Thursday, March 6, 2014

DoD Budget Plan Takes Aim at TRICARE and other Benefits

From Military Advantage........

The proposed 2015 DoD budget could kill TRICARE Prime and increase out-of-pocket medical expenses for dependents and retirees.

Much of the first reports on the proposed 2015 defense budget didn’t necessarily focus on the details or specific areas to be cut. Many of details won’t be available until March 4th. However, there are some details available on one of the most significant benefits areas to be hit – TRICARE.

TRICARE, originally named for its three levels of health care coverage (Prime, Extra, and Standard), has been providing affordable healthcare coverage for military dependents and retirees for nearly 20 years. But, according to columnist Ton Philpott’s recent Military Update, the DoD is proposing to merge the three options into a single fee-for-service insurance option, similar to the current Standard option.

The proposed changes to TRICARE would not affect active-duty service members access to free healthcare, but their dependents and working-age military retirees would face higher costs to include a share of medical expenses and perhaps a new annual enrollment fee, set initially at $285 for individuals and $569 for families.

Beneficiaries could see lower costs if they use military treatment facilities or “preferred” care providers who offer military discounts. However, the plans include charging retirees a new co-pays for using on-base treatment facilities. New co-pays also would be set for military families and retirees who use emergency rooms inappropriately for routine care.

Philpott reports that TRICARE Prime would likely end as defense health officials continue to argue that Prime is too costly to operate for the military.

According to Philpott, beneficiaries 65 and older would continue to have access to TRICARE for Life, but, they would face a new enrollment fee. It might be set at one percent of military retired pay but capped so as not to exceed $300 a year.

On the upside, many believe that most of the DoD’s proposed benefit cuts are not likely to get passed Congress. The question is, which ones will? Stay tuned as more details will be available March 4 when the budget is formally rolled-out.

Additionally, other cuts in compensation are planned:

COMMISSARY CUTS -- The prized commissary system, which offers deep discounts on groceries, would see taxpayer support slashed from $1.4 billion annually to $400 million. This would occur over three years and lower average shopper discounts from 30 percent down to 10 percent compared to commercial grocers. The military would continue to subsidize commissaries overseas and at remote U.S. bases.

The intent, said Hagel, is not to close any stores. But resale industry experts say closings are inevitable once stateside stores can't offer enough savings to keep patrons from using commercial discounters off base. "We are not closing commissaries," agreed one Defense official. "They will be forced to close on their own."

Exchanges, or base department stores, are self-sustaining. But they too could be jeopardized if they lose patrons because their top priority for shopping on base is discounted groceries. If exchanges profits fall, so too will funds for base morale, welfare and recreation programs, critics contend.

Populations hardest hit would be young military families and older retirees and survivors who prize store discounts as deferred compensation for years of service when pay and allowances were relatively low.

Defense Secretary Hagel should understand that the benefit of commissaries stateside is not just to have stores on base, said Joyce Wessel Raezer, executive director of the National Military Family Association. "The 30 percent savings is the benefit. If savings go down to 10 percent, that benefit is gone," Raezer said.

HOUSING ALLOWANCES -- Service members living off base stateside would see Basic Allowance for Housing (BAH) level off for a few years. The plan is not to cut payments but to cap yearly adjustments until members must pay five percent of monthly rent and utility costs using other income.

In the late 1990s, BAH rates covered only 82 percent of average rental costs off base. When war broke out, Congress gradually closed that allowance gap. Today BAH fully covers average rent, utilities and renter's insurance. Defense officials now call that coverage "unsustainable."

Hagel and military chiefs want to cap the allowance until average BAH covers 95 percent of rent and utilities. BAH also no longer would be set to cover renter's insurance, saving perhaps $200 a year per recipient.

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