Under a law dating to the 1940s, veterans who received separation pay, compensation for time served, had to repay it if they later qualified for VA disability benefits. (Federal rules barred receiving both.) The VA would withhold disability checks until the debt was cleared. From 2013 to 2023, this debt recoupment structure equaled $2.44 billion in separation pay and bonuses from 112,834 veterans.

To many, this payment structure may seem like punishment to the disabled veteran. In 2023, Senator Ruben Gallego’s (AZ) Restore Veterans’ Compensation Act of 2023 which would have barred this practice, arguing the two payments serve different purposes. Since that time, the bill has been reintroduced many times. Most recently, Representative Bilirakis (FL) brought the Restore Veterans’ Compensation Act of 2026 to Congress on January 13, 2026. (HR7027 was referred to the Subcommittee on Disability Assistance and Memorial Affairs on May 7, 2026.)

“It is ridiculous to claw back money from a veteran who has put life and limb on the line, just because later in life they qualify for disability benefits,” stated Gallego, acknowledging the fact that traumatic brain injury symptoms often surface or worsen years after service.

*The bill’s chief criticism is fiscal: ending recoupment means the government forfeits future collections.