Problem Statement
Many Chapter 61 military retirees—those medically retired due to service-connected disabilities—do not receive full retirement pay despite their sacrifices. Currently, veterans with a 10%–100% disability rating from their branch of service are subject to a system that offsets their retirement pay with VA disability compensation, leaving them with reduced or no retirement benefits.
In the past, House Bill H.R. 1282 (Major Richard Star Act) and House Bill H.R. 333 (Disabled Veterans Tax Termination Act) sought to correct this injustice, but neither has been fully enacted. The failure to restore full retirement benefits denies these veterans the financial security they deserve and creates an unfair disparity between those retired for length of service and those retired due to combat or service-related injuries.
Proposed Solution
Congress should pass legislation restoring full retirement pay with backpay to all Chapter 61 medical retirees with 10%–100% disability ratings, regardless of time in service. This correction should:
- Eliminate the retirement pay offset that reduces or eliminates military retirement benefits for disabled veterans.
- Ensure retroactive compensation for affected retirees, restoring the pay they were unjustly denied.
- Align with existing disability and retirement policies for length-of-service retirees, ensuring fairness across all veterans.
Benefits
- Economic Fairness: Provides financial stability to medically retired veterans who sacrificed their careers due to service-related disabilities.
- Morale & Retention: Demonstrates a commitment to supporting those injured in service, improving trust in military benefits.
- Bipartisan Support: Both H.R. 1282 and H.R. 333 have received widespread backing, indicating broad political agreement on the need for reform.
Budgeting Options
To ensure the financial feasibility of restoring full retirement pay with backpay, funds can be reallocated from identified savings within the Department of Defense (DoD) budget.
- Reallocation of DoD Savings
- Recent initiatives led by the Department of Government Efficiency (DOGE), under the guidance of Elon Musk, have identified significant savings within the DoD. These efforts focus on reducing inefficiencies and eliminating wasteful spending (Financial Times).
- By redirecting a portion of these savings, the government can fund this initiative without increasing the overall defense budget.
- Reduction of Redundant Programs
- The Congressional Budget Office (CBO) has suggested options to reduce the DoD budget by over $1 trillion over a decade through the elimination of redundant or outdated programs (CBO.gov).
- Allocating a fraction of these savings would be sufficient to cover the costs associated with restoring full retirement benefits for Chapter 61 retirees.
- Streamlining Defense Contracts
- Renegotiating defense contracts and closing corporate tax loopholes, as proposed by policymakers, could result in substantial savings (Time.com).
- These funds could be redirected to cover the financial requirements of this proposal.
Call to Action
We urge President Trump and Congress to act immediately to correct this injustice by passing legislation that restores full retirement pay with backpay to all Chapter 61 retirees with a 10%–100% service-connected disability rating. These veterans did not choose to leave the military early—their service was cut short due to injuries sustained in the line of duty. They deserve the full retirement benefits they were promised.
By implementing these budget-conscious solutions, the government can restore fairness to Chapter 61 medical retirees while maintaining fiscal responsibility.