H.R. 2102, Major Richard Star Act

Bill Summary

H.R. 2102 would permit Chapter 61 retirees—service members who have retired from the armed forces because of a disability—to receive the full amount of both their military retired pay and their veterans’ disability compensation.[1] (The term Chapter 61 is derived from chapter 61 in title 10 of the U.S. Code, which established the rules for disability retirement from military service.)

Estimated Federal Cost

The estimated budgetary effects of H.R. 2102 are shown in Table 1. The costs of the legislation fall within budget functions 050 (national defense), 400 (transportation), 600 (income security), and 950 (undistributed offsetting receipts).

Basis of Estimate

For this estimate, CBO assumes that the bill will be enacted in fiscal year 2026 and will apply to military retirement payments beginning in 2027. CBO expects that under the bill, accrual payments made by the Department of Defense (DoD) and the Coast Guard (USCG) to the Military Retirement Fund would increase beginning in 2028.

Direct Spending

H.R. 2102 would increase compensation for certain disabled military retirees. CBO estimates that enacting the bill would increase direct spending by $78 billion over the 2026-2036 period (see Table 2).

A long-standing federal law prevents most veterans with service-connected disabilities from receiving both full military retired pay and veterans’ disability compensation from the Department of Veterans Affairs (VA). Military retirees who are eligible for disability compensation typically have their retired pay offset dollar-for-dollar by the amount of their disability compensation.

Two exceptions to that restriction allow certain retirees to receive both retired pay and disability compensation:

• Under Concurrent Retired and Disability Pay (CRDP), retirees can receive the full amount of their retired pay and their disability compensation, subject to certain limits, provided they served for at least 20 years and have a VA disability rating of at least 50 percent.[2]
• Under Combat-Related Special Compensation (CRSC), retirees with qualifying combat-related disabilities receive special compensation up to the amount by which their military retired pay is offset for disability compensation, subject to certain limits, but irrespective of years of service or disability rating.

H.R. 2102 would change CRDP and CRSC rules to allow Chapter 61 retirees to collect the full amount of both their military retired pay and their veterans’ disability compensation. (The gross retired pay—that is, before applying the disability offset—for a Chapter 61 retiree is generally equal to the retiree’s disability rating, capped at 75 percent, multiplied by the average of the retiree’s highest 36 months of basic pay. H.R. 2102 would not change that formula.)

Concurrent Retired and Disability Pay. H.R. 2102 would eliminate the requirement that a Chapter 61 military retiree with a qualifying service-connected disability—that is, a disability or combination of disabilities with a VA disability rating of at least 50 percent—have at least 20 years of military service to be eligible for CRDP.

According to the DoD Office of the Actuary, in September 2025, about 255,000 Chapter 61 retirees with fewer than 20 years of service had their retired pay reduced because they were receiving disability compensation and were not receiving CRSC. On the basis of historical growth, CBO expects that the number of those Chapter 61 retirees will increase to 285,000 by 2036.

The average disability offset for those retirees was about $1,650 in September 2025. Under H.R. 2102, those retirees would instead receive the full amount of their retired pay. (Both retired pay and disability compensation are adjusted for inflation, so CBO projects the average offset to increase over time.) On that basis, CBO estimates that by eliminating that years-of-service requirement, H.R. 2102 would increase direct spending by about $63 billion over the 2026-2036 period.

Additionally, H.R. 2102 would eliminate the provision that limits the amount payable under CRDP to Chapter 61 retirees with at least 20 years of service to the amount that they would have received had they retired based on years of service rather than disability. For example, Chapter 61 retirees with 20 years of service and disability ratings of 100 percent would be eligible for pre‑offset (or gross) retired pay equal to 75 percent of their salary. Under the CRDP limitation, however, their net retired pay could not exceed 50 percent (equal to 20 years of service multiplied by the standard retirement multiplier of 2.5 percent that applies to service members who joined before 2018).

According to the Office of the Actuary, in September 2025 the department made CRDP payments to 32,000 Chapter 61 retirees with at least 20 years of service. CBO expects that number to increase to nearly 36,000 by 2036.

The average disability offset for those retirees was about $3,380 per month, whereas the average CRDP amount was about $2,935 per month. Under H.R. 2102, those disability retirees would instead receive the full amount of their retired pay. Thus, they would receive about $445 more each month in total compensation under the bill than they will under current law. On that basis, CBO estimates that by striking the years-of-service limitation on the amount of retired pay, H.R. 2102 would increase direct spending by about $2 billion over the 2026-2036 period.

