Amends language to 10 U.S. Code Section 1154 (h)(1) to: "A member who has received separation pay under this section, or separation pay, severance pay, or readjustment pay under any other provision of law, based on service in the armed forces, and who later qualifies for retired or retainer pay from the same service component under this title or title 14 shall have deducted from each payment of such retired or retainer pay an amount, in such schedule of monthly installments as the Secretary of Defense shall specify, taking into account the financial ability of the member to pay and avoiding the imposition of undue financial hardship on the member and member's dependents, until the total amount deducted is equal to the total amount of separation pay, severance pay, and readjustment pay so paid."

Inserting the words "from the same service component" allows NG service members who left AD under approved end-strength based separation programs to keep incentive payment, even after qualifying for an active-duty retirement for service in the NG. The current language ignores differences in T32 AGR service and T10 AD service at the point of qualifying for a AD retirement and forces recoupment from member and their families. As such, recruitment of previous AD members who have received a separation incentive is down, for fear that eventually they will have to pay the government back a large amount of money.