A medically retired military member walking into my office usually has the same three questions, in the same order: Can I still buy my time back? Do I have to give up my military retired pay to do it? And if I do, what happens to my dependents?The short answer to all three is yes — but with one important hinge that the system doesn’t make obvious.

A medical retirement (often called a “Chapter 61” retirement in the military’s lexicon) is still a military retirement. The retiree is drawing military retired pay, has a DD-214, and is eligible for TRICARE and other retiree benefits. When they later become a federal civilian employee under FERS, the buyback question becomes: can I credit that same active-duty service toward my FERS annuity, given that I’m already drawing a military pension from it?

The general rule: no double credit for the same service.

Federal retirement law has a long-standing principle: you cannot use the same period of military service to qualify for two separate federal benefits at the same time. The military buyback is a deposit to credit active-duty service as if it were federal civilian service for FERS purposes. If the same service is also producing military retired pay, the system needs to make sure it is not paying twice for the same years.

The way the system reconciles that is to require a waiver of military retired payfor the period of service being bought back. The retiree keeps the title “medically retired,” keeps the ID card, keeps TRICARE, keeps the disability rating — but the actual retired-pay check attributable to the waived service stops. The FERS annuity then takes the credit for those years instead.

What the waiver actually does.

The waiver is a written election, usually on a form provided by the military pay center (DFAS for most branches). It identifies a specific period of service and a specific number of years or months being credited to the FERS annuity. Once the waiver is in effect:

  • Military retired pay is reduced by the portion attributable to the waived service. For a 20-year career being bought back in full, the reduction is the entire retired pay.
  • The waived service is then credited toward the FERS annuity calculation, including the high-3 average, the creditable service years, and any retirement-eligibility thresholds (MRA+10, 30-and-out, etc.).
  • VA disability compensation is not affected by the waiver. The retired pay and the VA rating are handled separately; the VA–DoD offset under 38 U.S.C. § 5304 is a separate rule from the buyback.
  • TRICARE eligibility generally continues as long as the retiree is medically retired and meets the other criteria, but the FERS civilian health plan (FEHB) usually becomes available alongside it.

The cost-benefit math is usually favorable.

A FERS annuity is calculated on the high-3 average salary times the 1.0% multiplier(or 1.1% at age 62 with 20+ years) times years of creditable service. Adding 20 years of military service to a civilian FERS career can increase the annuity substantially — often by tens of thousands of dollars per year for the rest of the retiree’s life.

Against that, the cost of the buyback deposit is 3% of basic pay for the military service period (for FERS), plus interest if the deposit is made after the three-year grace period. On most medically retired service members’ numbers, the long-term annuity increase pays back the deposit cost within the first few years of retirement — sometimes the first year.

What to do before signing the waiver.

The waiver is irrevocable for the period of service it covers. Once you have signed, the military retired pay attributable to that period is gone permanently, and only the FERS annuity can fill the gap. Before signing, get a written buyback deposit calculation from your HR office, model the projected FERS annuity both ways, and have a clean number to compare to the military retired pay you’d be giving up.

Also confirm with your military pay center that you understand which dependents benefits are affected by the waiver. In most cases, SBP (Survivor Benefit Plan) participation in the military system can be coordinated with the FERS survivor election — but the two are not the same benefit and not the same cost.