The VA Foreign Medical Program, the Department of Veterans Affairs benefit that covers overseas care for service-connected conditions, paid $128.3 million to 8,024 veterans and providers in fiscal 2024. That’s a 263% rise in reimbursements since 2018. The program is now shedding its paper-check system. Direct deposit has arrived, but not for the veterans who need it most.
Domestic bank accounts get electronic funds transfers. Overseas accounts still get a mailed U.S. Treasury check. For a program built entirely around Americans living abroad, that’s a strange place to draw the line.
What the program actually covers
The Foreign Medical Program isn’t overseas health insurance. It reimburses care tied to a VA-rated, service-connected disability, and nothing else. A veteran with a service-connected knee injury can file for treatment of that knee in another country. Routine care unrelated to the rated condition falls outside the program.
Eligibility runs through the veteran’s FMP benefits letter, which lists the covered conditions. Providers can bill the program directly, or veterans can file claims themselves after paying out of pocket. The Veterans Health Administration (VHA), the arm of VA that runs the program, processes those claims from a single U.S. office, and the volume is climbing fast.
The payment overhaul
For years the program mailed paper checks, despite a federal law generally requiring electronic payments. Lost and delayed checks followed, VHA officials told the Government Accountability Office (GAO).
Electronic funds transfers to domestic bank accounts went live in mid-April 2025, VA reported to GAO. The agency is also migrating the program’s legacy claims system to a modernized platform, a transition it has targeted for July 2026. International direct deposit is a later phase. As of late June, VA’s guidance still listed overseas electronic payment as unavailable, with the target for that phase pushed from December 2026 to June 2027.
So the modernization is real. It just arrives for U.S. account holders first and overseas account holders roughly two years later.
Where the claims come from
Veterans and providers in about 120 countries filed claims between 2018 and 2024. Three countries dominate the totals:
- Panama: 220,968 paid claims
- Dominican Republic: 96,561 paid claims
- Germany: 90,006 paid claims
The Dominican Republic figure reflects fast growth. Paid claims there rose from 3,188 in 2018 to 28,104 in 2024, a 782% increase that tracks broader American migration to the Dominican Republic. Panama’s lead partly reflects its large population of American retirees drawn to the country. It also reflects fraud.
The Panama fraud problem
Panama’s claim totals are inflated, GAO reported. A joint VA Office of Inspector General and State Department investigation charged 12 individuals and 24 companies in a long-running scheme, alleging a network of providers billed the program for services that were double-billed, overpriced, unnecessary or never delivered. The estimated loss to VA was $67 million. VA suspended a group of Panama providers in August 2024.
GAO found VA hadn’t fully assessed fraud risk across the program, even with that case on the record. The agency concurred with the finding and said it had begun regular risk reviews.
Slow claims and empty desks
Speed is the other failure. The program processed just 37% of claims within 45 days in fiscal 2024, against a 90% target.
Staffing is part of the reason. VHA raised the program’s authorized headcount from 25 to 38 positions in August 2023, but 14 sat vacant in 2024 under a VHA hiring freeze, officials said. The agency made some posts remote to fill them and has leaned on overtime and automation while a broader staffing review runs. The backlog persists as claim volume keeps rising.
What the direct deposit gap means for veterans abroad
The program serves one population: Americans receiving care outside the U.S. That same population is the one still waiting on direct deposit. A veteran in Panama or the Dominican Republic with a local bank account gets a check in the mail, with all the delay and loss risk the paper system already produced. The domestic fix landed in April 2025. The overseas fix isn’t due until June 2027.
