LEGISLATIVE INFORMATION

BY LTC ROBERT M. LEPAGE, USA, RET.

Progress on TRICARE for Gray Area Retirees: On August 6 the Office of Management and Budget (OMB) released an interim final rule for the new TRICARE Retired Reserve (TRR) program. The new program permits “gray area” National Guard and Reserve retirees – those eligible for a retirement check and TRICARE when they reach age 60 – to purchase TRICARE health insurance. Gray area members who are enrolled in or eligible for the Federal Employee Health Benefit Program are not eligible for TRR.

TRR enrollment is expected to commence this fall.

TRR coverage will be exactly the same as TRICARE Standard (which covers 75% of allowable charges after a deductible of $150 single/$300 family).

Unlike the current TRICARE Reserve Select (TRS) program – in which premiums are 72% subsidized by the government – gray area retirees will be responsible for paying premiums equal to the full cost of coverage.

For 2010 the monthly TRR rates will be $388 for member-only coverage, and $976 for family coverage. In January 2011 the rates will rise 2% to $408 a month for member only, and $1,020 for family coverage.

Although comparable to Blue Cross Blue Shield rates under the FEHB program and military COBRA rates, the new TRR rates are substantially higher than TRS. Unsubsidized TRS premiums would be about $177 monthly for a single servicemember and $705 for family coverage.

Reservists enrolled in TRS likely will experience “sticker shock” when their TRICARE rates more than double – from $177 for unsubsidized TRS coverage to $388 under TRR – the day they take off the uniform.

Full-cost TRR premiums certainly will be substantially higher than TRS rates due to demographic differences and comparable claims experience. We have asked DoD to provide the analysis that led to the rate-setting for TRR so Guard and Reserve families will have a complete understanding of the basis for the new rates.

With enactment of TRR, Congress has provided a long-sought MOAA and Military Coalition strategic objective: the opportunity for lifeftime TRICARE coverage options for actively serving and retired members of the National Guard and Reserve.

We look forward to working with government officials and Congress to ensure that the TRR program rates are fairly set and implemented in a timely fashion.

Gates Announces Budget Initiative:  In an interview this week Secretary of Defense Robert Gates announced his plans to retire sometime next year – he has been in charge of the Pentagon since late 2006, serving under both President Bush and President Obama.

The announcement comes on the heels of his plan to reallocate $100 billion of the Defense budget over the next five years by streamlining the Pentagon’s massive bureaucracy and tightening efficiencies.

Gates intends to implement this plan well before his departure. In a recent memo to military department secretaries, Gates directed “a series of initiatives designed to reduce duplication, overhead, and excess, and instill a culture of savings and restraint across the DoD.”

Some of the key initiatives are:

• Reducing funding by 10 percent for service support contractors
• Freezing the number of defense agency, Joint Staff, and combatant command billets over the next three years
• Reducing at least 50 general and flag positions and 150 senior civilian executive positions over the next two years
• Recommending closure of Joint Forces Command in Hampton Roads, VA.

We will follow any new initiatives closely to ensure they continue our strong support for our already overburdened military people and their families and don’t negatively impact our nation’s military readiness.

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LEGISLATIVE INFORMATION

Medicare-TRICARE Fix in Works : On May 12, House Speaker Nancy Pelosi (D-CA) and 16 other House members, including many key committee leaders, met with MOAA President VADM Norb Ryan and other association leaders to discuss military and veterans’ legislative issues.

Pelosi began the meeting by announcing that House and Senate leaders have reached a tentative agreement on a fix to the 21% cut in Medicare and TRICARE payments to doctors now scheduled for June 1

She said she expects the House will vote as early as next week on a bill that would eliminate such cuts for five years, and that favorable Senate action will follow. The leadership plan is to deliver the legislation to the White House for signature by the end of May

VADM Ryan expressed MOAA’s strong support for that important initiative to address the #1 health care access concerns for America’s seniors and the military community.

Additional topics discussed during the meeting included needed efforts to address double-digit veteran unemployment; the overwhelming VA claims backlog; the importance of substantive progress on concurrent receipt and SBP fixes; and health care, retirement, and veteran status for Guard and Reserve members

House Armed Services Chairman Ike Skelton (D-MO), expressed frustration at the “serious challenge” his committee has encountered searching for qualifying spending offsets to act on concurrent receipt and survivor benefit fixes.

Skelton said he and other leaders are continuing to work on that and, citing the Speaker’s personal engagement, hope they “might have some light at the end of the tunnel.”

Admiral Ryan thanked the leadership for their continuing efforts to provide fairer pay and manpower levels (see article below), asserting his belief that too many continue to take our troops’ and families’ sacrifices for granted. He pledged MOAA’s continuing support to find ways to address concurrent receipt, SBP, and Guard/Reserve fixes.

