Military Retirement - A New Blended System

The Defense Department on Wednesday laid out the final details for its new blended retirement system for military personnel, which will automatically enroll new service members and give existing troops the option of signing up.

The changes were included in the fiscal 2016 Defense authorization bill as the result of a longstanding effort to reform military service members’ compensation package. Deputy Defense Secretary Robert Work, an Obama appointee who President Trump asked to stay on, officially issued the policy that will take effect in 2018.

Under the system, new troops would automatically be enrolled in the Thrift Savings Plan and receive a matching contribution from the government. The government will contribute between 1 percent and 5 percent of service members’ salaries toward their TSPs, depending on what they elect to contribute themselves, though they will be defaulted into contributing 3 percent of their paychecks. The TSP account will begin 60 days into their service. Those who stay in the military for 20 years, and are thereby entitled to a retirement pension, would receive a less generous calculation for their annuity.

The new system moves away from the 20-year, all-or-nothing pension system currently in place for military members. Only about 17 percent of troops serve for 20 years and become eligible for the benefit.

To encourage members to stay in the military, they would receive “continuation pay” after 12 years of service. That payment will amount to between 2.5 and 13 times service members’ monthly basic pay. The guidance allows members to receive the payment in one lump or in four equal installments spread out over four years. Individuals who accept the bonus must sign on to at least three additional years of service, and may have to repay it if they do not complete the added time.

The new blended retirement system only automatically affects new service members starting Jan. 1, 2018. Current service members are grandfathered into the existing system, but can opt into the new one. They will have all of 2018 to make their decision. The Pentagon is in the process of educating troops about the modified retirement system, and launched its third of four courses this week. Troops electing to enroll in the blended system must complete the training to be eligible. Once enrolled via the “myPay” website, the decision is irrevocable, the guidance stated.

Article from GovernmentExecutive.com

VA Secretary says House budget plan would 'hurt veterans'

Veterans Affairs Secretary Bob McDonald warned this week that House appropriators’ plan to trim $1.5 billion off his department’s annual budget request will “hurt veterans” if it becomes law.

This is the second consecutive year that House lawmakers have proposed a smaller-than-requested VA budget, albeit still a sizable increase in department spending. It’s also the second consecutive year McDonald has called the idea harmful to veterans seeking medical care and benefits.

“It will impede some critical initiatives necessary to transform VA into the high performing organization veterans deserve,” he told a crowd at a Center for Strategic and International Studies speech on Wednesday. “We’re encouraging Congress to fully fund VA at the level requested.”

Last month, the House Committee on Appropriations passed a VA spending plan for fiscal 2017 with nearly $73.5 billion in discretionary spending, which would be an increase of about 3 percent from fiscal 2016 levels.

But White House officials asked for a 5 percent increase, arguing the need for more construction funding and expansion of VA programming. House Republicans have said their funding plan covers enough of those programs while practicing fiscal restraint.

Senate appropriators are working on a different funding measure which would nearly equal the White House request. On Wednesday, McDonald lauded that plan and urged the House to follow suit.

That’s what happened last year, when House lawmakers initially trimmed the administration’s budget request by several hundred million dollars, only to restore most of it as negotiations with the Senate progressed.

But McDonald’s comments about the shortfall hurting veterans became fodder for critics who said the department has failed to fix many of its problems, despite generous annual increases.

If approved by Congress, the VA discretionary budget will equal almost as much as the department’s entire budget 10 years ago. Both mandatory and non-mandatory funding totaled $79.5 billion in fiscal 2007, less than half the $163 billion budget finalized for fiscal 2016.

No timetable has been set for when the appropriations bills could reach a full vote in their respective chambers. Lawmakers from both parties have spent recent months sparring over spending caps and budget targets, and are scheduled to take a two-month recess in mid-July to prepare for the November elections.

Article from Military Times

Military Legislative News

A summary of this week's legislative news that pertain to the military and military retirees - lick on the link for the full stories from Military Times.



