The Restore Veterans' Compensation Act of 2023 would eliminate the military's practice of recouping separation payments from veterans who receive disability compensation through the Department of Veterans Affairs. Currently, when service members leave the military with separation pay, that money can be deducted from their later VA disability benefits, but this bill would prevent that entirely. For veterans who receive military retirement or retainer pay instead, the bill would limit recoupment to no more than 25 percent of monthly retirement pay (unless the member requests faster repayment), require the Defense Department to consult with members about repayment rates, and allow a 90-day notice period before deductions begin. The bill also includes a hardship waiver allowing the Secretary of Defense to stop recoupment if it would cause financial difficulties for the veteran or their dependents. These changes would apply to separation pay, special separation benefits, voluntary separation incentives, and voluntary separation pay, taking effect the first day of the first month after the bill becomes law.
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