MOAA strongly agrees with the “three-F challenge” expressed at the meeting by Vivianne Wersel of the Gold Star Wives: “Find the Funds and Fix It!”

Pay Raise Yes, TRICARE Fee Hikes No: The Military Personnel Subcommittee, chaired by Susan Davis (D-CA), met this week to craft its sections of the FY2011 National Defense Authorization Act (H.R. 5136). This is the first round in determining what Congress will approve for manpower levels, pay and benefit changes, and weapons programs for the new fiscal year.

Davis opened the hearing recognizing the sacrifices that servicemembers and their families are facing as the nation enters its ninth year of war. Full details of the draft won’t be disclosed until after the full Armed Services Committee acts on it next week, but the Subcommittee did announce selected provisions, including:

• A 1.9% active duty pay raise as endorsed by MOAA and The Military Coalition, rather than the 1.4% proposed by the Pentagon
• Manpower increases for the active Army and Navy
• Increases in hostile fire pay and family separation allowance to match inflation since they were last adjusted in 2004 (which would equate to about a $35 monthly increase in each)
• A pilot program to help military spouses find jobs in the military community
• A one-time cash allowance for severely wounded warriors to help resettle caregivers providing aid and attendance
• Authority to continue TRICARE coverage for children up to age 26, in return for a premium to be set by the Pentagon
• A total of $65 million to assist civilian schools serving military children, including those impacted by Base Realignment and Closure actions

TRICARE coverage for Guard/Reserve members who qualify for retired pay before age 60

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BY LTC ROBERT M. LEPAGE, USA, RET.

21% Cut Fixed – Until June: Congress can act fast when it absolutely has to, and it absolutely had to on April 15 – the last day Medicare could avoid imposing a 21% cut in payments to doctors that many doctors say would cause them to stop seeing Medicare and military patients.

Within the space of five hours, the Senate voted to defer the 21% cut until June 1. Because that was a month longer delay than the House proposed, House leaders greased another vote to approve the longer delay, and the bill was rushed to the White House so President Obama could sign it into law that night.

The cuts technically went into effect on April 1, but Medicare exercised its authority to hold claims for up to 10 business days, in anticipation that Congress would approve the delay. Still, the fact is that this is one more can-kicking exercise.

Now, legislators will try to figure out a way to push back the cuts until the end of the year, and next year they’ll have to go through a new drill to avoid a 25% cut in January 2011.

The constant battles on this issue stem from the inability of Congress to agree on how to pay for the $240 billion permanent fix. More and more legislators are insisting it should be paid for by cutting other spending. But finding a package of $240 billion in spending cuts that a majority of legislators would vote for is an equally daunting challenge.

Needless to say, this isn’t a trivial issue. Hill leaders simply must find a way to get past this problem so seniors and military beneficiaries aren’t being held hostage to monthly threats of having their health care access cut off.

TRICARE Protection Under Health Reform: The Senate passed Sen. Jim Webb’s (D-VA) TRICARE Affirmation Act (S. 3148), which makes it explicit in law that TRICARE constitutes qualifying coverage for national health reform purposes – thus avoiding any question that TRICARE beneficiaries would be subject to penalties imposed on those who don’t obtain coverage.

The White House and Pentagon said all along there was no way that military people would be subject to such penalties, but now the law lays that out in black and white.

The House passed similar legislation earlier, so it will now go to the President for signature.

The Senate also has passed a separate bill explicitly protecting all beneficiaries of VA health care (S. 3162). The bill is awaiting consideration in the House and is expected to pass shortly.

Coverage For Your 20-Somethings:
New House and Senate bills would make TRICARE comply with the national health reform requirement to retain children on a parent’s health plan until age 26. But it won’t be free.

MOAA, Coalition Oppose Lending Loophole:
MOAA and The Military Coalition joined the Defense Department in asking Senate Banking, Housing & Urban Affairs leaders to protect troops and reject a proposed exemption of auto lenders from restrictions on unscrupulous practices

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BY LTC ROBERT M. LEPAGE, USA, RET.

White House Speaks to TRICARE Concerns:

Among other similar claims, a column in the Wall Street Journal this week by former Senate Majority Leader (and Republican Presidential nominee) Bob Dole asserted that the Senate-passed national health reform bill would tax TRICARE for military families when delivered by a private-sector plan.

A White House blog post strongly refutes this claim, asserting, “There is absolutely nothing in health reform that will affect TRICARE beneficiaries.”

To clarify further, there are two types of taxes at issue in the Senate health bill.

One is an excise tax on individuals who have high-cost plans (the so-called “Cadillac tax”). The legislative language of the Senate bill specifically excludes TRICARE, TFL, and VA coverage from this tax.

