'Penalized for being wounded': Disabled vets lose almost $2K a month due to this loophole

A loophole in U.S. law severely limits the amount of compensation disabled veterans get, and one man affected by the loophole is now setting out to change it.

NBC News reported Monday that U.S. Army veteran Dan Nevins – a double amputee injured from an improvised explosive device detonating under his vehicle in Iraq — is now working with lawmakers on both sides of the political aisle to pass a bill to end the so-called "wounded veterans tax." Nevins learned after his injury that he would lose out on $1 of retirement for every $1 in disability compensation he received, since he had served for less than 20 years and had a disability rating of less than 50%.

“I was told I could not receive both,” Nevins told NBC News. “And I was like, ‘Wait a minute. That’s not what I thought was going to happen.’”

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The "wounded veterans tax" amounts to roughly $1,900 per month in lost income for the approximately 50,000 impacted servicemen and women. Nevins said that his injuries required 36 surgeries and an 18-month stay at the Walter Reed Hospital in Bethesda, Maryland, and that he didn't learn about losing out on retirement income until after he was released.

“It’s a tragedy really,” he said. “So many people are cutting what we would all take for granted out of their lives, just so they can survive. And I mean, it’s not a ton of money, but it will help and really change lives and families for the better.”

The Major Richard Star Act, which is sponsored by Rep. Gus Bilirakis (R-Fla.) in the House of Representatives and Sen. Richard Blumenthal (D-Conn.) in the Senate, would close this loophole by allowing wounded veterans to receive their full disability and retirement pay, regardless of how long they served. Its passage appears likely, with the bill having 274 co-sponsors in the House and 71 cosponsors in the Senate. The bill is estimated to cost more than $9 billion between 2024 and 2033, according to the Congressional Budget Office. But Blumenthal argued the benefit was worth the cost.

They’re being penalized for being wounded," Blumenthal told NBC. "It’s about simple justice and fairness.”

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Click here to read NBC's article in full.