Archive for the 'Economic Issues' Category

Health Care Changes in the President’s FY 2013 Budget Proposal

Feb 15 2012

On February 13th, the President released details of their proposed budget for Fiscal Year 2013.   As we have expected and feared, the budget put forth for consideration by Congress includes significant increases in healthcare costs to military personnel of nearly every segment of the population.   The only exceptions are medically retired servicemembers  and survivors of members who died on active duty.

While the increases have been predicted given the budget cutting political atmosphere seen over the past few years, MOAA feels that DoD and the Administration are too quick to pass the burden off to retirees when  there are areas of operations that could be made more efficient without hurting the beneficiaries.  In December, MOAA proposed 16 ways to make the military health care program less costly that would negate the need to pass the costs to retirees.  You can see that list here.

It is important to understand that the increases in fees are, at this point, just a proposal.  Congress will have the opportunity to stop their implementation, in the same way that they did in 2007 when we saw the last effort from DoD to change retiree health care costs.  In March, MOAA will testify to Congress in the hopes that they can negate the proposed changes with a Budget Resolution.   That is why the next two months will be so critical to stave off the increases, and why MOAA will need everyone’s help in contacting their Senators and Representatives.  If Congress fails to act, the changes to the pricing structure would go into effect on October 1st, 2012.

There are three tiers that determine just how much the increases will be and they are based on annual retired pay amounts.  Tier 1 is anyone earning up to $22,589.  Tier 2 includes income between $22,590 and $45,178.  Tier 3 is for anyone earning $45,179 annually.  These figures are just based on military retired pay, not other income.

Let’s examine the proposed changes in segments.   First is TRICARE Prime:

Please note that those annual fees are based on a family rate; for singles just divide it by half.  Also important to note, the fee increases from FY2018 onward, the increases will be based not on COLA but on health cost inflation, a figure that varies but is usually in the ballpark of 6-7%, which would outpace COLA in most years.

Here are the proposed changes to the TRICARE Standard annual fee (all of the notes above for TRICARE Prime apply to Standard as well):

The budget proposal also includes the addition of something MOAA has been fighting to ensure never comes to pass – an annual enrollment fee for TRICARE for Life.  In addition to the normal Medicare Part B premium, retirees would be asked to pay TFL premiums at the following levels:

It is important to note that the fees listed above are for INDIVIDUAL plans, so you would need to double the amount for spouse coverage.  As with the other fee increases, the rates past 2017 would be tied to the health cost inflation rate, which would in all probability outgrow COLA increases.

In addition to the annual enrollment fee changes, there are modest increases proposed for pharmacy copays.  The biggest change is that Non-Formulary drugs will only have limited availability at the retail level.  As you can see from the differences in the pricing between retail and mail order generic rates and non-formulary availability, DoD is focusing on increasing the use of the TRICARE Mail Order Pharmacy.

Again, these changes are just at the proposal stage, and we have the opportunity to keep them from becoming a reality by launching an orchestrated, energetic messaging campaign directed towards Congress.  MOAA understands that the DoD budget must play a role in helping to solve the nation’s budget crisis and that military personnel will play a role in that sacrifice.  But we believe these increases are not the best way to go forward and we are asking everyone to help get that message across.

Please use MOAA’s messaging system to contact Congress by going here.  And stay on top of all the developments by subscribing to MOAA’s Legislative Update.

For another look at the impact of the proposed changes with full yearly cost estimates for different groups, please see these two documents:

Impact of FY 2013 DoD Budgetfee (incl Rx) proposals (E7-O4)

Impact of FY 2013 DoD Budgetfee (incl Rx) proposals (O-5)

(please note that the TFL figures in both of these estimates are based on retiree plus spouse, as opposed to the figures listed in the article above)

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The Defense Budget Board Retirement Proposal

Aug 18 2011

Please Note: MOAA has established a single landing page for the retirement proposal here:

Controversial Proposal

In July of 2011, the Defense Business Board presented a revamping of the military retirement structure, based in large part on the findings of the Quadrennial Review of Military Compensation of 2010. The proposal has been met with serious concern and strong opposition by MOAA and other organizations. In simple terms, the proposal would do away with the 20 year service pension plan currently in operation and replace it with a 401k style savings plan that would start at the beginning of a serviceman’s career. We believe that the proposed changes both significantly devalue core career incentives and would harm recruitment and retention efforts. Anyone familiar with the REDUX program, which was so detrimental that it was significantly altered in 2000 and now is offered as an alternative choice of retirement options, can see how this program would play out.