House panel backs major military retirement overhaul.
House lawmakers will back a dramatic overhaul to the military retirement system as part of the fiscal 2016 defense authorization bill, including a 401k-style investment plan and an end to the 20-year, all-or-nothing retirement model.
Plans call for the new retirement system to be in place by October 2017. They come despite concerns of some veterans groups that the commission recommendations won't entice enough troops to stay to or past the 20-year mark.

House Armed Services Committee leaders also will mandate better financial literacy training for troops, improved access to child care on military bases and consolidate the current 30 Reserve component duty statuses to six.

Those moves are all aspects of recommendations made earlier this year by the Military Compensation and Retirement Modernization Commission.


Senate to follow House's military retirement overhaul.
Senate Armed Services Committee leaders say they are ready to move ahead on military retirement reform this year, following the lead of their House counterparts.


Committee chairman Sen. John McCain, R-Ariz., said he expects some version of a new 401(k)-style military retirement system to be included in his panel's draft of the annual defense authorization bill later this spring.


"We've been working closely" with the House, McCain said. "We're basing our plan on the recommendations of the (Military Compensation and Retirement Modernization) Commission, and we feel comfortable with that."


The new plan as drafted by the House committee and compensation commission would replace that with an automatic federal contribution of 1 percent of troops' basic pay to their Thrift Savings Plan account, plus additional matching contributions of up to 5 percent of basic pay.


Service members also would receive a lump-sum "continuation pay" if they stay beyond 12 years, and still would draw traditional retirement pay if they reach 20 years of service. However, the payout at 20 years of service would be reduced from the current 50 percent of active-duty pay to 40 percent, which has raised concerns among some outside advocates who worry about retention of senior military members.



VA secretary calls House budget plan too small, harmful.
VA Secretary Bob McDonald on Tuesday blasted a $1.4 billion shortfall in the House's budget proposal for fiscal 2016 as "inadequate" to maintain his department's reform and outreach efforts.

"It will cause veterans to suffer," he told members of the Senate Appropriations Committee. "It means fewer veterans will get care."

Last week, the House subcommittee that oversees the VA budget offered its first draft of the department's fiscal 2016 spending blueprint, a $163.2 billion plan that they touted as another healthy increase.

But the plan would trim veterans health care programs by $690 million and cut the department's request for construction spending by half. McDonald called those plans "unacceptable" despite the other funding boosts in the plan.

He said the health care cuts represent "the equivalent of over 70,000 fewer veterans receiving care," while the construction cuts will stop four major medical center projects and six other cemetery expansion efforts.

McDonald was on Capitol Hill to lobby not only for that extra fiscal 2016 money but also for permission to shift another $1 billion from emergency funds approved last summer to finish the controversial VA medical center construction project in Denver, which has seen its price tag balloon in recent years.

Originally projected around $800 million, the overdue Denver project is now expected to cost closer to $1.7 billion and take another two years to complete. Congress needs to OK the funds transfer by mid-May or risk even higher costs.


Lawmakers support 2.3% military pay hike, but quietly.
A key House committee is quietly backing a 2.3 percent military pay raise next year, a full percentage point higher than what the Pentagon requested.

But the House Armed Services Committee appears intent on not making a big deal about it — and the lack of strong supporting language could leave troops' paychecks lighter.

Rep. Mac Thornberry, R-Texas, committee chairman, said his committee's draft of the 2016 defense authorization bill will not include any language regarding the military pay raise.

Instead, the committee will tacitly abide by a law on the books for years that ties the military raise to average increases in private-sector wages.

TRICARE Fee Increase Proposal

Pentagon Outlines Increased Tricare Fee Proposal. Military families and retirees may soon have only one health care plan option and higher out-of-pocket fees under a controversial new Defense Department budget proposal that would combine Tricare Prime, Extra and Standard into one program.

