July 6, 2012

2013 TRICARE Prime Fees. The Pentagon has announced the new fee schedules for FY2013, including some beneficiary categories who will be exempt from the increase.
TRICARE West Contract Decided. The GAO has issued a ruling that appears to end the three-year battle over which contractor will administer the new TRICARE contract for the 21-state TRICARE West Region.
“Stolen Valor” Legislation Revisited. The Supreme Court has ruled that it’s not illegal for people to lie about receipt of military decorations, but new legislation would take another angle to go after such miscreants.
MOAA vs. QRMC on SBP. Here’s MOAA’s take on what’s right and what’s wrong about the recommendations of the 11th Quadrennial Review of Military Compensation concerning survivor benefits.

2013 TRICARE Prime Fees
This week, the Department of Defense announced how much TRICARE Prime enrollees will pay in enrollment fees for FY2013.

The fees for the new year were limited by a MOAA-championed provision in the FY2012 Defense Authorization Act that capped annual Prime fee adjustments at the retired pay COLA percentage. The new law limited the Prime fee hike for next year to 3.6% – the same rate as the 2012 COLA.

The new fees for retirees, survivors and family members under 65 will be as follows, effective October 1, 2012:
 

All Prime enrollees paying fees (active duty enrollees pay no fee) will pay the FY 2013 rates EXCEPT that the following categories will be kept at the same rate they paid in FY2012:

- Survivors of members who died on active duty
- Retirees who received a medical (chapter 61) retirement from their parent service

The exceptions apply only to the listed beneficiaries who were already paying fees before Oct 1, 2012.

Beneficiaries in these categories who enroll in Prime for the first time after September 30, 2012 will pay the new FY 2013 rate, and then their fees will be frozen at that rate for future years.

These exceptions are not specified in the law, but are being made as a matter of DoD policy.

MOAA already has pointed out the inequity of excluding from the rate freeze other categories of survivors and disabled retirees whose circumstances may be equally deserving of rate protection.
 

TRICARE West Contract Decided
The Government Accountability Office (GAO) has upheld the Defense Department’s award of the new contract for the TRICARE West region to UnitedHealthcare, effectively ending a three-year appeal process.

The new contract originally was awarded in 2009 to TriWest Healthcare Alliance, which has managed the West region contract for more than a decade. However, the contract was re-bid after United Healthcare successfully protested that award.

In March 2012, Defense officials announced that United Healthcare had won the re-bid – which prompted a new appeal by TriWest.

TriWest leaders are mulling possible further legal options. But this week’s GAO ruling means work will proceed immediately to plan the transition from TriWest to United, with the actual contract changeover scheduled for April 1, 2013.

The details regarding GAO’s decision to deny TriWest’s protest have not yet been publicly released.

The TRICARE West region covers 2.9 million beneficiaries residing in 21 states – including active duty personnel, retirees, survivors and family members under age 65.

MOAA will be monitoring the transition closely.
 

“Stolen Valor” Legislation Revisited
Last week, the U.S. Supreme Court struck down the Stolen Valor Act, which had made it illegal to lie about receiving military awards and decorations. While such lies are reprehensible, the court ruled, they are protected speech under the Constitution, and cannot be made illegal.

In response, Representative Joe Heck (R-NV) has offered his proposed legislation (H.R. 1775) that would make it a crime for a person to profit by misrepresenting his or her military service or eligibility for military awards or decorations.

By barring any profit from such misrepresentation rather than criminalizing the false statement itself, H.R. 1775 would avoid the first amendment problems cited in the U.S. Supreme Court decision on this topic.

MOAA President VADM Norb Ryan (USN-Ret) has signed a letter of support for H.R. 1775, expressing MOAA’s belief that it strikes the proper balance between preventing unscrupulous gain from false statements while protecting the individual freedoms that generations of uniformed servicemembers have fought to preserve.
 

MOAA vs. QRMC on SBP
The 11th Quadrennial Review of Military Compensation (QRMC) has recommended that the Pentagon end its opposition to allowing any deduction of VA survivor benefits from military Survivor Benefit Plan (SBP) annuities.

That’s the good news.

Under current law, when an active duty or retired servicemember dies of a service-caused condition, the surviving spouse receives about $1,200 a month in Dependency and Indemnity Compensation (DIC) from the VA. If the survivor also qualifies for SBP, the DIC amount in most cases is deducted from SBP.

For years, MOAA has fought to eliminate that offset, while Pentagon leaders have opposed that effort.

The QRMC logic for changing that position is that retirees paid premiums for SBP coverage, and it’s not right to just cancel most or all of the coverage and refund the premiums (without interest) if the survivor also qualifies for DIC.

The QRMC report acknowledges that SBP is heavily subsidized by the government.

But since retiree premiums cover about 50% of SBP annuity payouts overall, the QRMC report recommends that SBP widows affected by the DIC offset should be allowed to keep 50% of their SBP annuity in addition to DIC. That is, they should get to keep the half that retiree premiums paid for.

The QRMC proposal would apply that rule for all SBP-DIC survivors, including those whose sponsors died on active duty and never had a chance to pay any premiums.

MOAA appreciates the QRMC’s effort to make an objective assessment and its acknowledgement that the current offset is inequitable.

But we believe its proposal to “divide the SBP baby” misses the point.

First, there are some categories of survivors who already have been exempted from the offset. Surviving spouses of members who died on active duty after 9/11 can avoid the offset by transferring the SBP annuity to their children.

Second, a court decision several years ago ruled that SBP-DIC survivors who remarry after age 57 can retain both SBP and DIC.

So current law is a hodge-podge of conflicting provisions that belie almost any single rationalization, and the most recent changes have been aimed at eliminating the offset for selected categories of survivors.

MOAA believes the answer is to recognize the reality that SBP is, by-and-large, a member-purchased annuity intended to replace 55% of earned retired pay in the event of the member’s death (for any reason).

Any caveat that members who died on active duty didn’t pay premiums ignores the obvious – they paid the highest premium of all.

Similarly, any argument that survivors should only get the portion of the benefit that retiree premiums funded would subvert the whole intent of SBP, which was expressly designed as a government-subsidized program to incentivize participation and maximize survivor protection. By enacting SBP, Congress acknowledged that the previous, unsubsidized survivor annuity program was inadequate.

In contrast, VA Dependency and Indemnity Compensation is a separate plan whose intent is to compensate survivors when uniformed service causes the member’s death. That’s what “indemnity” means.

The law already recognizes that distinction by allowing some survivors to keep both payments.

The route to consistency is to extend that logic to all SBP-DIC survivors, rather than applying tortured math to create a new class of “half-SBP-eligibles.”