may continue to receive health insurance coverage through TRICARE even after the death of the retiree.

References:

Health Benefits for Retired U.S. Military

U.S. Military Retiree Pay Information

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Benefits Abound for Retired Military Personnel