VA Offset
To be eligible to receive both military retired pay and VA Disability Compensation concurrently, a member who did not retire under Chapter 61 for disability must:
Have a service-connected disability (or combination of service-connected disabilities) that is rated by the Secretary of Veterans Affairs as not less than 50 percent disabling on the VA schedule for rating disabilities.
Any less and the law requires that a military retiree waive a portion of their gross DoD retired pay, dollar for dollar, by the amount of their Department of Veterans Affairs (VA) disability compensation pay; this is known as the VA waiver (or VA offset)
Basically, the only advantage for those retires with less than 50% disability rating is the VA portion that replaces your regular pay is not taxed.
There is a special entitlement for combat-related disabilities, but I'm not sure how it works. I've never met a disabled veteran with a combat-related disabilities.
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