Recent benefits update was needed

by Tom Philpott

Military survivor benefits for 270,000 elderly recipients, and the future value of the Survivor Benefit Plan for all beneficiaries, will begin to rise next October when the first of four special pay hikes takes effect.

When the last one occurs, in April 2008, SBP annuities for older beneficiaries will have returned to a level that effectively eliminates a long-standing reduction in benefits at age 62.

Phase-out of the SBP “offset,” cleverly dubbed the “widow” tax by change advocates, is the crown jewel among personnel initiatives that Congress passed this month in the 2005 National Defense Authorization Act.

Also set to see pay gains are military retirees with 20 or more years of service and a disability rating of 100-percent for service-connected injuries or illnesses. Effective Jan. 1, their military retired pay will be fully restored — that is, no longer reduced, dollar-for-dollar, by their VA disability compensation.

For this group alone among seriously-disabled retirees, the law accelerates the 10-year phased end to the ban “concurrent receipt” of military retirement and disability pay.

And for the first time, TRICARE Standard benefits will be made available to some drilling reservists and National Guard members. But the Reserve TRICARE plan is far more restrictive than the one embraced last summer by 70 percent of the Senate.

Indeed, none of the three major personnel initiatives negotiated in a House-Senate conference committee, before Congress adjourned for fall elections, is as inclusive as proponents had hoped.

On SBP, Senate negotiators accepted the House’s shortened phase-out schedule for the age-62 offset. It will disappear in 3 1/2 years rather than 10. But the House accepted the Senate’ higher “buy-in” formula if current retirees seek to enroll in an improved SBP.

The House proposed only a modest late-enrollment penalty, no more than 4.5 percent of covered retired pay. Instead, interested retirees will have to pay all missed premiums plus interest back to the date they had declined enrollment.
On Accelerated Concurrent Receipt, Congressional staff members said this change likely will affect 15,000 retirees with 100-percent disability ratings, half the original 30,000 estimate.

Left behind could be retirees with disability ratings below 100 percent who receive compensation at the 100-percent level because their disabilities make them “unemployable.”
Proponents for accelerating concurrent receipt to the most seriously disabled believed for months that the Senate bill’s language covered any retiree with 20 years and receiving 100-percent level compensation.

The language wasn’t changed but during the conference, said a Senate source, lawmakers agreed the provision should apply only to retirees with 100-percent disability ratings.

On Reserve TRICARE: This first-time opening of TRICARE Standard to certain drilling reservists is far less ambitious than the $5.6 billion amendment (over five years) that Sens. Lindsey Graham, R-S.C., and Tom Daschle, D-S.D., pushed through the Senate last summer.

Graham-Daschle sought to open TRICARE to any drilling reservist or family member willing to pay monthly premiums, set at 28 percent of the cost of care. The government would pay the remaining 72 percent.

The compromise negotiated will offer access to TRICARE Standard at the same premiums but this plan is designed to reward mobilization and to keep more service members in the drilling Guard and Reserve.

For every 90 days members are mobilized, they will earn a year of TRICARE Standard coverage. Therefore a year’s tour in Iraq or Afghanistan would result in four years of TRICARE Standard coverage. Members would have to stay in the Guard or Reserve while using the new TRICARE benefits.
The offer would apply to reserve component members mobilized on or after Sept. 11, 2001, so they could use any post-9/11 mobilizations to gain TRICARE access and extend their reserve commitment.

The law directs that the reserve TRICARE benefit be available 180 days after the defense bill is signed, which likely will occur this month. The TRICARE coverage doesn’t begin until members return from deployment and use up 180 days of transitional TRICARE benefits.

Susan Lucas with the Reserve Officers Association said ROA sought TRICARE for all drilling reservists both as a tool to improve recruiting and retention and also to reduce the number of reservists not medically fit to be activated.
Providing TRICARE only as a reward for mobilization, she said, fails to address the medical readiness issue.
The Bush administration opposed ending the SBP offset, expansion of TRICARE to drilling reservists and accelerating phase-in of concurrent receipt. But it never threatened to veto the defense bill over any of them.

On ending the SBP offset, the White House’s Office of Management and Budget suggested earlier this year that there really is no reduction in benefits at age 62, not if surviving spouses begin to draw Social Security payments as SBP annuities fall.

Tom Philpott can be contacted at Military Update, P.O. Box 231111, Centreville, Va. 20120-1111, or by e-mail at:
milupdate@aol.com