If you were medically retired under Chapter 61 with 20 or more years, you were probably told that the retired pay you draw alongside your VA compensation couldn't be split in a divorce. For years DFAS paid it that way. Then it lost a 2022 appeal, and in February 2026 DoD rewrote the pay regulation DFAS follows to match. That concurrent pay, CRDP, now counts as divisible retired pay.
The change came through a revision to a pay regulation that few people outside DFAS and divorce law ever read. Many of the retirees it reaches will hear about it from a former spouse's lawyer, or from a garnishment larger than the one they had. Here's where it came from and who it reaches, worked through for one retiree on the 2026 pay tables.
What changed, and when
- March 1, 2022. In Claims Case No. 2016-CL-091608.3, the Defense Office of Hearings and Appeals' Claims Appeals Board held that CRDP paid to a Chapter 61 retiree is a restoration of retired pay based on length of service and can be divided under the USFSPA.
- February 2026. DoD revised the Financial Management Regulation DFAS follows, Volume 7B, chapters 29 and 64, to say the same thing.
- Back pay. The North Carolina State Bar's guidance for lawyers says DFAS has indicated a former spouse's share of CRDP will run back to March 2022, the date of the decision. DFAS hasn't published that, and its USFSPA FAQ still says former spouse payments are prospective only. Treat back pay as unsettled until DFAS confirms it in writing.
- October 1, 2026. The Supreme Court agreed to hear Marschner v. Marschner, No. 25-1349, a case about a Chapter 61 retiree. It will decide whether a court can enforce a divorce agreement in which the veteran promised to make up the former spouse's share if a VA waiver or a disability retirement shrinks it. More below.
Table of Contents
- What Changed and Where It Came From
- Who It Reaches, and Who It Doesn't
- Why DFAS Now Calls It Divisible
- A Worked Example on 2026 Pay
- What Is Still Protected
- The CRSC Election
- Medical Retirees With Fewer Than 20 Years
- What This Didn't Change
- What to Do If This Applies to You
- Frequently Asked Questions
What Changed and Where It Came From
Federal law leaves part of a Chapter 61 pension out of what a court can divide. Under 10 U.S.C. § 1408(a)(4)(A)(iii), disposable retired pay doesn't include the Chapter 61 retired pay "computed using the percentage of the member's disability." For years DFAS read that to cover the whole Chapter 61 pension of a retiree paid on the disability percentage, CRDP included. So for many medical retirees with 20 or more years, nothing was divisible.
That reading was challenged, and on March 1, 2022 the Claims Appeals Board ruled against DFAS. The decision says the retiree's restored pay under 10 U.S.C. § 1414 "is subject to division under the USFSPA. CRDP is a restoration of retired pay based on longevity, which is 20 years of service. It is divisible under the USFSPA."
DoD brought the regulation DFAS follows in line with the decision in February 2026. Its explanation of the change, at the top of chapter 64 and again in chapter 29, reads this way.
"[M]ilitary retired pay payable to military retirees under Title 10, Chapter 61, of United States Code that is paid concurrently with Department of Veterans Affairs disability compensation is disposable pay subject to division under the Uniformed Services Former Spouse's Protection Act, because the amount paid effectively removes the disability factor from the Chapter 61 retired pay payable."
The statute itself didn't change. Section 1408 was last amended in 2017. What changed is how DFAS reads it, and that's what decides what DFAS pays a former spouse. A state court still applies its own law to the decree in front of it.
Who It Reaches, and Who It Doesn't
The rule reaches a medical retiree only when all four of these are true.
- You were retired for disability under Title 10, Chapter 61.
- You have 20 or more years of creditable service under 10 U.S.C. § 1405, or 20 or more years computed under § 12732 for Guard and Reserve service.
- Your combined VA rating is 50% or more, which 10 U.S.C. § 1414(a) requires for CRDP.
- You're receiving CRDP, not CRSC.
A divorce decree also has to divide your retired pay in the first place. If yours awards alimony or child support but no share of the pension, this rule doesn't create one.
Who it doesn't reach
- Fewer than 20 years. Under 10 U.S.C. § 1414(b)(2), a Chapter 61 retiree with fewer than 20 years can't get CRDP at all, so there's no concurrent pay for the rule to reach. The same February 2026 chapter says that without CRDP your "disposable retired pay is not divisible" (Volume 7B, chapter 29, paragraph 7.2.2), so DFAS doesn't divide any of it.
