Middle Tennessee Chapter - MOAA

White House to Retirees: Cough Up $13 Billion

The White House released details of its personnel and healthcare budget proposals on February 13th, and they confirmed pretty much what MOAA had predicted.

All told, the TRICARE fee proposals envision shifting about $13 billion in health costs from the Pentagon to retirees over the next 5 years.

The changes would phase in significant fee hikes for nearly every segment of the military population, including retirees of all ages, drilling Guard and Reserve members, and currently serving family members.

TRICARE Prime annual enrollment fees for retired families (currently $520) would rise as high as $820 starting October 1, 2012, and rise to as much as $2,048 within five years, with fees based on military retired pay amount.

TRICARE Standard beneficiaries would start paying a $140 annual family enrollment fee and a slightly increased deductible ($320) starting Oct 1, with the enrollment fee and deductible rising to $250 and $580, respectively within 5 years. These would be flat fees for all Standard beneficiaries.

Retirees and family members age 65 and older would start paying an annual TRICARE For Life (TFL) enrollment fee of up to $135 per person starting this Oct. 1. This fee also would be graduated based on retired pay amount, and would rise to as much as $475 per year within 5 years.

Pharmacy copays for retail and mail-order brand-name medications would more than double (from $12 to $26) starting Oct 1. Copays for non-formulary medications that currently cost $25 would also more than double, to $51, and availability would be mostly restricted to the mail-order venue, with only limited retail access. The brand-name and non-formulary copays would rise to $34 and $66, respectively, within 5 years.

See the attached chart for proposed retired pay eligibility thresholds and year-by-year fee changes.

Under the proposal, medical (chapter 61) retirees and survivors of members who died on active duty would be exempt from these increases. When MOAA asked about other survivors, we were told they would be subject to the new fee scales. The question remains unanswered whether they would all be in the lowest tier, or whether Survivor Benefit Plan annuities might be counted in the same way as retired pay.

Also as expected, the Administration proposes a special commission responsible for recommending changes in the military retirement system for future entrants. The budget envisions that, once submitted to Congress, the proposals would have to be given a "yes or no" vote, as is done with BRAC legislation, with little debate and no opportunity for amendments.

MOAA understands that there will always be new reviews of retirement and other compensation programs, but objects strongly to subverting the normal congressional vetting process for the military retirement system that is so essential to long-term retention and readiness.

Finally, the Administration put additional details on its military pay raise proposal. It envisions no change for FY2013, when the law calls for a 1.7% pay raise to keep pace with private sector pay growth. The budget also calls for a comparability-based raise for FY2014. 

But after that, it envisions abandoning the comparability standard, limiting military raises to 0.5% for FY15, 1% for FY16 and 1.5% for FY17.

MOAA believes strongly that maintaining the tie to private sector pay growth is essential. Hard experience shows that, when previous Administrations and Congresses abandoned that link for budgetary purposes, retention and readiness eventually suffered.

"These proposals are a result of last August's Budget Control Act," said Joint Staff Director VADM William Gortney (USN) at a briefing for association leaders.

According to DOD officials, the Budget Control Act created a requirement to cut the defense budget by $259 billion over 5 years and $487 billion over 10 years – a requirement MOAA understands all too well.

MOAA understands that the DOD budget must play a role in solving our nation's debt crisis. But we have issues with the Pentagon's first reaction, especially in the healthcare arena, to pass the buck to beneficiaries rather than fulfilling their own responsibilities for efficient management of military healthcare.

We have a tough fight ahead of us, but our battle now is for the hearts and minds of Congress.

Please use MOAA's Web site to urge your legislators to oppose disproportional health fee increases for military beneficiaries.

©MOAA 2012

Important Dates for 2012

Here is an estimated timeline of when important actions will occur in the second session of the 112th Congress:

Mid February: The President will submit his annual budget proposals to Congress. On or before this date we'll find out exactly what the Pentagon and Administration will propose in order to cut $450 billion in defense spending over the next decade. Pay freezes, manpower cuts, TRICARE fee increases, retirement changes, and more could be included in the proposal.

Late March: Six weeks after the President delivers his budget to Congress, congressional committees are required to submit their "views and estimates" of spending and revenues within their respective jurisdictions to the House and Senate Budget Committees.

April: House and Senate Budget Committees draft and mark up concurrent resolution on the budget, which sets spending limits for the year. April 15 is the deadline for completion of action on the budget resolution (though partisan and fiscal differences have precluded approval of a formal budget resolution in recent years, and that may prove true again in 2012.)

May: The House and Senate Armed Services Committees will likely begin work on the FY2013 Defense Authorization Bill, including any changes that may be imposed by budget resolution spending limits.

May-July: Full House and Senate pass their respective versions of the defense bill.

July-October: House and Senate negotiators resolve differences between their respective versions.

October-December: Final Defense Authorization Bill passed by House and Senate and becomes law.

November 6: Presidential and Congressional elections.

December 31: Deadline to pass an alternative debt reduction plan in order to avoid the sequestration process that will cut another $600 billion from defense spending over the next decade.©MOAA 2012

Fact or Fiction: Congressional Benefits

Approval ratings for Congress are at a historic low, and our members often ask us what sort of benefits legislators enjoy.

The following information isn't presented to defend Congressional perks, but only to dispel some myths that perpetually float around the internet. If we're to have credibility defending military programs, we need to have our facts right.

Fact or Fiction:

1) Members of Congress get full pensions for life after serving just one term.

Mostly Fiction. The Congressional retirement system is very similar to that of federal civilians. It's true that a member of Congress can become eligible for retirement benefits after a minimum of 5 years of service if they're age 62 or older, but only for a partial pension.

To qualify for a pension a member of Congress must meet one of the following service and age requirements:

• 5 years of service and age 62
• 20 years of service and age 50
• 25 years of service at any age

Like the military retirement system, Congressional retirement pay is calculated on a combination of their average high-three years of salary and a multiplier based on their length of service.

It's also worth pointing out that members of Congress contribute to their own retirement and pay Social Security taxes. Once retired their Cost of Living Adjustments (COLA) are sometimes held artificially below the Consumer Price Index (CPI) which measures inflation.

Since the Congressional retirement system was overhauled in 1984 (to be less generous) the average annual pension is roughly $40,000.

2) Members of Congress don’t pay for their healthcare.

Fiction. Members of Congress and their staffs are eligible for the same health insurance as federal civilians, and they pay the same premiums. They can enroll in any insurance program offered under the Federal Employee Health Benefits Program (FEHBP).

One of the most popular plans under FEHBP (the Blue Cross Blue Shield Standard plan) costs beneficiaries $430 a month for a family, and $185 a month for individual coverage.

Starting in 2014, members of Congress and their staffs will be required to participate in the health care exchanges created under national health care reform.

3) Legislators receive free health care at military facilities such as Walter Reed.

Fiction. Members of Congress can receive care at the new Walter Reed National Military Medical Center, but the cost of such care is billed to their federal insurance.

4) Congress votes themselves pay increases every year.

Mostly Fiction. The law authorizes Congress a raise every year unless legislators vote to stop it.

Congress voted to forgo a pay raise in 2010, 2011, and 2012. Congressional pay increases are capped lower than the military raise. While military raises are tied to the average American's (the Employment Cost Index), congressional raises are capped one-half percentage point below that.

In 2012 members of Congress will collect a salary of $174,000 (Congressional leaders receive more).©MOAA 2012