Navigation What is Separation Pay Recoupment and When Can VA Act?
Recoupment of Separation Pay by VA is conducted in certain situations with Veterans whose entitlement to disability compensation arose on or after September 15, 1981. Any Veterans whose service or entitlement to disability was established prior to September 15, 1981 are not subject to these provisions. Specifically, the VA in the Code of Federal Regulations Section 38 CFR 3.700(a)(3) provides:
Where the disability or disabilities found to be service-connected are the same as those upon which disability severance pay is granted, or where entitlement to disability compensation was established on or after September 15, 1981, an award of compensation will be made subject to recoupment of the disability severance pay. Prior to the initial determination of the degree of disability recoupment will be at the full monthly compensation rate payable for the disability or disabilities for which severance pay was granted. Following initial determination of the degree of disability recoupment shall not be at a monthly rate in excess of the monthly compensation payable for that degree of disability.
In simpler terms, any Veteran whose service occurred September 15, 1981 or later that has been separated from service due to a medical disability and received separation payment for their disability at the time of separation will have to pay that money back if the VA provides service connection for VA disability benefits for the same disability. It is also important to note that the VA states they will withhold the entire monthly rate related to the disability for which you were separated.