- A VA rating under 50%. No CRDP, so the VA waiver applies in full, and paragraph 7.2.2 covers you too. DFAS doesn't divide your retired pay.
- CRSC instead of CRDP. CRSC isn't retired pay (10 U.S.C. § 1413a(g)). More on that choice below.
- Guard and Reserve medical retirees before retirement pay age. Under § 1414(b)(1), the pay protected from the VA offset is what length of service would pay you, and for a reservist that pay doesn't start until retirement age, usually 60. Until then there may be little or no CRDP to divide.
Why DFAS Now Calls It Divisible
A Chapter 61 pension is your High-3 times a percentage, and you get the better of two percentages (10 U.S.C. § 1401). One is 2.5% a year of service under High-3. The other is the disability percentage DoD gave you, up to 75%. A retiree with 20 years and a 70% DoD rating is paid on the 70%.
CRDP doesn't protect all of that from the VA offset. Under 10 U.S.C. § 1414(b)(1), a Chapter 61 retiree with 20 or more years waives retired pay for VA compensation only to the extent the Chapter 61 pay is more than what length of service alone would pay, and never more than the VA pay itself (38 U.S.C. § 5305). So when your VA pay covers that excess, the retired pay DFAS sends is the length of service figure.
That cap is the reason the Board and now DFAS treat the pay as divisible. What DFAS pays is the pension your years of service earned, no longer a figure built on the disability percentage. Pay figured on years of service is ordinary disposable retired pay.
If your DoD rating is low enough that 2.5% a year pays more than the disability percentage, you're paid on years of service and there's no waiver under § 1414(b)(1). Under DFAS's old reading, the part of that pension equal to what your disability percentage would pay was still left out of disposable pay, and only the difference was divisible. With CRDP, the new rule may reach the rest of it too, so check your statement.
A Worked Example on 2026 Pay
Take an E-7 medically retired July 1, 2026 with 20 years, a 70% DoD disability rating and a 70% VA rating with no dependents. The marriage lasted 18 of the 20 years, the divorce came after retirement, and the decree gives the former spouse 50% of the marital share. The figures are worked from the engine behind the free calculator, with retired pay rounded down to the dollar the way DFAS pays it.
| Step | Monthly |
|---|---|
| High-3 average, 2023 to 2026 pay tables | $5,760.90 |
| Chapter 61 retired pay on the 70% disability rating | $4,032 |
| What 20 years of service would pay (50%) | $2,880 |
| VA compensation, 70%, no dependents | $1,808.45 |
| Waived for VA pay, the part above $2,880 | $1,152 |
| Retired pay DFAS sends under CRDP | $2,880 |
| Former spouse's share, 18 ÷ 20 years × 50% = 45% | $1,296 |
| Retired pay you keep, before tax | $1,584 |
| Plus your VA compensation, tax-free and not divisible | $1,808.45 |
Under DFAS's old reading, this same former spouse got $0, because all of this retiree's Chapter 61 pay was figured on the disability percentage. Now it's $1,296 a month. The retiree still keeps $3,392.45 a month counting the VA pay, and the VA pay is the bigger part of it.
Check your own statement, not this table. A decree with a frozen benefit order, a fixed dollar award or an SBP election changes the math, and so does a DoD rating that isn't 70%. Your DFAS Retiree Account Statement shows what's actually being divided, and a lawyer who handles military divorces can tell you what your decree reaches.
Your rank, your years, your decree
Pick Medical in the calculator and put in your rank, years and DoD rating, the months you were married while serving and the court's percentage. It shows the share and what you keep after tax, next to your VA pay. With fewer than 20 years or no CRDP, it leaves out the pay figured on your DoD rating, as the law does. Free, about a minute.
See my share →What Is Still Protected
VA disability compensation
The money the VA pays you isn't retired pay and can't be divided as property. Federal law shields VA benefits from legal process (38 U.S.C. § 5301), and the Supreme Court held in Mansell v. Mansell, 490 U.S. 581 (1989), that retired pay waived to receive VA compensation isn't divisible either. The February 2026 revision didn't touch any of that.
