What’s in the Defense Bill?

November 9, 2017

The House and Senate conference on the FY 2018 National Defense Authorization Act is complete, and the outcome validates the extensive efforts put forward by MOAA and our coalition partners to support the currently serving force. 

The final legislation recognizes the strain on the all-volunteer force by increasing the troop strength above the president's request by the following amounts: 7,500 in the active duty Army, 1,000 in the active duty Marine Corps, 500 in the Amy Reserve, and 500 in the Army National Guard. 

The defense policy legislation also authorizes the full 2.4-percent pay raise for members of the armed forces in line with the statutory baseline, the Employment Cost Index (ECI) rate. As you might recall, MOAA championed the full pay raise rather than the 2.1-percent pay raise proposed in the president's budget. While this raise matches the ECI, as it did last year, we still have a lingering, cumulative gap of 2.6 percent from previous years as compared to the private sector. 

For the second year in a row, MOAA successfully advocated on behalf of all those who currently serve to leave housing allowances intact. The Senate's proposal to cut the with-dependent rate for dual-military couples with children would have been a significant financial hit to those families, the majority of whom are enlisted. Our financial impact analysis and engagement with leadership on the Armed Services Committees paid off for those families. We will remain vigilant, knowing these allowances have become a favored target for budgeteers.

What's in Store for TRICARE?
We noted the Senate's FY 2018 NDAA proposal, submitted earlier this year, included a provision to raise TRICARE pharmacy fees. We immediately engaged, and many of you contacted your members of Congress to share dissatisfaction with these increases. Despite those efforts, fee increases likely will be included in the final version of the NDAA for the president's signature. 

Beneficiaries will see steady increases in their cost shares over the next 12 years. According to estimates, these increases will save DoD more than $2.1 billion by the year 2022. Most of the increases will be through retail pharmacy copayments, but new fees will be introduced to include mail-order prescriptions as well. The disclosure in the Senate's Conference Report Highlights indicate these copayments would generate discretionary savings to fund improvements in military readiness and health care. 

Beneficiaries still can obtain their medications at military pharmacies for free. 

Non-active-duty TRICARE users currently pay: 

  • $0 for 90-day supplies of generic drugs via TRICARE's home delivery
  • $20 for a 90-day supply of an approved brand-name drug. Prescriptions filled at an in-network retail pharmacy carry a cost of $10 for a 30-day supply
  • $10 for a 30-day generic supply at an in-network retail pharmacy
  • $24 for a 30-day supply of a brand-name drug at a retail pharmacy. 

That will change as early as 2018; all medications (except those obtained at a military treatment facility) now will require beneficiaries to pay a fee. We do not yet have the projected fee structure, but the bill submitted by the Senate provides an idea of what those fees could be. 

For example, medications obtained through TRICARE's home delivery program were targeted to be $7 for a 90-day supply of generic medication and $28 for a 90-day supply of a brand-name medication. 

Generic medications received at in-network retail pharmacies would cost $11 for a 30-day supply, but the cost of brand-name drugs would increase to $28. 

The cost of medications for TRICARE beneficiaries will continue to increase between now and the year 2026. Costs are projected to top off with fees for a 30-day supply of a generic medication at a retail pharmacy and a 90-day supply by mail reaching $14. A 30-day supply of a non-generic medication at a retail pharmacy will be $48, and a 90-day supply by mail will hit $44.

What Should Military Families Know?
Successfully changed legislation to allow hospice care for beneficiaries under age 21.
Medicare, designed for adults over age 65, prohibits reimbursement for hospice services if a beneficiary continues to receive curative care for the same illness. Parity between Medicare and TRICARE means the rule also applies to children using TRICARE. Growth and development in children make it difficult to provide a health prognosis when facing a terminal illness. The choice to terminate treatment in order to access hospice care can cause. Private insurance does not impede providing services in this way. As such, MOAA and the TRICARE for Kids Coalition fought to have this prohibition removed by law and succeeded. This will bring much-needed support for military families during dark and stressful times. 

Reimbursement for spouse licensure. According to MOAA's 2014 survey with Syracuse University's Institute for Veterans and Military Families, roughly half of military spouses indicate their career field requires some sort of licensing or certification. Military spouses typically must leave their jobs when they PCS, which takes a financial toll on their families. The burden increases when they must bear the costs of applying for a new license and take new exams to find employment in their new state. The conferees approved language that would permit the services to reimburse up to $500 of licensure costs incurred as a result a PCS. 

Impact Aid increases. Conferees approved a substantial increase to DoD Impact Aid, restoring supplemental Impact Aid to 2014 levels and doubling Impact Aid funding for schools with military-dependent children with severe disabilities.

Military survivors. A controversial provision in this year's bill extends funding for a benefit set to expire in May 2018. Conferees agreed to permanently extend the Special Survivor Indemnity Allowance (SSIA) and index future increases to COLA.

SSIA was created in 2008 to provide partial relief for military survivors affected by the “widow's tax,” a financial penalty where the military's Survivor Benefit Plan (SBP) suffers a dollar-for-dollar offset of the VA's Dependency and Indemnity Compensation (DIC). In many instances, a survivor's entire SBP might be wiped out from the tax. 

DoD estimates 67,000 survivors are affected by the tax.

MOAA has long advocated for full repeal of the widow's tax and was grateful when Congress established SSIA as an incremental step toward addressing the issue.

The provision's controversy is twofold: It fails to make continued progress on eliminating the offset, and lawmakers are funding this permanent extension using higher TRICARE pharmacy copayments. In essence, the broader group of TRICARE beneficiaries are being tasked to pay for this benefit.

Having said that, we have to give sincere thanks to House Armed Services Committee Chair Rep. Mac Thornberry (R-Texas) for his work on the issue and for ensuring the funds generated through the increased pharmacy copayments stay with beneficiaries in some measure. As noted above, the Senate charted those funds for readiness and health care. Making a permanent extension to the allowance relieves some of the anxiety military survivors have experienced during previous funding challenges and uncertainty.

When SSIA was established in 2008, some survivors balked at a $50 a month allowance, seeing it as a pittance. At $310 a month, SSIA now covers roughly 25 percent of what it will take to fully repeal the widow's tax.

“I consider this as achieving 25 percent of the total repeal, and that's real movement on something folks on Capitol Hill once said was impossible,” said MOAA's Vice President of Government Relations, Col. Dan Merry, USAF (Ret). “We're not in favor of the funding method but understand the Senate-proposed pharmacy copayment increases were destined to be approved. Thankfully, those funds are going straight to our survivors.” MOAA will continue to work with the Armed Services Committees to get the remaining 75 percent for full repeal.


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