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Tuesday, February 14, 2012

White House to Retirees: Cough Up $13 Billion




White House to Retirees: Cough Up $13 Billion The White House released details of its personnel and healthcare budget proposals on Monday, 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.
We also understand that the DoD budget must play a role in solving our nation's debt crisis. But what we take issue with is 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 (www.moaa.org) to urge your legislators to oppose disproportional health fee increases for military beneficiaries.