For a look at what the DBB proposed, click here.

MOAA’s Response

MOAA has written about the retirement overhaul proposal several times. From the July 29th Legislative Update:

“MOAA believes the QRMC plan would do grave damage to long-term retention and readiness. By dramatically reducing its financial commitments to servicemembers without any reduction in the enormous sacrifices demanded of career troops and families, it would destroy the sense of reciprocal commitment between member and service.”

From the August 12th Legislative Update:

“The new retirement reform proposals usually envision even more severe cutbacks of guaranteed retired pay amounts, relying more on a contributory Thrift Savings Plan (TSP) system under which services would contribute varying amounts each year depending on service needs for particular skills. Under that system, full retired pay wouldn’t start until age 57 and TSP withdrawals wouldn’t start until age 60.

Just as the Redux cut was applied prospectively (that is, only to people who entered service after the retirement law was changed), most who have endorsed major retirement changes envision applying the new rules only to new entrants.

But a recent retirement task force briefing to the Defense Business Board called that a “high-cost option.” It also highlighted a “lower-cost option” under which all current members would be converted to the new system as of a specific date — grandfathering only service already rendered as of that date.

It’s not clear exactly how that might work. A person with 20 years of service as of the conversion date might have future retired pay capped at 50% of high-three-year average basic pay, even if he or she served another 10 years, with subsequent service earning only some level of TSP deposits. A person with 10 years as of the conversion date who went on to complete a career might end up drawing retired pay capped at 25% of high-three-year average basic pay.

But this is only speculation, because no details or decisions have been offered yet.”

It is important to note that the DBB proposal is not the new law, and will only be one of the many possible options that DoD and Congress consider in the coming months and year. But with the debt talks that are ongoing and the requirements of automatic defense reductions that were written into the recently passed debt ceiling deal on the table, retirement benefits are in dangerous territory.

To help illuminate the dangers and inform the public of what is happening with the retirement discussions, MOAA’s Director of Government Relations, Col Steve Strobridge, USAF (Ret.), fielded questions in an interview with the Washington Post on August 11th, and produced the video that you can view below.

In Focus: Retirement Reform from MOAA on Vimeo.

You Can Help

What can you do?

1 – Send your elected officials a MOAA-suggested message urging them to ensure that ongoing budget-cutting efforts don’t undermine the core pillars that are essential to sustaining a high-quality all-volunteer force.

2 – Urge all of your friends and relatives to do the same.

One response so far

Warning to Veterans Hoax Twist

Mar 06 2011

Non Beneficial Mutation

During the life-cycle of a viral email, there are inevitably changes of various elements, both small and large. Usually these changes take place over long periods of time, spanning administrations and political changes. We gave an example of a current long period alteration recently with the Cindy Williams article being repackaged after 10 years to target President Obama. It is rare that changes are made after only a short time, as logic would imply that there would be some memory of the email that was just released and obvious differences would be clear. This is one of those cases. As we detailed in ‘Warning to Veterans Hoax’, there is a viral email posing as an official Department of Veterans Affairs Warning regarding a group called Veterans Affairs Services. While the original email pointed service members towards the VA Office of the General Counsel, the new mutation points people to the National Guard Bureau. The message also states that the warning originated from NGB this time, in place of the previous attribution of the Office of the Secretary of the Department of Veterans Affairs.

