Action in Congress

April 1, 2009

Tricare Battle Lines Drawn

Raising Tricare fees for retirees is still a popular idea among budget analysts and some key military leaders. Rep. Chet Edwards (D-Tex.) and Rep. Walter Jones Jr. (R-N.C.) want to ensure these fees don’t rise, especially as the Obama Administration begins working to reduce the federal deficit.

Edwards and Jones reintroduced the Military Retirees Health Care Protection Act (HR 816) Feb. 3 and within a day had 29 co-sponsors. The bill would prohibit any increases in Tricare premiums, deductibles, or co-pays for medical, dental, or pharmacy benefits for another year.

It would express the “sense of Congress” that the nation and the Department of Defense have incurred health benefit obligations for military retirees that exceed any obligation that corporate employers have to their civilian employees.

Finally, the bill would advise defense officials that they have other options to contain health care costs “that do not disadvantage beneficiaries,” and they should go down those paths rather than seek “large fee increases.”

“I hope the new Administration will not request the same premium increases as the last [one did], but this legislation will allow us to remove any temptation,” Edwards said in unveiling his bill. “We cannot attract the best and brightest to fight our war on terrorism in the years ahead if they see us breaking faith with those who served in years past.”

Adm. Michael G. Mullen, Chairman of the Joint Chiefs of Staff, said he continues to support higher Tricare fees for working-age military retirees, noting that the fees have been frozen since they were first set in 1995. “We need to do that,” Mullen said, to keep personnel costs in balance with other parts of the budget. “It’s a given, as far as I’m concerned.”

Redux Bonus: Repeal or Educate

The Military Coalition, a consortium of 35 military and veterans associations, which includes the Air Force Association, urged the House Armed Services Committee in late February to support repeal of the $30,000 Redux bonus.

Known formally as the Career Status Bonus, it is offered to careerists in their 15th year of uniformed service if they agree to accept a less valuable retirement plan when they complete 20 or more years of service.

According to revised data from the Air Force Personnel Center, 30 percent of enlisted airmen and four percent of officers offered the bonus last year took the cash and moved under a reduced retirement system.

Financial advisors say it’s usually an unwise choice. But thousands of personnel still are enticed by the money to pay off debts, buy a car, qualify for a home mortgage, or make their own investments.

Last year, the Center for Naval Analyses estimated that an E-7 retiring at age 38 after 20 years of service forfeits, on average, $344,400 in lifetime retired pay by taking the Redux bonus.

The coalition advised lawmakers that accepting the bonus is equivalent to taking out a 24 percent annual mortgage on that money. For officers, it’s like a 35 percent lifetime mortgage rate.

After 20 years of service, the better High-3 retirement plan provides an immediate annuity equal to 50 percent of average basic pay over a member’s three highest income years. Redux pays 40 percent for 20 years.

This disparity in retired pay narrows with each year served beyond 20, so that, after 30 years’ service, a Redux or High-3 member both receive 75 percent of high-three basic pay as they retire. However, the High-3 annuity is fully protected from inflation with yearly cost-of-living adjustments that match changes to the Consumer Price Index (CPI). COLAs for Redux retirees, on the other hand, are set at CPI minus one full percentage point.

Redux retirees get a one-time catch-up raise at 62. So, for a year, their retired pay is equal to that of High-3 peers. But then the Redux COLA caps continue for the rest of a retiree’s life.

The Air Force enlisted take rate is higher than that of the Navy or Marine Corps. Army data on Redux take rates were not available.

If Congress can’t find dollars to repeal the Redux bonus, the coalition is asking lawmakers at least to force the services to do a better job advising careerists on the long-term financial impact of accepting the bonus.

GI Bill for Online Students

As the Department of Veterans Affairs prepared final regulations for implementing the Post-9/11 GI Bill this August, lawmakers and veterans’ groups have found weaknesses or glitches in the complex program that they want Congress to address.

A number of technical amendments will be proposed. But Rep. Bob Filner (D-Calif.), chairman of the House Veterans’ Affairs Committee, seeks a substantial change—to allow full GI Bill benefits for online degree programs. As is, he said, the law discourages veterans from pursuing degrees online.

