Honorable. The Honorable characterization is appropriate when the quality of the member's service generally has met the standards of acceptable conduct and performance of duty for military personnel, or is otherwise so meritorious that any other characterization would be clearly inappropriate. (For example, a Medal of Honor recipient would almost always receive an Honorable Discharge, unless he/she was involved in the most serious of misconduct). In the case of an Honorable Discharge, an Honorable Discharge Certificate (DD Form 256) is awarded and a notation is made on the appropriate copies of The DD Form 214/5.
General (Under Honorable Conditions). If a member's service has been honest and faithful, it is appropriate to characterize that service under honorable conditions. Characterization of service as General (under honorable conditions) is warranted when significant negative aspects of the member's conduct or performance of duty outweigh positive aspects of the member's military conduct or performance of duty outweigh positive aspects of the record. A General (under honorable conditions) characterization of discharge may jeopardize a member's ability to benefit from the Montgomery G.I. Bill if they, in fact, had contributed. Moreover, the member will not normally be allowed to reenlist or enter a different military service.
Under Other Than Honorable Conditions. OTH Discharges are warranted when the reason for separation is based upon a pattern of behavior that constitutes a significant departure from the conduct expected of members of the Military Services, or when the reason for separation is based upon one or more acts or omissions that constitute a significant departure from the conduct expected of members of the Military Services. Examples of factors that may be considered include the use of force or violence to produce serious bodily injury or death, abuse of a special position of trust, disregard by a superior of customary superior-subordinate relationships, acts or omissions that endanger the security of the United States or the health and welfare of other members of the Military Services, and deliberate acts or omissions that seriously endanger the health and safety of other persons.
Persons awarded an OTH characterization of service: are not entitled to retain their uniforms or wear them home (although they may be furnished civilian clothing at a cost of not more than $50); must accept transportation in kind to their homes; are subject to recoupment of any reenlistment bonus they may have received; are not eligible for notice of discharge to employers (which may affect unemployment benefits); and, do not receive mileage fees from the place of discharge to their home of record.
It is generally believed that an OTH Discharge will render an individual ineligible for all VA Benefits. This is not necessarily so. The Department of Veterans Affairs will make its own determination with respect as to whether the OTH was based on conditions which would forfeit any or all VA benefits. Most veterans' benefits will be forfeited if that determination is adverse to the former service-member, such as when based on the following circumstances: (1) Desertion; (2) escape prior to trial by general court-martial; (3) conscientious objector who refuses to perform military duties, wear the uniform, or comply with lawful orders of competent military authorities; (4) willful or persistent misconduct; (5) offense(s) involving moral turpitude; (6) mutiny or spying; or (7) homosexual acts involving aggravating circumstances.
http://usmilitary.about.com/library/weekly/aa092500a.htm
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