S. 1245, Servicemembers and Veterans Empowerment and Support Act of 2025

Bill Summary

S. 1245 would require the Department of Veterans Affairs (VA) to accept additional evidence from veterans who file claims for disability compensation because of certain mental health conditions caused by sexual trauma that occurred during their military service (called military sexual trauma, or MST). As a result, more veterans would receive disability compensation and health care from VA. The bill also would expand eligibility for counseling and treatment of conditions related to MST to include all former National Guard members and reservists, regardless of whether they served on active duty. Finally, the bill wouldrequire VA to provide information on claims related to MST, produce reports, and establish working groups.

Estimated Federal Cost

The estimated budgetary effects of S. 1245 are shown in Table 1. The costs of the legislation fall within budget function 700 (veterans benefits and services).

Basis of Estimate

For this estimate, CBO assumes that the legislation will be enacted in fiscal year 2026 and that the estimated amounts will be appropriated each year. CBO also expects that some of the costs associated with S. 1245 would be paid by the Toxic Exposures Fund. Estimated outlays are based on historical spending patterns for the affected programs.

Provisions That Affect Spending Subject to Appropriation and Direct Spending

As discussed below under “Direct Spending,” Section 203 of the bill would make it easier for veterans to establish that certain mental health conditions were caused by sexual trauma during their military service. As a result, more veterans would file claims for disability compensation from VA and also would receive health care from the department. Section 301 would increase the number of veterans who receive treatment and counseling for sexual trauma from VA. In total, CBO estimates that those changes would cost $818 million over the 2026-2035 period. Of that amount, $591 million would be spending subject to appropriation and $227 million would be direct spending.

Those changes would affect spending subject to appropriation as well as direct spending because CBO expects that some of the costs of those changes would be paid from the Toxic Exposures Fund (TEF) established by Public Law 117-168, the Honoring our PACT Act. The TEF is a mandatory appropriation that VA uses to pay for health care, disability claims processing, medical research, and information technology (IT) modernization that benefit veterans who were exposed to environmental hazards. Additional spending from the TEF would occur if legislation increases the costs of similar activities that benefit veterans with such exposure. Thus, in addition to increasing spending subject to appropriation, enacting the bill would increase amounts paid from the TEF, which are classified as direct spending.

CBO projects that the proportion of costs paid by the TEF will grow over time based on the amount of formerly discretionary appropriations that CBO expects will be provided through the mandatory appropriation as specified in the Honoring our PACT Act.[1]

Health Care. Section 203 would increase the number of veterans who receive disability ratings and alter the disability ratings of some veterans whose claims were approved under current law. Eligible veterans who enroll in VA’s health care system are assigned to priority groups based on their disability rating. Those priority groups affect their access to health care and determine whether they are subject to copayments. In general, veterans assigned to higher priority groups pay little or nothing out of pocket and can receive additional benefits such as transportation subsidies for medical appointments.

Some of the veterans who newly receive disability ratings under section 203 would be treated in the VA health care system at a higher priority and receive more care from VA at a greater cost to the department. Veterans who will be enrolled under current law could receive increased disability ratings and would also receive care at a higher priority level.

On the basis of data from VA about the average costs of care by priority group, CBO estimates that an average of 2,400 additional veterans each year would newly enroll in the VA health care system at an average cost of about $25,000. CBO also estimates that about 800 veterans who will be enrolled in the VA health care system under current law would receive care at a higher priority level at an average cost of $15,500 in additional care each year.

After accounting for the gradual enrollment of new beneficiaries and additional costs for current beneficiaries, CBO estimates that health care costs under section 203 would total $680 million over the 2026-2035 period. Of that amount, $491 million would be spending subject to appropriation and $189 million would be direct spending.

Treatment for Veterans of the National Guard and Reserves. Section 301 would make all former members of the National Guard and reserves eligible for counseling and treatment from VA for conditions related to MST. Under current law, VA provides such services to those veterans only if they served on active duty before entering the Guard or reserves or if they were ordered to federal active duty in their reserve component status. Some veterans would become newly eligible upon enactment of the bill; others would become eligible in subsequent years as they separate from the military. On the basis of data from VA, CBO estimates that about 2,000 veterans would become newly eligible and receive care from VA annually at an average cost of about $5,000. Thus, implementing the section would cost $101 million over the 2026‑2035 period, CBO estimates. Of that amount, $73 million would be spending subject to appropriation and $28 million would be direct spending.