The new education benefit, when it begins Aug. 1, will provide three types of payments. One covers tuition and fees at any college or university up to a maximum set to match charges at the most expensive state-run school in the same state.

If students take enough courses to exceed the status of “half-time” students, they also receive a monthly living allowance equal to military basic allowance for housing (BAH), paid nearest the school, for pay grade E-5.

Students also will receive up to $1,000 a year to cover the cost of books, supplies, equipment, or other educational costs.

Online students are eligible only for tuition and fee reimbursements, not the living allowance or the stipend for books. It was a compromise worked out with the Bush Administration after VA officials raised the prospect of online students being enticed to enroll at schools in the highest cost areas in order to land big living allowances which are set based on school location.

Filner has introduced a bill (HR 950) that would allow full GI Bill benefits to online students, not just to those taking classroom courses. The bill would remove a requirement that to receive full benefits, students must have at least one class a semester on campus.

The living allowance is paid to students who are more than “half-time” students which usually means three courses or more per semester. That won’t change under Filner’s bill. The bill, as written, still lacks many details on how this change would be designed and executed.

VA Health Funding

House and Senate VA committee chairmen, backed by most veterans service organizations, have reintroduced legislation that provides advance funding of VA health care budgets so hospitals and clinics no longer are forced to cut services while Congress plays politics each fall with the annual appropriations process.

The new VA Secretary, retired Gen. Eric K. Shinseki, the former Army Chief of Staff, doesn’t support the proposal. Shinseki believes more timely action on budgets, by the Administration and by Congress, is all that is needed to avoid those troublesome budget shortfalls at VA health facilities.

In 19 of the last 22 years, Congress has failed to pass a VA funding bill before the start of the new fiscal year. Sen. Daniel K. Akaka (D-Hawaii) and Filner, chairmen of the VA committees, said they back an initiative developed by veterans’ service organizations, that would shift VA health care to advanced funding, in effect, a two-year funding cycle.

The Veterans Health Care Budget Reform and Transparency Act (HR 1016, S 423), first introduced last year, would put VA health care under an advance appropriation schedule. If it were in effect already, Congress this year would be passing a VA health budget to take effect in Fiscal 2011, a year ahead of schedule. The idea is to end funding delays that force hospitals and clinics to defer maintenance and freeze hiring as they operate for months under a “continuing resolution” instead of new budgets that reflect inflation and new program spending.

Part two of the reform package would keep funding levels for VA health care sufficient and transparent. VA would be directed to use a new budget modeling system it developed that very accurately projects the per capita cost of providing health care to its enrolled patient population. Any future budgets submitted either would have to be sufficient to provide care to all current enrollees or would have to explain why it is short of the mark.

Though President Obama campaigned on full funding of the VA budget, Shinseki didn’t embrace the advance funding initiative during his first appearance before Congress as VA Secretary.

“My preference would be for a timely budget, and I’ll assure you I’ll do my part,” he said. Shinseki recalled that, as Army Chief of Staff, “I lived with continuing resolutions and I know full well the impact that they bring.” If as VA Secretary he sees health care budgets that can’t get passed on time, then “other options” will be weighed, Shinseki said.

Priority 8 Enrollees

Thanks to an initiative from Edwards last year, VA is set to open its health care system in July to 265,000 more veterans who now fall in Priority Group 8—those with no service connected injuries and incomes that exceed poverty levels as set by the government.

Enrollment means access to care at VA clinics and hospitals in return for modest co-payments and deep discounts on VA prescription drugs.

Priority 8 veterans have been barred from enrolling in VA health care since January 2003. To partially lift that ban, Edwards got some $350 million added to the VA budget last year. That will allow VA to raise by 10 percent the income thresholds that define Priority 8 veterans so that about a quarter of a million veterans now barred by income will be able to enroll.

Veterans who applied for enrollment on or after Jan. 1 this year, and were rejected as Priority 8 veterans, need not reapply. Their applications, which already show 2008 incomes, will be reconsidered. If they fall under new higher income thresholds, their enrollment will be approved and they will be notified.

Applicants denied enrollment as Priority 8 veterans before 2009 will have to reapply so VA officials can see their income information for 2008.

More details on enrollment expansion are available online at or by calling 1-877-222-VETS (8387).