In total, enacting the changes to CRDP in the bill would increase direct spending by $65 billion over the 2026-2036 period.

Combat-Related Special Compensation. H.R. 2102 would eliminate the disability offset altogether for Chapter 61 retirees with combat-related disabilities, allowing them to receive both their full retired pay and their VA disability compensation. Under current law, CRSC restores the amount of their retired pay that has been offset, but the amount of CRSC is limited: The CRSC payment plus any residual retired pay (after applying the disability offset) cannot exceed the amount of retired pay that would be calculated based on years of service.

That rule significantly limits the amount that retirees with severe combat-related disabilities after a short time in service can receive in retired pay. For example, Chapter 61 retirees with five years of service and disability ratings of 100 percent would be eligible for pre‑offset (or gross) retired pay equal to 75 percent of their salary. After applying the disability offset, however, the CRSC payment plus any residual retired pay could not exceed 10 percent (equal to five years of service multiplied by the standard retirement multiplier of 2 percent that applies to service members who joined after 2017).

According to the Office of the Actuary, in September 2025 the department made CRSC payments to nearly 59,000 Chapter 61 retirees. CBO expects that number to increase to about 66,000 by 2036.

The average disability offset for those retirees was $2,300 per month, whereas the average CRSC payment was about $850 per month. Under H.R. 2102, those disability retirees would instead receive the full amount of their retired pay. Thus, they would receive about $1,450 more each month in total compensation under the bill than they will under current law. On that basis, CBO estimates that enacting the changes to CRSC would increase direct spending by $13 billion over the 2026-2036 period.

Spending Subject to Appropriation

DoD and the USCG make annual accrual payments to the Military Retirement Fund. Those amounts cover the present value of estimated payments for future retirement benefits—other than concurrent receipt payments—earned during a year. (In addition, the Treasury makes annual accrual payments into the Military Retirement Fund to cover the cost of future concurrent receipt payments.)[3]

Under current law, CBO projects that DoD’s and USCG’s annual accrual payments will increase from about $21 billion in 2028 to about $25 billion in 2036. CBO expects that under the bill, each of those payments would grow by 3.6 percent beginning in 2028, as future Chapter 61 retirees with combat-related disabilities are no longer subject to the offset and receive their full retired pay.

On that basis, CBO estimates that implementing H.R. 2102 would increase spending subject to appropriation by $7 billion over the 2026-2036 period. Any related spending would be subject to the appropriation of the estimated amounts.[4]

Uncertainty

CBO’s estimate is subject to uncertainty regarding the number of service members who would collect full benefits under the bill. CBO projects that the number of service members who retire because of service-connected disabilities will continue to increase over the next decade, albeit at a slower rate than over the past two decades. Costs would differ if the number of retirees changes at a different rate than projected. For example, if the number of Chapter 61 retirees remains at the current level over the next decade, the estimated increase in direct spending under the bill would be about $5 billion less than estimated here.

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 1.

Increase in Long-Term Net Direct Spending and Deficits

CBO estimates that enacting H.R. 2102 would increase net direct spending by more than $2.5 billion in each of the four consecutive 10-year periods beginning in 2037.

CBO estimates that enacting H.R. 2102 would increase on‑budget deficits by more than $5 billion in each of the four consecutive 10-year periods beginning in 2037.

Mandates

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

Previous CBO Estimate

On June 13, 2023, CBO transmitted a cost estimate for H.R. 1282, the Major Richard Star Act, as introduced in the House of Representatives on March 1, 2023. Both H.R. 1282 and H.R. 2102 would eliminate the disability offset for Chapter 61 retirees with combat-related disabilities and fewer than 20 years of service.

In addition to that change, H.R. 2102 would make three other changes to disability retirement benefits that were not included in H.R. 1282. As a result of those differences, the estimated 10-year increase in direct spending of H.R. 2102 is significantly greater than what CBO estimated for H.R. 1282. Two changes account for $65 billion of the $68 billion difference in the cost of the two bills: H.R. 2102 would make Chapter 61 retirees with fewer than 20 years of service eligible for CRDP and eliminate the cap on the amount of CRDP that Chapter 61 retirees with at least 20 years of service can receive.

H.R. 2102 also would eliminate the disability offset for Chapter 61 retirees with combat-related disabilities and at least 20 years of service. That change accounts for about $100 million of the difference in the estimated costs.

Estimate Prepared By

Federal Costs: David Rafferty

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