Commission Pitches Reform to Congress

February 6, 2015

On February 3 and 4, the Senate and House Armed Services Committees heard testimony from the nine members of the Military Compensation and Retirement Modernization Commission (MCRMC). The hearings were held days after the administration delivered its FY 2016 budget proposal to Capitol Hill.

The MCRMC spent nearly two years studying military compensation and benefits before releasing its long anticipated report last week.  The commission put forth 15 recommendations for Congress, and the administration, to consider regarding military pay and benefits.

The commissioners testified that their mandate was not to cut costs, or reduce compensation and retirement benefits, but to modernize the system in order to ensure the long term viability of the all-volunteer force.

Much more careful analysis is required of the recommendations, but the paramount topics of interest are the recommendations to reform military retirement and health care.

The commission recommends reforming the military retirement system into a blended defined benefit and 401k-style plan. It would offer a transportable retirement device to those who serve less than 20 years, but reduce defined retirement pay and shift more responsibility and uncertainty of retirement benefits onto career servicemembers.

Under the proposal, current servicemembers would have the option to remain in the existing retirement system or transition to the new hybrid system. New entrants would be required to use the blended retirement system.

The commission recommends eliminating the TRICARE benefit for military families, retirees under 65, and their dependents.

A selection of commercial health care plans would be available similar to the options open to federal civilians in the Federal Employees Health Benefit Plan (FEHBP). Military families would have the lion’s share of their health care cost paid for by a new Basic Allowance for Health Care. Working age military retirees, and their dependents, would enjoy a wider array of health care options at a lower cost share than federal civilians, but would ultimately pay four to five times what they currently pay under TRICARE.

Lawmakers at both hearings expressed openness to reform, but were especially cautious of the health care proposal.

This was only the first in a series of upcoming hearings and deliberations—the devil is in the details of the recommendations. MOAA supports Congress’ careful and thorough analysis and looks forward to working closely with members and staff.

On February 6, MOAA and its partners in The Military Coalition met with the commission’s staff to discuss the proposal in detail and raise comments and concerns. MOAA continues to carefully analyze the recommendations.

The commission’s 15 recommendations are just that—for now, but lawmakers expressed hope that at least some of the recommendations would find their way into the upcoming defense authorization bill.

If enacted, these recommendations would have a profound impact on the compensation, benefits and quality of life of active, Guard and Reserve service members, retirees and their families.

MOAA urges all members to stay involved and informed through our weekly legislative updates and participate in our calls to action to communicate with your members of Congress. We also want to know what you think about the recommendations. Take our MCRMC survey and let us know how you feel about the most controversial recommendations.