The other tax is an insurance provider fee that would be levied on all insurance companies in America, proportional to their share of the covered population. It appears that the Dole column was talking about the latter tax.

As the WSJ column acknowledged, the proposed legislation would exempt all government entities from the tax. MOAA contacted the Senate Finance Committee staff to reconfirm our understanding of exactly how the plan would work for care delivered through TRICARE’s civilian contractors.

We were assured (again) that the non-partisan House/Senate Joint Tax Committee has indeed issued a ruling that this tax would not apply to TRICARE contractors since, under the new contracts, the contractors are not underwriting coverage, but only administering the government program.

We accept this at face value, but also recognize that no one can ever guarantee that proposed legislation won’t be changed or interpreted ultimately in a different way than expected.

That’s why MOAA continues to ask our members to use MOAA’s alert to urge their legislators to ensure military and VA health benefits are explicitly protected, and not subject to any taxation, in whatever health care legislation Congress may consider. To date, MOAA members have generated nearly 80,000 messages to Congress on this topic.

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BY LTC ROBERT M. LEPAGE, USA, RET.

Senate Approves Family-Caregiver Bill: On November 19, the Senate unanimously approved S. 1963, the Veterans Omnibus Health Services Act of 2009, a major MOAA goal.
Progress on this issue has not come easily. One Senator prevented the bill from moving forward due to a lack of funding offsets. MOAA joined forces with a number of other veterans’ organizations to pressure Congress to end the gridlock and get it to the Senate floor for a vote.
The legislation will alleviate some of the heart-wrenching situations families of wounded warriors have encountered. Many caregivers have been forced to quit their jobs, deplete their savings and retirement accounts, give up their own health care benefits, or become destitute as a result of caring for their wounded servicemember or disabled veteran.
Sen. Daniel Akaka (D-HI), Chairman of the Veterans Affairs Committee told members, “The toll on the caregivers who try to do it all can be measured in higher rates of depression and poor health as they struggle to care for these wounded warriors – an obligation that ultimately belongs to the government…this legislation fulfills the VA’s obligation to care for the nation’s wounded veterans by providing their caregivers with counseling, support, and a living stipend – including health care.”
The bill also contains a number of other important provisions:
· Increased mental health care funding for women veterans suffering from military sexual trauma
· Medical services for newborn children of female vets
· Improved access to care in rural areas
· Creation of programs to combat veteran homelessness
The House has passed a less-extensive bill, H.R. 3155, and Congressional leaders are expected to meet shortly to resolve differences between the bills. Please contact your legislators and ask them to support the more robust Senate caregiver bill.

Is Walter Reed Transfer on Track? On Dec.2, a House Armed Services Committee hearing reviewed progress on construction and realignment of the new Walter Reed National Military Medical Center (WRNMMC) at Bethesda and the new community hospital located at Fort Belvoir, VA. Committee members wanted to know if the scheduled relocation of Walter Reed Army Hospital functions to a new joint-service facility in Bethesda is on track to meet the September 15, 2011 deadline directed by the 2005 Base Realignment and Closure (BRAC) Commission. Chairman Solomon Ortiz (D-TX) wanted to know if DoD was fully committed to the original BRAC vision of a “world class facility.” A May 2009 report by the Defense Health Board (DHB) raised concerns about construction modifications, funding shortfalls, and joint service command and control issues. Mr. Al Middleton, Acting Deputy Assistant Secretary of Defense for Health Budgets and Financial Policy, said construction at the WRNMMC Bethesda campus is on track and more than 60 percent complete. “We understand that “world-class healthcare facilities is a long-term commitment to improvement beyond BRAC, and that additional investments are required to achieve that end state,” he said. VADM John Mateczun, who heads the National Capital Region health care Joint Task Force, told the subcommittee, “We are committed not just to world-class care, but to the best care that can be provided any time, any place, to the wounded that are coming to us from the theaters in Iraq and Afghanistan. Casualty care is our number one priority.”

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COLAs and Military Retired Pay

Issue: Government retired pay promises must be kept, including annual cost-of-living adjustments (COLAs) to prevent erosion of retirees’ purchasing power by inflation.

Background: Despite previous prospective changes that reduced future retired pay value by 25% since 1980, and subsequent retention problems that led Congress to repeal those changes in 1999, some government and private sector critics continue to allege the military retirement system is “overly generous.” During the 1990′s, legislators proposed or enacted multiple changes or delays in annual cost-of-living adjustments (COLA), singling out retired servicemembers for discriminatory COLA penalties. Too often, critics wrongly equate federal retirement compensation–earned by decades of selfless service and sacrifice–with unearned federal welfare programs.

