To be eligible for admission as a Chelsea Pensioner a candidate must be a former soldier or non-commissioned officer of the British Army (including National Service) or a former officer of the British Army who served in the ranks or was awarded a disablement pension while serving in the ranks. They must be of pensionable age, be able to live independently on arrival at the Royal Hospital Chelsea and be free of any financial obligation to support a spouse or family.

Applicants for the Royal Hospital Chelsea (RHC) are invited for a four-day stay during which they get a taste of what life is like for a Chelsea Pensioner. If they enjoy their stay and it is felt that they will fit in they are invited to become a Chelsea Pensioner. Upon arrival at the Royal Hospital, each In-Pensioner is measured up for their Blues (day-to-day uniform) and Scarlets (the famous uniform that they wear on parade). They are given their own room, or "berth" in a ward, and are allocated to a Company. Up until refurbishment works carried out in the 1950s, these rooms measured 6 × 6 feet. Work completed in 2015 has ensured that all In-Pensioner berths include en suite facilities, a writing desk, and natural light.

On entry, In-Pensioners surrender their army pension, in return receiving board, lodging, clothing and full medical care.

In-Pensioners also have their own club with a bar, lounges and restaurant; there are allotments for those who enjoy gardening and facilities for lawn bowls. If an In-Pensioner becomes unwell they are moved into the Infirmary, which is a care home with nursing and a G.P. medical centre. The Royal Hospital Burial Ground is at Brookwood Cemetery in Surrey.

The Chelsea Pensioners were among the first to be included in the UK's rollout of COVID-19 vaccinations, having received their first dose on 23 December 2020.

The records at Royal Hospital show that a woman, Christian Davies, was admitted to Chelsea Hospital c. 1717, and was awarded a pension for her service in the army and the wounds she received in the service of Queen Anne. She died in 1739 and was buried in the Royal Hospital Chelsea with full military honours.

From Davies' death until 2009, only male candidates were admitted. It was announced in 2007 that female ex-service personnel would be admitted on the completion of modernisation of the long wards. In March 2009 the first women in the Hospital's 317-year history were admitted as In-Pensioners: Dorothy Hughes (aged 85) and Winifred Phillips (aged 82).

Winifred Phillips (1926–2016) trained as a nurse and joined the Auxiliary Territorial Service in 1948 and enlisted in the Women's Royal Army Corps in 1949 while serving in Egypt. For the next 22 years she served in Singapore, Cyprus and Egypt reaching the rank of Warrant Officer Class 2. She wrote two books about becoming one of the first female Chelsea Pensioners: My Journey to Becoming the First Lady Chelsea Pensioner (2010), and Mum's Army: Love and Adventure from the NAAFI to Civvy Street (2013). She never married.

Dorothy Hughes joined the British Army in 1941, later working as part of 450 Heavy Anti Aircraft Battery in the London Division. In 1945 the Battery was deployed near Dover to defend against V-1 flying bomb attacks. She later worked with the Army Operational Research Group developing fuses in shells used against V-2 rockets and was discharged from the Army in 1946 with the rank of Sergeant.