For the original language, see the link above to the article on the Warning to Veterans Hoax. Here is the new language that was inserted:

This scam continues to capture personal info and potential identity theft even though prior warnings have been sent throughout DoD. The following is an advisory sent out by the National Guard Bureau (NGB) in reference to a group called “Veterans Affairs Services”

VAS may be gaining access to military personnel through their close resemblance to the VA name and seal. NGB Legal Counsel has requested that the NGB Provost Marshal Office coordinate with DoD to inform military installations, particularly mobilization sites, of this group and their lack of affiliation or endorsement by VA to provide any services.

After receiving a number of inquiries to their office, a representative from the NGB was tasked by the NGB Chief Counsel to investigate how they were included in the warning and they reached out to us due to the previous hoax warning. After researching the change in the email, we found that the new verbiage first appeared on a public website on February 22nd, in two locations, here and here.

From there, the message was shared on Facebook and currently appears in this form on numerous blogs and message boards. What has made the problem more exacerbating is the fact that many people have received the warning from trusted sources, like the workplace or fellow service men.

Clearly, NGB did not put out this message, and just as the DVA did not put out the original, the primary source for the message is unclear. While the warning for military members both active and retired to be extremely careful when dealing with any financial institutions regarding disability pay ‘settlements’ or retired pay plans is important, the focus of both variations of this warning has been VAS. We’re growing increasingly suspicious that this is more of a financial trick by a competitor of VAS, which raises more concern than a falsely attributed warning.

We’ll keep an eye out for more changes or details, but please help out by spreading the word that the National Guard Bureau did not put out this warning, and they are not handling inquiries regarding VAS.


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Warning to Vets Email Article Press Mention

Jan 14 2011

Published by under Economic Issues

Spreading the Word

The article we ran back in December about the ‘Warning to Vets‘ email hoax has been picked up in part, with some further information given to the reporter, by here. A short sampling of the article, including additional insight from VFW:

FORT SAM HOUSTON, Texas — An old e-mail lurking in the electronic cloud is making rounds again in a renewed attempt at phishing for veterans’ personal information.

“While the e-mail is not what it purports to be, the message lends itself to a much bigger issue of the exploitation of veterans using survivor benefits as a hook by financial services companies to get their business,” said Matthew Lofiego, Military Officers Association of America’s (MOAA) deputy director of the Member Service Center.

“There are so many organizations out there targeting veterans, offering them money and becoming the beneficiary of their benefits,” Lofiego said.

“Servicemembers and veterans need to be careful in this day in age,” said Jerry Manar, deputy director for Veterans of Foreign Wars, a non-profit service organization of combat veterans in the U.S.

“Many scams seem to offer something for very little money or for free. Once you’re involved with them they do a bait and switch and begin charging money for services,” Manar said, stressing residents of retirement and nursing homes are often targeted and particularly vulnerable.

“It is a growing problem, and one that MOAA is paying close attention to, especially the tactics being used,” Lofiego said.

Recently forwarded throughout the Army community and titled “Warning To Veterans,” the current version of the e-mail advises against using the services of an organization called Veterans Affairs Services and appears to come from Kevin Secor, Veterans Service Organizations liaison, Office of the Secretary of the Department of Veterans Affairs.

MOAA contacted the VA and VSO Liaison Kevin Secor to confirm. Lofiego said Secor stated that he never sent the message.

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Admiral Ryan on Fox News

Dec 09 2010

Representing MOAA

This morning, MOAA’s President, Vice Adm. Norb Ryan, Jr., USN (Ret), participated in a discussion on Fox News’ morning show “Fox & Friends” about military pay raises. Admiral Ryan carried the MOAA message of an increase in active duty pay from the 1.4% proposed amount to 1.9%.

The best quote, in response to a question regarding why there is resistance to this modest pay increase:

“This is a recommendation from the Pentagon and I happen to believe that the bean counters have taken over and they’ve forgotten Leadership 101 principles. Like I said, you have to have enough money for the weapons systems, but you have to have enough money for the only weapon system that has never let this country down: it’s people.”

View the full video here:

Take action and send your representatives in Congress a message via MOAA’s Action Center by clicking here and filling out the message.

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