Should a Chapter 61 retiree (permanent medical) who is also otherwise eligible for retirement receive an award?

Why should their service go unrecognized because of a medical condition? Sounds like foolishness to me.

I fall in that category and I must say that a letter from the Commanding in Chief is all the award I needed. Having to see an original signature of the President thanking me for my service is all it takes for me to appreciate much.

Only if their actions prior to the retirement warrants it. I don't thank soldiers should receive an award just for retiring(service or medical).