Claims Processing. Section 203 would increase the number of disability claims filed for conditions related to MST. CBO estimates that those additional claims would increase VA’s workload by about 22 full-time-equivalent positions each year over the 2026-2035 period. Annual compensation for claims processors would average $150,000. CBO expects that VA would need additional IT resources for those processors at an annual cost of $4,000 per person. In total, processing the additional claims arising from section 203 would total $37 million over the 2026-2035 period. Of that amount, $27 million would be spending subject to appropriation and $10 million would be direct spending.

Direct Spending

The discussion under “Provisions That Affect Spending Subject to Appropriation and Direct Spending” describes the costs of implementing changes to VA health care programs, providing treatment for MST to veterans of the National Guard and Reserves, and processing additional disability claims. Those changes would increase direct spending by $227 million over the 2026-2035 period, CBO estimates. In addition, the bill would increase the number of disability claims that VA approves, which CBO estimates would increase mandatory spending for disability compensation by $1,265 million. In total, enacting the bill would increase direct spending by $1,492 million over the 2026-2035 period (see Table 2).

Disability Compensation. Section 203 would make it easier for veterans to establish that certain mental health conditions were caused by MST. Under current law, veterans are eligible for disability compensation for conditions related to MST, including post-traumatic stress disorder (PTSD), anxiety, and depression. Disability compensation is a monthly cash benefit paid to veterans who have disabilities or diseases that VA determines are connected to their military service. VA assigns a disability rating to veterans based on the severity of their condition. Ratings range from zero to 100 percent and increase in increments of 10 percent; veterans with higher ratings receive more disability compensation, which is paid from mandatory appropriations.

VA considers several types of evidence when evaluating claims for PTSD that are related to MST. In addition to official service records from the Department of Defense, VA may accept other evidence, such as:

• Reports from law enforcement agencies and health care records;
• Lay evidence such as statements from counselors, family members, roommates, and fellow service members;
• Evidence of substance abuse, relationship issues, or unexplained behavioral changes or issues; and
• Other unofficial sources of evidence that would support the claim.

Under current law, VA accepts those forms of evidence only when evaluating claims for PTSD related to MST. Section 203 would require VA to also consider those forms of evidence for other mental health conditions related to MST. CBO expects that allowing veterans to submit those types of evidence would result in the approval of more disability compensation claims related to MST than under current law. CBO estimates that payments for disability compensation arising from those claims would increase direct spending by $1,265 million over the 2026‑2035 period.

The additional claims that would be approved under section 203 fall into three categories. The first category consists of previously denied claims that would be resubmitted for review. The second category consists of claims that will be submitted and denied under current law, but that would instead be approved under the bill. The third category consists of new claims that would be submitted because veterans would be able to provide additional types of evidence to support their claims.

There is significant uncertainty about the number of claims from each category that would be approved as a result of the bill. For this estimate, CBO generally assumes that 50 percent of claims from each category would be approved. On the basis of information from VA about the number of veterans who currently have disability ratings, CBO estimates that of the veterans whose claims are approved, 45 percent would receive a disability rating for the first time. CBO estimates that those veterans would be rated at 50 percent and receive annual benefits averaging $16,350. The remaining 55 percent of approved claims would be for veterans who receive an increase to their existing disability rating. CBO estimates that those veterans’ ratings would increase by 30 percent and that their annual benefits would increase by an average of $18,750.

Previously Denied Claims. For claims that were previously denied but would be resubmitted and approved under the bill, compensation paid would total $524 million over the 2026-2035 period, CBO estimates.

Between 2021 and 2025, VA denied about 5,000 compensation claims for mental health conditions other than PTSD arising from sexual trauma. CBO estimates that about 2,500 of the claimants who were previously denied would reapply and that 50 percent, or 1,250, would be approved. Using information from VA on the number of veterans who have disability ratings under current law, CBO estimates that 565 of those claimants would be newly eligible for compensation and that 685 would receive an increase to their existing disability rating. Those claims would be approved during the 2026‑2030 period, and by 2035, CBO estimates that 1,230 veterans whose claims were previously denied would be receiving additional benefits. CBO estimates that additional payments would total $187 million over the 2026-2035 period.

CBO expects that some veterans, who were previously denied compensation for mental health conditions other than PTSD and did not claim that those conditions arose from sexual trauma, would reapply using MST as a basis because they would be able to provide additional supporting evidence. Between 2021 and 2025, VA denied about 450,000 claims for mental health conditions that did not assert a connection to MST. CBO estimates that about 4,500 of the claimants would reapply with an MST claim and that 50 percent, or 2,250, would be approved. CBO estimates that 1,015 of those claimants would be newly eligible for compensation and that 1,235 would receive an increase to their existing disability rating. Those claims would be approved during the 2026-2030 period, and, by 2035, CBO estimates that 2,210 veterans whose previous claims were denied would be receiving additional benefits. CBO estimates that additional payments stemming from reapplicants using the additional evidence would total $337 million over the 2026‑2035 period.

