Restore Veterans’ Compensation Act of 2026
- Bill Number
- H.R. 7027
- Origin Chamber
- House
- Congress
- 119th Congress, Session 2
- Policy Area
- Armed Forces and National Security
- Status
- Introduced
- Latest Action
- 2026-05-07: Referred to the Subcommittee on Disability Assistance and Memorial Affairs.
- Last Updated
- 2026-05-23T08:07:41Z
AI-Generated Summary
Purpose
The "Restore Veterans' Compensation Act of 2026" (H.R. 7027) aims to protect certain payments made to separating members of the Armed Forces—such as separation pay, special separation benefits, and voluntary separation incentives—from being clawed back (recouped) when those members later receive disability benefits from the Department of Veterans Affairs (VA) or military retirement pay. It eliminates recoupment from VA disability pay and imposes limits on recoupment from retirement pay to reduce financial hardship.
Key Provisions
- No Recoupment from VA Disability Compensation: Members who received separation pay, severance pay, or readjustment pay cannot have those amounts deducted from their VA disability benefits. VA disability payments remain untouched regardless of prior separation payments (amends 10 U.S.C. § 1174(h)(2)).
- Limited Recoupment from Retirement or Retainer Pay:
- Deductions limited to the net amount of separation pay after federal income tax withholding.
- Maximum deduction: 25% of monthly retirement pay unless the member requests a faster rate.
- Requires consultation with the member to avoid hardship.
- 90-day notice before deductions start, with clear information provided.
- Secretary of Defense can waive deductions if they cause financial hardship (amends 10 U.S.C. § 1174(h)(1)).
- Applies to Voluntary Separation Incentives and Pay: Similar rules extend to these payments, with no deductions from VA disability for combat-related retirees and exemptions for those eligible to retire at separation time (amends 10 U.S.C. §§ 1175, 1175a).
- Effective Date: Changes apply starting the first month after enactment, including to ongoing retirement pay deductions.
Significant Changes to Existing Law
- Eliminates Full Recoupment from VA Disability: Previously, the Department of Defense (DoD) could fully offset separation payments against VA disability benefits; now, no offset is allowed.
- Caps and Softens Retirement Recoupment: Prior law allowed flexible recoupment rates without tax adjustments, percentage caps, notice periods, or waivers; new limits prioritize member finances.
- Conforming Updates: Aligns rules for voluntary programs and removes outdated recoupment language.
Potential Impacts
- On Veterans/Service Members: Increases take-home pay by preserving separation incentives alongside VA disability or retirement benefits; reduces financial strain during transition to civilian life.
- On Government Agencies: DoD loses some recoupment revenue (potentially minor budget impact); VA unaffected as it no longer offsets payments. Improves coordination between DoD and VA.
- On Citizens/International Relations: Primarily domestic; benefits U.S. military veterans financially, potentially aiding recruitment/retention by enhancing post-service security.
Main Stakeholders Affected
- Armed Forces Members/Veterans: Primary beneficiaries, especially those involuntarily separated who later qualify for disability or retirement.
- Department of Defense (DoD): Loses recoupment authority/flexibility; must implement new processes, notices, and waivers.
- Department of Veterans Affairs (VA): Simplified administration as disability payments are no longer reduced.
- Congress: Committees on Armed Services and Veterans' Affairs oversee implementation.
Notable Legal, Constitutional, or Political Implications
- Legal: Shifts authority from DoD discretion to statutory limits/waivers, promoting fairness in benefit coordination without altering eligibility for benefits.
- Constitutional: No apparent issues; aligns with Congress's power over military pay/benefits (Article I, Section 8).
- Political: Supports veteran welfare by prioritizing compensation retention; bipartisan sponsorship (Reps. Bilirakis and Levin) signals broad appeal in military-focused districts. May set precedent for future benefit protections.
This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.
Sponsor
Rep. Bilirakis, Gus M. [R-FL-12]
Cosponsors (1)
Recent Actions
- 2026-05-07: Referred to the Subcommittee on Disability Assistance and Memorial Affairs.
- 2026-01-13: Referred to the Committee on Armed Services, and in addition to the Committee on Veterans' Affairs, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
- 2026-01-13: Referred to the Committee on Armed Services, and in addition to the Committee on Veterans' Affairs, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
- 2026-01-13: Introduced in House
- 2026-01-13: Introduced in House
Bill Versions
- Restore Veterans’ Compensation Act of 2026 — issued 2026-01-13 — PDF (7 pages)