Civilian retirement standards don’t apply to the military, which entails far more arduous service conditions: 20 to 30 years of hazardous duty, frequent moves, extended family separations, overseas service, long hours of overtime without extra pay, forfeiture of many personal freedoms most civilians take for granted, and an “up-or-out” promotion system. The vast majority of military members face forced departure from service before age 50, with no vesting before 20 years. Retaining a high-quality career force over the long term requires a strong reciprocal commitment between member and service.

Retired pay increases, provided for in statute since 1871, are part of the commitment. Since 1963, COLAs have been tied to the Consumer Price Index (CPI), a Bureau of Statistics metric that measures changes in inflation. Without COLA protection, inflation would erode nearly half of real retired pay value for a 20-year retiree by age 62.

The 2009 COLA, announced in October 2008, was an incredible 5.8% for most recipients of military retired pay, VA disability compensation, Survivor benefit Plan annuities, Social Security, and other federal annuity programs.

However, inflation in 2009 (when compared to the 2008 baseline) actually declined 2.1% providing no COLA for 2010. A quick reminder: the law doesn’t allow a negative COLA. If inflation is negative for the year, there just won’t be a COLA. The 2010 COLA, announced in October 2009, was negative, but fortunately the law doesn’t permit a negative COLA. So for 2010, there just won’t be a COLA for recipients of military retired pay, VA disability compensation, Survivor benefit Plan annuities, Social Security, and other federal annuity programs.

Additional COLA information can be found at the following link: COLA Watch.

MOAA Position: MOAA is committed to resisting any attempts to single out uniformed services retirees for special COLA penalties and any proposals that would allow long-term erosion of real retired pay value.

Key Bills/Status: No bills on the horizon at this time. The most likely potential vehicles for future COLA threats are Social Security reform proposals that would limit COLAs as a means of reducing long-term costs or Federal budget reduction bills that would establish statutory caps on discretionary spending.

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Concurrent Receipt of Military Retired Pay and VA Disability Compensation

Check out MOAA’s new brochure (Undue Sacrifice) for an easy to read version of this fact sheet.

Issue: Congress needs to fully eliminate the law that makes most disabled uniformed services retirees forfeit part or all of their military retired pay for VA disability compensation.

Background: For decades, MOAA has sought legislation providing full relief from the 19th century law that required a dollar-for-dollar offset of military retired pay for VA disability compensation. MOAA strongly believes retired pay is earned for a career of uniformed service, and VA disability compensation is recompense for pain, suffering, and lost future earning power due to service-connected disabilities.

Since we persuaded Congress to make the first very modest step in 2003 for a small, yet significant, group of disabled retirees, we’ve made steady incremental progress almost every year in broadening eligibility.
In the ensuing 6 years, we’ve fully restored earned service-based retired pay for:

100% disabled retirees with at least 20 years of service

All combat-disabled retirees without regard to length of service or percentage of combat-related disability

Additionally, we’ve won a scheduled 10-year phase-out of the disability offset (to be completed by 2014) for retirees with 50% or higher-rated non-combat-related disabilities who have at least 20 years of service or were retired under the Temporary Early Retirement Authority of the 1990s.

Although these major improvements cover 304,000 disabled retirees, or 33% of the total disabled retired population, still 623,000 fund their disability compensation from the VA dollar-for-dollar from their retired pay.

MOAA Position: MOAA believes strongly in the principle that career military members earn their retired pay by service alone, and that those unfortunate enough to suffer a service-caused disability in the process should have any VA disability compensation from the VA added to, not subtracted from their service-earned military retired pay. In the case of members forced into medical retirement before 20 years of service, their service-earned retired pay should be vested at the rate of 2.5% times years of service times the applicable pay base. There should not be any distinction between members disabled for combat- vs. non-combat-related causes, as the impact on their quality of life and future earning power is the same in either case. MOAA is committed to ending the disability offset for all disabled retirees.

Key Bills/Status: Several bills have been introduced in the 111th Congress that would continue to make progress to eliminate the remaining offsets. Congressman Gus Bilirakis (R-FL) has introduced H.R. 303, the Retired Pay Restoration Act and Congressman Jim Marshall (D-GA) has introduced H.R. 333, the Disabled Veterans Tax Termination Act. In the Senate Harry Reid has introduced S. 546, The Retired Pay Restoration Act of 2009.

Additionally, for the first time ever the White House has included a concurrent receipt proposal in their Budget Resolution. The administration’s proposal would phase in eligibility for new recipients over five years. The first three years opens CRDP eligibility to the more severely disabled Chapter 61 retirees with less than 20 years of service. The remaining two years of this phase-in extends CRDP to Chapter 61 retirees, regardless of years of service, with a VA rating of less than 50%. The White House proposal, although included in the House version of the FY2010 defense authorization bill (H.R. 2647), failed to survive conference and was stripped from next year’s defense bill.