December 19, 2014
The FY 2015 defense authorization bill included several wins
on issues MOAA has been working for years. We take a closer look at two of
these lesser-known wins.
The defense bill partially resolves a long-sought technical
glitch concerning the full crediting of earned early reserve retirement credit
for reservists called to federal active duty.
The FY 2008 National Defense Authorization Act authorized
National Guard and Reserve members to begin receiving retired pay earlier than
age 60 for qualifying active duty service performed after 28 January 2008.
Each aggregate of 90 days active duty yields three months’
early retirement, but only if the call-up time is served within a single fiscal
year. Consequently, many operational reservists are losing the credit.
For example, a 120-day call-up commencing on August 1 and
ending on November 30 would receive no early reserve retirement credit because
the 90-day clock resets at the start of the fiscal year (October 1).
The defense bill permits credit of qualifying active service
totaling aggregates of 90 days served over two consecutive fiscal years.
The change is an important step towards improving
compensation for reservists that matches the enormous increase in the nation’s
reliance on them for operational missions.
Unfortunately, however, the provision only applies to activations after
September 30, 2014.
and Reserve members who retire early are not eligible for TRICARE Standard or
Prime coverage before age 60, an issue for which MOAA continues to seek a
MOAA also continues to support crediting Guard and
Reservists’ active duty service from September 11, 2001 until January 27, 2008,
but the $2 billion dollar mandatory spending price tag deters lawmakers from taking it up.
SBP Special Needs
The defense bill also includes a provision authorizing the
payment of Survivor Benefit Plan (SBP) annuities into a special needs trust for
permanently disabled dependent children.
A special needs trust exempts income from means-testing for assistance provided
by state governments and social services. MOAA and its partners have been advocating for
this change since 2007.
DFAS must now establish and implement the administrative
rules necessary to accommodate retirees who wish to designate a special needs
trust as the recipient of their SBP annuity.
This guidance will likely involve soliciting public comments
via the Federal Register. MOAA will be monitoring the process to ensure
comments and concerns from retirees are considered.
Our best guess at this point is that DoD will allow an SBP
“open season” to accommodate this new category of beneficiary. Retirees with a
permanently disabled child who elected not to enroll in SBP because of the
potential adverse effects of the annuity receipt may be considered for open
enrollment. MOAA will provide more information as it becomes available.
Special needs trusts are complex legal instruments and any
retired member contemplating the use of one should consult with a qualified
lawyer. We caution that it will likely take months for DFAS to develop