Senator Gallego introduces bill to stop VA recouping separation pay from disabled veterans

Published Aug 6, 02:13 PM UTC

Senator Ruben Gallego (D-AZ) introduced the Restore Veterans Compensation Act on August 6, 2026, to prevent the Department of Veterans Affairs (VA) from recouping military separation pay from veterans who later qualify for disability compensation. The bill would bar the VA from collecting voluntary or involuntary separation pay from disabled veterans and allow those qualifying for military retirement pay to remit only the net amount received after taxes. It also reduces the recoupment rate from 40% to 25% of paychecks for retired veterans. From 2013 to 2023, the VA recouped $2.44 billion from 112,834 veterans. The bill, co-sponsored by Rep. Gus Bilirakis (R-FL), previously failed in the House. Supporters, including Disabled American Veterans, argue disability payments and separation pay serve different purposes and that recoupment can cause severe financial hardship, as illustrated by a 75-year-old Air Force veteran facing loss of housing after a 34-year delay in recoupment action.