I 
118TH CONGRESS 
1ST SESSION H. R. 3489 
To amend title 10, United States Code, to eliminate the recoupment of 
separation pay, special separation benefits, and voluntary separation in-
centive payments from members of the Armed Forces who subsequently 
receive disability compensation under laws administered by the Depart-
ment of Veterans Affairs and to impose limitations on the authority 
of the Secretary of Defense to recoup such pay from members who 
subsequently receive military retired or retainer pay. 
IN THE HOUSE OF REPRESENTATIVES 
MAY 18, 2023 
Mr. GALLEGO (for himself, Mr. BILIRAKIS, and Mr. DESAULNIER) introduced 
the following bill; which was referred to the Committee on Armed Serv-
ices, and in addition to the Committee on Veterans’ Affairs, for a period 
to be subsequently determined by the Speaker, in each case for consider-
ation of such provisions as fall within the jurisdiction of the committee 
concerned 
A BILL 
To amend title 10, United States Code, to eliminate the 
recoupment of separation pay, special separation benefits, 
and voluntary separation incentive payments from mem-
bers of the Armed Forces who subsequently receive dis-
ability compensation under laws administered by the De-
partment of Veterans Affairs and to impose limitations 
on the authority of the Secretary of Defense to recoup 
such pay from members who subsequently receive mili-
tary retired or retainer pay. 
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Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Restore Veterans’ 
Compensation Act of 2023’’. 
SEC. 2. RECOUPMENT OF SEPARATION PAY, SPECIAL SEPA-
RATION BENEFITS, VOLUNTARY SEPARATION 
INCENTIVE, AND VOLUNTARY SEPARATION 
PAY AND BENEFITS FROM MEMBERS OF THE 
ARMED FORCES. 
(a) SEPARATION PAY UPON INVOLUNTARY DIS-
CHARGE OR RELEASE FROM ACTIVE DUTY AND SPECIAL 
SEPARATION BENEFITS.— 
(1) ELIMINATION OF RECOUPMENT FROM MEM-
BERS RECEIVING VETERANS DISABILITY COMPENSA-
TION.—Paragraph (2) of section 1174(h) of title 10, 
United States Code, is amended to read as follows: 
‘‘(2)(A) A member who has received separation pay 
under this section, or severance pay or readjustment pay 
under any other provision of law, based on service in the 
armed forces shall not be deprived, by reason of the receipt 
of such separation pay, severance pay, or readjustment 
pay, of any disability compensation to which the member 
is entitled under the laws administered by the Department 
of Veterans Affairs. 
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‘‘(B) The amount of disability compensation to which 
a member may be entitled under the laws administered 
by the Department of Veterans Affairs may not be re-
duced on account of the receipt of separation pay, sever-
ance pay, or readjustment pay.’’. 
(2) RECOUPMENT FROM MEMBERS RECEIVING 
RETIRED
OR
RETAINER
PAY
LIMITED
TO
NET 
AMOUNT OF SEPARATION PAY.—Section 1174(h)(1) 
of title 10, United States Code, is amended by in-
serting before the period at the end the following: ‘‘, 
less the amount of Federal income tax withheld from 
the separation pay, severance pay, or readjustment 
pay (such withholding being at the flat withholding 
rate for Federal income tax withholding, as in effect 
pursuant to regulations prescribed under chapter 24 
of the Internal Revenue Code of 1986)’’. 
(3) 
PERCENTAGE
LIMITATIONS
ON 
RECOUPMENT FROM MEMBERS RECEIVING RETIRED 
OR RETAINER PAY AND RECOUPMENT PROCESS.— 
Section 1174(h)(1) of title 10, United States Code, 
as amended by paragraph (2), is further amended— 
(A) by inserting ‘‘(A)’’ after ‘‘(1)’’; 
(B) by striking ‘‘shall specify, taking into 
account the financial ability of the member to 
pay and avoiding the imposition of undue finan-
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cial hardship on the member and member’s de-
pendents,’’ and inserting ‘‘(subject to subpara-
graph (B)) shall specify’’; and 
(C) by adding at the end the following new 
subparagraphs: 
‘‘(B) The amount deducted under subparagraph (A) 
from a payment of retired or retainer pay may not exceed 
25 percent of the amount of the member’s retired or re-
tainer pay for that month unless the member requests de-
ductions at an accelerated rate. The Secretary of Defense 
shall consult with the member regarding the repayment 
rate to be imposed, taking into account the financial abil-
ity of the member to pay and avoiding the imposition of 
an undue hardship on the member and the member’s de-
pendents. 
‘‘(C) The deduction of amounts from the retired or 
retainer pay of a member under this paragraph may not 
commence until the date that is 90 days after the date 
on which the Secretary of Defense notifies the member 
of the deduction of such amounts under this paragraph. 
Any notice under this subparagraph shall be designed to 
provide clear and comprehensive information on the de-
duction of amounts under this paragraph, including infor-
mation on the determination of the amount and period of 
installments under this paragraph. 
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‘‘(D) The Secretary of Defense may waive the deduc-
tion of amounts from the retired or retainer pay of a mem-
ber under this paragraph if the Secretary determines that 
deduction of such amounts would result in a financial 
hardship for the member.’’. 
(b) CONFORMING AMENDMENTS.— 
(1) VOLUNTARY SEPARATION INCENTIVE.—Sec-
tion 1175(e) of title 10, United States Code, is 
amended— 
(A) in paragraph (3)(A)— 
(i) by striking the first sentence and 
inserting the following new sentence: ‘‘Sub-
section (h) of section 1174 of this title 
shall apply to any member who has re-
ceived the voluntary separation incentive 
and who later qualifies for retired or re-
tainer pay under this title or for disability 
compensation under the laws administered 
by the Department of Veterans Affairs.’’; 
and 
(ii) in the second sentence, by striking 
‘‘the deduction required under the pre-
ceding sentence’’ and inserting ‘‘the deduc-
tion from the member’s retired or retainer 
pay’’; and 
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(B) by striking paragraph (4) and redesig-
nating paragraph (5) as paragraph (4). 
(2) VOLUNTARY SEPARATION PAY AND BENE-
FITS.—Subsection (h) of section 1175a of title 10, 
United States Code, is amended to read as follows: 
‘‘(h) COORDINATION WITH RETIRED OR RETAINER 
PAY AND DISABILITY COMPENSATION.—(1) Subsection 
(h) of section 1174 of this title shall apply to any member 
who receives voluntary separation pay under this section 
and who later qualifies for retired or retainer pay under 
this title or title 14 or for disability compensation under 
the laws administered by the Department of Veterans Af-
fairs. 
‘‘(2) No deduction shall be made from the disability 
compensation paid to an eligible disabled uniformed serv-
ices retiree under section 1413, or to an eligible combat- 
related disabled uniformed services retiree under section 
1413a of this title, who is paid voluntary separation pay 
under this section. 
‘‘(3) The requirement under this subsection to repay 
voluntary separation pay following retirement from the 
armed forces does not apply to a member who was eligible 
to retire at the time the member applied and was accepted 
for voluntary separation pay and benefits under this sec-
tion.’’. 
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(c) EFFECTIVE DATE AND APPLICATION OF AMEND-
MENTS.—The amendments made by this section shall take 
effect on the first day of the first month beginning on or 
after the date of the enactment of this Act. In the case 
of deductions to be made from the retired or retainer pay 
of members of the uniformed services, the amendments 
shall apply to that month and subsequent months. 
Æ 
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