"As we went through the various reviews last year, one of the things that became very obvious was the need to go back through the military pay and compensation package," said Lt. Gen. Mark Ramsay, resources and assessments joint staff director. "We have taken a very clean sheet look at this ... and we're going to submit a single simplified Tricare plan."

The new plan would end the trio of current Tricare programs starting Jan. 1, 2016. All users under age 65 would instead be forced into a consolidated Tricare health cost-sharing plan similar in fee structure to the current active-duty Standard program.

The fee increases and consolidation plan are part of a larger $495.6 billion fiscal 2015 budget package. The health care changes look to save $9 billion between 2015 and 2019 by increasing co-pays to "encourage members to use the most affordable means of care," the proposal states.

While active-duty service members would still receive free health care, all other users would see increased costs for care outside military treatment facilities based on military pay grade, as well as some new out-of-pocket costs for care in them.

All non-medically retired retirees under age 65 along with their families and retiree survivors will also be forced to pay an annual enrollment fee of $286 for individuals or $569 for families under the new proposal or forfeit coverage for the year. That is slightly higher than the current Tricare Prime annual retiree fees of $260 for individuals and $520 for families. But unlike the current fee, the new enrollment cost would apply to all retirees who wish to use Tricare for health coverage.

Another change would be the cost of non-preventive care visits to primary care doctors. Under the current plan, active-duty Tricare Standard users pay a cost share per visit of 15 percent. Under the proposed changes, those visits would cost active-duty users in pay grades E-4 and below a set price of $10 and those of higher pay grades $15. Primary care visits to military treatment facilities would continue to be free.

For retirees, visits to a primary care manager at a military treatment facility would cost $10 per visit, while they would pay $20 for an in-network civilian provider. Under the current plan, all military treatment facility visits are free.

If active-duty or retiree beneficiaries choose to use an out-of-network provider, they would pay a cost share of 20 and 25 percent respectively of what the provider charged Tricare, under the new proposal.

Annual deductibles and catastrophic caps -- the most a user would have to pay out of pocket -- will also go up under the new proposal. Currently, the catastrophic cap is $1,000 for active-duty families and $3,000 for retirees. The new plan would raise it to $2,500 and $5,000 respectively. Deductibles, which are now up to $300 per family depending on pay grade, would go up to as much as $600.

Tricare users 65 and older would continue to have access to Tricare for Life under the proposal, but would have a new enrollment fee of at least .5 percent of their military retiree pay, but no more than $150 or $200 for retired flag officers starting in 2015. That fee would go up each year until it reached 2 percent of their pay but no more than $614 or $818 for retired flag officers in 2019.

Civilian pharmacy fees would also go up. Costs for generic drugs, which are now set at $5 for a one-month supply, would rise to $14 by 2024. And brand-name drugs, which currently cost $17, would go up to $45.

Using the mail order pharmacy would also start to cost users more. Currently, generic drugs are free by mail. But by 2024, they will cost $14 per one-month supply. And mail order brand-name drugs, which currently $13, will go up to $45.

Filling prescriptions at military treatment facilities would continue to be free.

"Even with additional fees, the coverage is far cheaper than equivalent civilian sector health care plans, and the care will remain comparable to or better than the civilian sector," the proposal said.

Before going into effect, however, the plan must get past Congress, which could prove to be a major hurdle. In years past, lawmakers have avoided raising healthcare fees for military families and retirees, despite the skyrocketing costs. Choosing to dismiss the Tricare changes as well as the other benefit changes included in the proposal would leave a $2.1 billion budget shortfall for 2015, officials said.

"I think that many on the Hill realize that we need a balanced package here. We don't particularly want to do this either, at least some parts of it," said Robert Hale, the DoD's comptroller. "If we don't want to live with these caps ... we've got to do a variety of others things. I think there's a realization of that but I understand it's tough."