The pay you waive
In the example, the $1,152 waived for VA pay is never paid as retired pay, so it isn't there to divide (10 U.S.C. § 1408(a)(4)(A)(ii)).
Combat-Related Special Compensation
CRSC isn't retired pay (10 U.S.C. § 1413a(g)), so it isn't divisible as property.
Support is a different question. These protections are about dividing property. Federal law lets VA compensation paid in place of waived retired pay be garnished for child support and alimony (42 U.S.C. § 659(h)), and in Rose v. Rose (1987) the Supreme Court let a state hold a disabled veteran in contempt for unpaid child support even if his veterans' benefits were the only way he had to pay it.
The CRSC Election
If some of your disabilities are combat related, you may qualify for CRSC as well as CRDP, but you can't receive both (10 U.S.C. § 1414(d)). The law gives you an annual open season to switch, and DFAS has held it each January. DFAS has also defaulted to paying whichever is larger before tax, which doesn't account for a former spouse's share.
For a Chapter 61 retiree the two can come out to the same gross. Under 10 U.S.C. § 1413a(b)(3)(A), CRSC can't push your retired pay plus CRSC above what length of service would pay. In the example, with CRSC instead of CRDP, the full VA waiver leaves $2,223.55 of retired pay, and CRSC is capped at $656.45. Add the VA pay and the total is $4,688.45 a month, the same as under CRDP.
The difference is what can be divided. CRSC can't be. The retired pay left after the waiver is Chapter 61 pay figured on the disability percentage, which § 1408(a)(4)(A)(iii) leaves out of disposable pay. So for a divorced retiree with a combat-related rating, the election can change what the former spouse receives by a lot. How DFAS treats your own account after a switch, and whether a court would revisit support, are questions for a lawyer before the next open season, not after it.
Our CRDP vs CRSC guide covers the eligibility rules for each.
Medical Retirees With Fewer Than 20 Years
A Chapter 61 retiree with fewer than 20 years can't get CRDP (10 U.S.C. § 1414(b)(2)), but can get CRSC for combat-related disabilities, capped under § 1413a(b)(3)(B). This rule doesn't reach you, because you have no concurrent pay for it to reach.
The Major Richard Star Act would change that for combat-related disabilities. As introduced, H.R. 2102 and S. 1032 would pay a Chapter 61 retiree with a combat-related disability both retired pay and VA compensation without the offset, at any length of service. A different version inside H.R. 9237 would pay combat-injured medical retirees with fewer than 20 years up to what 20 years of service would pay, plus VA compensation, and would also reach retirees with 20 or more years whose combat-related rating is under 50%. As of October 2026 none has passed. H.R. 2102 and S. 1032 are in committee, and H.R. 9237 stalled on the House floor in July 2026. None of them amends 10 U.S.C. § 1408, and the first version would remove the length of service limit the FMR's reasoning rests on, so how DFAS would treat the new pay in a divorce is an open question. If you have a combat-related rating and a divorce decree, it's worth asking a lawyer about before a bill moves.
What This Didn't Change
The rest of the divorce rules work the same way. Our USFSPA guide covers each one in detail.
- The 50% cap. DFAS won't pay a former spouse more than 50% of disposable retired pay under property orders. With garnishment for child support or alimony the total can reach 65%.
- The 10/10 rule. DFAS pays a property share directly only if the marriage lasted at least 10 years while you served at least 10. Below that, the court can still divide the pension and you pay it yourself.
- The coverture fraction. Most decrees award a percentage of the marital share. The math is the same. Only the pay it applies to grew.
- The frozen benefit rule. For a decree that became final after December 23, 2016 while you were still serving, DFAS divides the retired pay you'd have gotten if you had retired on the date of the decree, figured from your High-3 and years of service on that date, plus the COLAs since. It covers property division only.
- Howell v. Howell, 581 U.S. 214 (2017). A state court can't order you to reimburse a former spouse for a drop caused by a VA waiver. Whether a court can enforce an indemnification promise you agreed to in a settlement is the question in Marschner, which the Supreme Court should decide by summer 2027. Marschner's own former spouse was turned down by DFAS in 2021 because all of his retired pay was disability based and he didn't have CRDP yet. The case itself is about the agreement, not about DFAS's rule.
