Over the past decade, the Department of Veterans Affairs (VA) has demanded that veterans repay billions of dollars given as separation incentives before they can receive disability payments. This policy, rooted in a little-known law from 1949, prohibits veterans from collecting both separation pay and disability benefits, leading to widespread financial hardship among those who have served.
The law, authorized by Congress, requires veterans to repay any separation payout they received when leaving the service if they later qualify for disability compensation. Many veterans, including those with service-related injuries, have been caught off guard by this rule. According to a report from NBC News, veterans have collectively repaid at least $2.5 billion due to this policy.
Veterans like Damon Bird have been severely affected. Bird, who left the Army with a $74,000 separation payout, was later diagnosed with service-related bladder cancer and post-traumatic stress disorder. Despite receiving a monthly disability check of $2,400, the VA halted those payments in 2021, citing the need to recoup the separation incentive first. Bird described the financial strain, stating, “It felt like I would never see the light at the end of the tunnel.”
The VA argues that it is legally bound to recover these payouts before providing disability benefits, with around $364 million still outstanding. However, the policy has drawn criticism from veteran advocates and lawmakers alike. Rep. Ruben Gallego (D-AZ) introduced legislation in 2022 to end these recoupments, noting that bipartisan support exists, but the bill has stalled due to concerns over costs.
As veterans continue to struggle with financial challenges stemming from this policy, advocates are pushing for a change to ease the burden on those who served and sacrificed for their country.
