The Department of Veterans Affairs (VA) has required veterans to repay billions of dollars in separation incentives before they can receive disability benefits, citing a little-known law from 1949. The policy has impacted thousands of veterans over the past decade, many of whom were injured while serving and are now facing financial hardship.
The law, enacted by Congress, prevents veterans from receiving both a separation payout and disability compensation. As a result, veterans who accepted an incentive to leave the service when the military downsized must repay that amount before becoming eligible for VA disability benefits. According to NBC News, the total amount veterans have repaid so far is estimated at $2.5 billion.
Veteran Damon Bird, who served in the Army, is among those affected. After leaving the service with a $74,000 payout, Bird was diagnosed with bladder cancer and post-traumatic stress disorder related to his military service.
Although he initially received monthly disability payments of $2,400, the VA stopped his benefits in 2021 to recover the separation pay. Bird described the emotional and financial toll, saying, “We were barely keeping up with our day-to-day cost of living.”
The VA maintains that it is legally required to recover these payouts before disbursing disability compensation. Currently, about $364 million remains to be collected from veterans. In response, lawmakers and veterans’ advocates are pushing for change. Rep. Ruben Gallego (D-AZ) introduced a bill in 2022 aimed at ending the recoupments. Gallego noted that the legislation has bipartisan support but faces obstacles due to its financial implications.
The situation has sparked renewed calls for a review of outdated policies that place undue financial strain on veterans who served their country.
