Federal RuleAug 21
62
DOL Rewrites Disability Rules for 'Merit-Based Opportunity' Push
RuleLabor DepartmentFederal Contract Compliance Programs OfficeSignificant Wallet
119-s-5367119th CongressWALLET
Restore Veterans’ Compensation Act of 2026
Sponsored By: Senator Gallego, Ruben [D-AZ]
Introduced
Summary
Protects VA disability compensation from being reduced or recouped because of separation-related pay while creating a narrow, tax-aware recovery path from retirement pay with strict limits and hardship relief.
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- Service members who separate: The bill bars recoupment of VA disability compensation that is attributable to separation pay, severance pay, or readjustment pay. It also forbids reducing disability compensation because a member received those payments.
- Retirees and those on retainer pay: Recoveries may be taken from retired or retainer pay only to the extent of the net separation-related amount after federal tax withholding. Deductions are capped at 25% of monthly retired or retainer pay, can be adjusted upon request, require a 90 day delinquency notice before deductions start, and include a hardship waiver option.
- Voluntary Separation Incentive (VSI) participants: VSI payments are aligned with retirement and disability rules so later retirees or disabled veterans face the same limited recoupment rules. The bill blocks certain deductions from disability compensation and exempts from VSI repayment anyone who was eligible to retire when VSI was approved.
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Bill Overview
Analyzed Economic Effects
1 provisions identified: 0 benefits, 0 costs, 1 mixed.
Separation pay recoupment changes for veterans
This bill would stop the VA from reducing or taking disability compensation because you received separation, severance, readjustment, or voluntary separation pay. It would allow recoupment of net separation-related pay from your retired or retainer pay if you later qualify for retirement or VA disability. The recoupable amount would be reduced by the federal income tax withheld from the separation pay. Deductions could not start until 90 days after you get notice and would generally be limited to 25% of that month's retired or retainer pay unless you request faster repayment. The Secretary would have to explain the amount and schedule, consult to avoid undue hardship, and may waive deductions for financial hardship. If you were eligible to retire when accepted for voluntary separation pay, you would not have to repay that separation pay after later retiring. These changes would take effect on the first day of the first month beginning on or after enactment.
Sponsors & CoSponsors
Sponsor
Gallego, Ruben [D-AZ]
AZ • D
Cosponsors
There are no cosponsors for this bill.
Roll Call Votes
No roll call votes available for this bill.
View on Congress.gov