What to Do If This Applies to You
- Check all four conditions. Chapter 61, 20 or more years, a VA rating of 50% or more, and CRDP rather than CRSC.
- Read your Retiree Account Statement. Log in to myPay and look at the deduction lines. That's the record of what DFAS is dividing.
- Read how your decree is worded. An award written as a percentage of disposable retired pay grows with the disposable figure. A fixed dollar award doesn't move on its own. A former spouse DFAS turned down before may need to apply again.
- Run the CRSC comparison before the January open season if you have a combat-related rating. Compare what you keep after the division, not the gross.
- Talk to a lawyer who handles military divorces. The USFSPA, the VA waiver and this regulation interact in ways a general family lawyer may not spot. A base legal assistance office may be able to help you understand the rules when staff are available (10 U.S.C. § 1044), though it usually can't represent you in court.
Frequently Asked Questions
Does this apply to a divorce finalized years ago?
It can. The rule changes how DFAS figures disposable pay under the decree you already have. The North Carolina State Bar's guidance says DFAS has indicated a former spouse's share of CRDP will run back to March 2022, the date of the Claims Appeals Board decision, but DFAS hasn't published that, and its own FAQ says former spouse payments are prospective only. If your decree awards a percentage of disposable retired pay and DFAS is already paying under it, the amount can change without a new court order. A former spouse who was turned down before, or whose decree didn't divide the pension, may need to apply again or go back to court.
Will DFAS tell me if my payments change?
When a former spouse serves DFAS with a court order, federal law requires DFAS to notify you within 30 days (10 U.S.C. 1408(g)). A recalculation under an order DFAS already has may only show up on your Retiree Account Statement, so read it line by line instead of glancing at the net.
I have 20 years and a Chapter 61 retirement but a VA rating under 50%. Am I affected?
No. CRDP needs a combined VA rating of 50% or more (10 U.S.C. 1414(a)). Without it, DoD's pay regulation says your disposable retired pay is not divisible (Volume 7B, chapter 29, paragraph 7.2.2), so DFAS doesn't divide it. The same is true if you have no VA compensation at all. A court can still order support, which DFAS can garnish.
I was medically retired with fewer than 20 years. Am I affected?
No. A Chapter 61 retiree with fewer than 20 years can't receive CRDP (10 U.S.C. 1414(b)(2)), so there's no concurrent pay for the rule to reach, and DoD's pay regulation says your disposable retired pay is not divisible (Volume 7B, chapter 29, paragraph 7.2.2). CRSC, if you get it, isn't divisible either. A court can still order support, which DFAS can garnish.
Does this change my taxes?
It doesn't change whether your retired pay is taxable. That's decided by 10 U.S.C. 1403 and 26 U.S.C. 104, which exclude disability-based pay only in certain cases, such as a combat-related disability, or up to the VA compensation you'd be entitled to. What does change is that a share DFAS pays your former spouse directly goes on their own 1099-R, not yours.
What is Marschner v. Marschner about?
It's a case about a National Guard member medically retired under Chapter 61 who agreed in his divorce settlement to make up his former spouse's share if a VA waiver or his disability retirement shrank it. The North Dakota Supreme Court held that federal law bars enforcing that promise. The Supreme Court agreed on October 1, 2026 to decide whether that's right, and a decision should come by summer 2027. It's about the agreement, not about DFAS's 2026 rule.
Would the Major Richard Star Act change this?
It could, for combat-related disabilities. The bills would loosen or remove the VA offset for Chapter 61 retirees with combat-related disabilities, which is the length of service limit DFAS's 2026 reasoning rests on, but none of them amends the USFSPA. As of October 2026 none has passed, and how DFAS would treat the new pay in a divorce is an open question.
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Related Articles
- How military retirement pay is divided in divorce (2026 USFSPA guide)
- CRDP vs CRSC in 2026, which one pays you more
- The Major Richard Star Act in 2026, status and what it would pay
- VA Disability Rating Changes and Your Retirement Pay
This article is for educational purposes and is not legal advice. It describes a federal pay regulation, not the law of your state, and property division in divorce is decided under state law by a court reading your specific decree. Verify your own figures against your DFAS Retiree Account Statement and consult a military divorce attorney about your situation.