Over the past decade, the Department of Veterans Affairs (VA) has recouped billions of dollars from veterans who were initially given separation payouts upon leaving service. These repayments stem from a 1949 law prohibiting veterans from receiving both separation incentives and disability benefits, leaving many former service members in financial distress.
The law affects veterans who accepted separation pay when the military downsized its active-duty forces and later became eligible for VA disability compensation. According to NBC News, veterans have collectively repaid more than $2.5 billion due to this policy. The VA withholds disability payments until the separation payout is fully recouped.
Damon Bird, a veteran diagnosed with service-related bladder cancer and post-traumatic stress disorder, was one of those impacted. After leaving the Army with a $74,000 separation incentive, Bird began receiving a $2,400 monthly disability stipend—until the VA halted those payments in 2021 to reclaim the separation payout. Bird described the experience as overwhelming, stating, “It felt like I would never see the light at the end of the tunnel.”
Veteran advocates argue that the policy is unfair and places undue financial strain on those who have already sacrificed for their country. Rep. Ruben Gallego (D-AZ) introduced a bill in 2022 to eliminate these recoupments, gaining bipartisan support. However, the bill’s progress has been slow due to concerns about the financial implications.
As veterans continue to bear the burden of this decades-old law, there is increasing pressure on Congress to amend the statute and provide relief to those who have served.