Obama to cut medical benefits for active, retired military, not union workers

Article by Joe Newby on Examiner.com

In an effort to cut defense spending, the Obama Administration plans to cut health benefits for active duty and retired military personnel and their families while not touching the benefits enjoyed by unionized civilian defense workers.

The move, congressional aides suggested, is to force those individuals into Obamacare, Bill Gertz reported at the Washington Beacon.

Gertz added:

“The proposed increases in health care payments by service members, which must be approved by Congress, are part of the Pentagon’s $487 billion cut in spending. It seeks to save $1.8 billion from the Tricare medical system in the fiscal 2013 budget, and $12.9 billion by 2017.

Not everybody is happy with the plan, however.

Military personnel would see their annual Tricare premiums increase anywhere from 30 -78 percent in the first year, followed by sharply increased premiums "ranging from 94 percent to 345 percent—more than 3 times current levels."

"According to congressional assessments, a retired Army colonel with a family currently paying $460 a year for health care will pay $2,048," Gertz wrote.

Active duty military personnel would also see an increased cost for pharmaceuticals, and the incentive to use less expensive generic drugs would be gone.

Health benefits has long been a prime reason many stay in the military - but some in the Pentagon fear the new rules will hamper recruitment and retention.

“Would you stay with a car insurance company that raised your premiums by 345 percent in five years? Probably not,” one aide said.

John Hayward of Human Events adds:

“Veterans will also be hit with a new annual fee for a program called Tricare for Life, on top of the monthly premiums they already pay, while some benefits will become “means-tested” in the manner of a social program – treating them like welfare instead of benefits for military service. Naturally, this is all timed to begin next year and “avoid upsetting military voters in a presidential election year,” according to critics.

There will be congressional hearings on the new military health care policies next month. Opposition is building in Congress, and among veterans’ organizations, including the VFW, which has “called on all military personnel and the veterans’ community to block the health care increases.”

Others are concerned about the double standard being set between uniformed military personnel - who are not unionized - and civilian defense workers who belong to public sector unions.

Gertz wrote:

“A second congressional aide said the administration’s approach to the cuts shows a double standard that hurts the military.

“We all recognize that we are in a time of austerity,” this aide said. “But defense has made up to this point 50 percent of deficit reduction cuts that we agreed to, but is only 20 percent of the budget.”

The administration is asking troops to get by without the equipment and force levels needed for global missions. “And now they are going to them again and asking them to pay more for their health care when you’ve held the civilian workforce at DoD and across the federal government virtually harmless in all of these cuts. And it just doesn’t seem fair,” the second aide said.

At least one Congressman is standing with the military on this issue.

“We shouldn’t ask our military to pay our bills when we aren’t willing to impose a similar hardship on the rest of the population,” said Rep. Howard "Buck" McKeon (R-CA), who chairs the House Armed Services Committee.

“We can’t keep asking those who have given so much to give that much more,” he added.

McKeon will be joined by some 5 million members of 32 military service and veterans groups, according to retired Navy Capt. Kathryn M. Beasley of the Military Officers Association of America, who called the plan "a breach of faith."

The Beacon also noted the curious timing of the plan, which is set to begin next year - after the 2012 elections. Critics say this is designed so as not to upset military voters.

DD 214 Increased Social Security Benefits For Vets

EXTRA SOCIAL SECURITY BENEFIT for those with active duty between January 1957 to December 31, 2001

In a nutshell it boils down to this:

You qualify for a higher social security payment because of your Military service, for active duty any time from 1957 through 2001 (the program was done away with 1 January 2002). Up to $1200 per year of earnings credit credited at time of application - which can make a substantial difference in social security monthly payments upon your retirement.

You must bring your DD-214 to the Social Security Office and you must ask for this benefit to receive it!


Social Security website:

This is something to put in your files for when you apply for Social Security down the road. It is NOT just for retirees, BUT anyone who has served on active duty between January 1957 to December 31, 2001.

Again - this benefit is not automatic, you must ask for it!