Imagine your body starts at 100% able. Your highest-rated condition is applied first, taking that percentage away. Each additional condition is then applied to what's left over, not the original 100%, because the VA assumes some of your remaining ability was already affected by the first condition.

So two separate 20% ratings don't combine to 40%. The first 20% leaves 80% remaining. The second 20% applies to that 80%, adding 16 percentage points (20% of 80), for a combined value of 36%, which happens to round to 40% anyway in this case. With other numbers, the gap between “just adding” and the real combined value can be much bigger, as the example below shows.

This method comes from the VA's Combined Ratings Table in 38 CFR §4.25. Behind the table is a simple two-step formula: combine each rating, highest to lowest, using the math above (rounding to a whole number after each step), then round the final combined value to the nearest 10 for your official rating.

Say a veteran has three service-connected conditions: PTSD rated 50%, a left knee condition rated 20%, and a right knee condition rated 10%. The two knee ratings are on opposite legs, so the bilateral factor applies (more on that below).

1. Combine the paired knee ratings first: 20% + 10% × (100% − 20%) = 20 + 8 = 28%.
2. Add the 10% bilateral bonus to that figure: 28% × 1.1 = 30.8, which rounds to 31%.
3. Combine the remaining ratings, highest first: 50% (PTSD) + 31% (the paired-knee group) × (100% − 50%) = 50 + 15.5 = 65.5, which rounds to 66%.
4. Round the combined value to the nearest 10 for the official rating: 66% rounds to 70%.

Official combined rating: 70%.

When you have a rating on both a left and right limb (any combination of arms and legs), the VA adds a 10% bonus to the combined value of just those paired ratings, before folding the result back in with everything else. This is the bilateral factor, defined in 38 CFR §4.26, and it exists because a disability affecting both sides of your body limits you more than the same two ratings would if they were both on the same side.

In the example above, the two knee ratings combined to 28%, and the bilateral bonus bumped that to 31% before it was combined with the 50% PTSD rating. Without the bilateral factor, that same veteran's official rating would be 60% instead of 70%.