Future Claims That Will Be Denied Under Current Law. According to VA, an average of about 1,500 claims for mental health conditions other than PTSD that stem from MST have been denied annually in recent years because the department determined that the claimants’ conditions did not meet the criteria for MST. Under the bill, CBO expects that 50 percent of similar claims would be approved as a result of the bill’s requirement that VA accept additional supporting evidence. CBO anticipates that about 335 approved claims each year would be for first-time disability compensation, and about 405 would result in a higher disability rating for veterans who already receive disability compensation. CBO estimates that, because more veterans qualify for compensation each year, about 7,000 veterans whose claims we expect will be denied under current law would be receiving additional benefits by 2035. After accounting for increases in the rates of disability compensation and growth in the number of veterans receiving benefits, CBO estimates that additional payments for future claims that will be denied under current law would total $674 million over the 2026-2035 period.

New Claims. CBO estimates that enacting the bill would increase the number of claims filed for mental health conditions other than PTSD that stem from MST. According to VA, an average of about 1,450 veterans receive a new disability rating each year for mental health conditions other than PTSD related to MST. CBO estimates that, under the bill, 75 additional veterans would apply for and receive compensation each year for those conditions; 35 of those approved claimants would be newly eligible for compensation, and 40 would receive an increase to their existing disability rating. By 2035, about 680 additional veterans would be receiving additional benefits. In total, the costs for disability compensation resulting from an increase in new claims for mental conditions related to MST would amount to $67 million over the 2026-2035 period.

Spending Subject to Appropriation

The discussion under “Provisions That Affect Spending Subject to Appropriation and Direct Spending” describes the costs of making several changes to VA health care (including treatment for veterans of the National Guard and Reserves) and increasing the number of disability claims processed. CBO estimates that implementing those changes would increase spending subject to appropriation by $591 million over the 2026-2035 period (see Table 3).

In addition, section 209 would require VA to create a public dashboard that provides data about claims related to MST. Section 303 would require VA to coordinate with the Departments of Defense, Homeland Security, and Transportation to inform service academy attendees who do not graduate about their potential eligibility for care related to MST and, upon request, provide copies of existing records documenting such trauma. Other sections of the bill would require VA to conduct studies, produce reports, and establish working groups to provide Congress and the public with additional information about MST. Satisfying those requirements would cost $1 million each year and total $10 million over the 2026-2035 period, CBO estimates. In total, implementing the bill would cost $601 million over the 2026-2035 period, subject to the appropriation of the estimated amounts.

Uncertainty

The number of veterans who would receive new or increased disability compensation under the bill could differ from CBO’s estimates; thus, direct spending costs could be higher or lower than those estimated. Health care costs also could be higher or lower depending on the number of veterans who would receive new or increased disability compensation.Other factors, such as the amount of compensation that veterans receive, also could differ from CBO’s estimates. Those factors would affect direct spending costs, but to a much smaller degree than differences in the number of veterans who receive compensation.

Pay-As-You-Go Considerations

The Statutory Pay-As-You-Go Act of 2010 establishes budget-reporting and enforcement procedures for legislation affecting direct spending or revenues. The net changes in outlays that are subject to those pay-as-you-go procedures are shown in Table 2.

Increase in Long-Term Net Direct Spending and Deficits

CBO estimates that enacting S. 1245 would increase net direct spending by more than $2.5 billion in any of the four consecutive 10-year periods beginning in 2036.

CBO estimates that enacting S. 1245 would not increase on‑budget deficits by more than $5 billion in any of the four consecutive 10-year periods beginning in 2036.

Mandates

The bill contains no intergovernmental or private-sector mandates as defined in the Unfunded Mandates Reform Act.

Estimate Prepared By

Federal Costs: 
Noah Callahan (for health care)
Logan Smith (for disability compensation)

Mandates: Brandon Lever

Estimate Reviewed By

David Newman
Chief, Defense, International Affairs, and Veterans’ Affairs Cost Estimates Unit

Kathleen FitzGerald 
Chief, Public and Private Mandates Unit

Christina Hawley Anthony
Deputy Director of Budget Analysis

Estimate Approved By