MOAA Legislative Update: Obama Concurrent Receipt Plan Details

May 15, 2009

The Desensitization of Memorial Day and Military Appreciation Month

May 8 was Military Spouse Appreciation Day, May is Military Appreciation Month, and May 25th is Memorial Day.

Especially in this period of protracted war, the military and veterans communities appreciate such expressions of public support and empathy. But words are cheap and the budget is tightening.

MOAA Government Relations Director Steve Strobridge’s May “As I See It” column ponders whether the selfless perseverance of today’s military members and families through almost a decade of war has actually desensitized the public and our leaders to their terrible and continuing burden of sacrifice.

May - As I See It

Obama Concurrent Receipt Plan Details

More details surfaced this week on the Administration’s proposal to expand concurrent receipt to service members who were medically retired, sometimes referred to as Chapter 61 retirees.

Under the Administration’s Omnibus proposal, all Chapter 61 retirees will become eligible for Concurrent Retirement and Disability Pay (CRDP) over a five-year period starting in January 2010. The expansion will come in two phases.

The first three years of the five year phase-in opens CRDP eligibility to the more severely disabled Chapter 61 retirees with less than 20 years of service. 

• On January 1, 2010, Chapter 61 retirees with less than 20 years of service and a VA rating of either 90% or 100% become eligible. 
  
• On January 1, 2011, Chapter 61 retirees with less than 20 years of service and a VA rating of either 70% or 80% become eligible. 
  
•  On January 1, 2012, Chapter 61 retirees with less than 20 years of service and a VA rating of either 50% or 60% become eligible.

The remaining two years of this phase-in extends CRDP to Chapter 61 retirees, regardless of years of service, with a VA rating of less than 50%. 

• On January 1, 2013, all Chapter 61 retirees with a VA rating of either 30% or 40% will become eligible. 
  
•  On January 1, 2014, all Chapter 61 retirees with any VA rating become eligible.

Once this plan is completed, the only disabled retirees ineligible for CRDP will be non-medical retirees with 40% or lower VA disability ratings. The 10-year cost of the expansion is estimated to be $5.8 billion.

This new initiative represents a 180-degree turnabout from the positions of all previous Administrations, Republican or Democratic.

Our hope is that this signals a potential willingness to go ‘the final mile” in the future to cover all disabled retirees.

COLA Creep

The Bureau of Labor Statistics announced this morning that inflation rose 0.3% in April.

That wasn’t enough to make much difference in the year-to-date number, which is still 3.5% in the hole for the first seven months of FY2009. So it’s looking more and more with each passing month that retirees won’t see any COLA for 2010. Check out the month-by-month COLA trend lines for the past three years and judge for yourself.

Energy prices are climbing again, so we can’t rule out a late-year inflation surge. But that wouldn’t be good news either.

Military Homeowner Assistance Plan Released

This week, the Pentagon announced the much-anticipated Homeowner Assistance Program (HAP) expansion guidance to provide financial relief for military and federal civilians, wounded warriors, and certain survivors who are relocating and facing significant financial losses in selling their homes.

The HAP has been temporarily expanded to assist these homeowners relocating on federal orders during the major downturn in the housing market. Earlier this year, Congress included $555 million in the economic stimulus package to provide eligible military and DoD civilians with partial reimbursement for losses on the sale of their primary residence.

Under the new expansion rules, the HAP will provide benefits in the following priority order: 

• Wounded service members relocating for treatment or medical retirement, and for the survivors of those who have died while on deployment 
•  Military and DoD civilians affected by the 2005 base reduction and closure (BRAC) round (under a special temporary exemption, there’s no requirement to demonstrate that BRAC caused the local housing market decline) 
•  Military and DoD civilians who suffer home losses as a result of permanent change of station (PCS) moves, on a temporary basis

To assist as many people as possible, eligibility includes retroactivity for PCS moves from July, 1, 2006 through December, 31, 2009, and longer for wounded warriors/surviving spouses and personnel affected by BRAC.

Due to the $555 million funding limitation, not all of the priority categories will be reimbursed at the same rate. Losses for members who privately sell their homes will be reimbursed at 95% of prior fair market value for wounded warriors and surviving spouses, while members on normal PCS moves will be reimbursed at 90%. The prior fair market value will be the original purchase price of the home, as HAP payments aren’t intended to protect home appreciation value.

Another HAP option allows the government to purchase the home if the eligible member can’t sell it. But reimbursement rates under that option are lower (90% of original price for wounded warriors/civilians and survivors, and 75% for PCS moves) to incentivize individual sales and minimize the need for much more costly government acquisition.

SecDef Defends “Reform” Budget

Secretary of Defense Robert Gates and Joint Chiefs of Staff Chairman ADM Mike Mullen, USN, discussed the Pentagon’s $533.8 billion dollar defense budget submission before the House Armed Services Committee this week.

Gates described it as a “reform budget,” emphasizing its intent to reorient the department’s strategic position, specifically in acquisition and procurement reform.

Mullen said it represents a “strategy as much as a budget” and that it included two-way input from all the service chiefs. He said Pentagon’s top priority is taking care of military people and their families.

Committee Chairman Ike Skelton (D-MO) applauded the plan as a “bold product” that remains “focused on our most critical component of our national security – our people.” Skelton specifically praised the budget for fully funding the defense health program, without TRICARE fees increases.

But the majority of the hearing focused on proposals to cut various weapon systems, which drew sharp questions from some legislators. Ranking member John McHugh (R-NY) dubbed the budget an “internal strategy,” complaining that Pentagon failed to provide Congress any visibility into the analysis behind the budget’s significant weapons cuts and delays.

McHugh expressed concern about a “gag order” levied on key personnel surrounding the budget. Gates defended his restriction on release of information on the internal deliberations of the department, saying “the building leaks like a sieve.” He said he wanted to ensure a coherent look at all aspects of the defense budget without leaks before the proposal was made public.

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