Bipartisan Legislation Introduced to Protect Veterans Unfairly Forced to Return Separation Pay to the Federal Government

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Washington, DC – This week, Representatives Mark DeSaulnier (D-CA), Ruben Gallego (D-AZ), and Walter Jones (R-NC) introduced the Restore Veterans’ Compensation Act of 2017, legislation that would prevent the federal government from recouping separation pay from veterans who later qualify for VA disability benefits. The bill also makes other changes to the Department of Defense’s recoupment policies to make them fairer to veterans.

Many service members qualify for separation pay when they depart the military—it’s a form of compensation for those with more than six years of service who meet reenlistment requirements but are not allowed to reenlist. It’s also used to incentivize service members to depart the military when the Pentagon is working to downsize the force. Unfortunately, under current law, veterans are required to pay back separation pay if they later become eligible for VA disability benefits or DOD retirement pay.

The Restore Veterans’ Compensation Act bill would:

  • No longer allow for the recoupment of separation pay from veterans who later become eligible for VA disability benefits because the two compensate for different things—workplace injuries (disability benefits) versus time served (separation pay);
  • Ensure retirees repay the net amount of separation pay instead of the gross amount to prevent the federal government from recouping more than the veteran received; and,
  • Change the recoupment rate to 25 percent of a veterans’ paycheck instead of the current 40 percent.

“When Americans sign up to protect our country, we make a commitment to honor and support their service – but for nearly 25,000 veterans that promise has been broken. Over $400 million in disability benefits have been withheld or even taken back from veterans to ‘make up’ for their separation pay, causing military families financial insecurity. I am proud to partner with my colleagues Representatives Gallego and Jones to make right on this promise and to give our veterans the compensation they deserve for the sacrifices they’ve made,” said Rep. DeSaulnier.

“As a Marine Corps combat veteran, I believe it’s manifestly unfair that veterans who receive VA disability benefits face the unwarranted recoupment of their separation pay,” said Rep. Gallego.  “They are completely unrelated – VA disability benefits compensate for workplace injuries while separation pay compensates for time served.  This policy simply makes no sense and Congress has a responsibility to our brave veterans to fix it.”

“This is an injustice! Right now, an honorable veteran can be forced to return large portions of his or her separation pay if found eligible for VA disability benefits or military retirement pay. These are completely separate payments, and our courageous veterans should not be shortchanged for being injured in the line of duty,” said Rep. Jones. “Thank you Represenatives Gallego and DeSaulnier for introducing legislation to put an end to this disparity.”

The Restore Veterans’ Compensation Act builds upon a measure Representatives DeSaulnier and Jones successfully included in the National Defense Authorization Act for FY17 to require that each separating servicemember is provided with financial transparency and informed of the possible conflict between separation and disability pay.

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