Legislation | SBP, Concurrent Receipt improvements become law.

President Signs Defense Act

On Oct. 28, President George W. Bush signed the FY 2005 Defense Authorization Act into law. This was good news, not only for a DoD at war that needs to get on with business, but also for hundreds of thousands of active duty, Guard, Reserve, and retired members and their families and survivors, who stand to benefit from the provisions of the new law.

The timing was a pleasant surprise, as most Washington insiders had thought the difficulty of negotiating multiple contentious provisions would delay final action until the lame-duck session after the election.

A quick-reference chart listing selected provisions of the Defense Authorization Act is on pages 20 and 21. The following summary offers additional details.

Retiree/Survivor Issues:

• raises the minimum Survivor Benefit Plan (SBP) annuity for survivors age 62 and older to 40 percent of covered retired pay as of Oct. 1, 2005; to 45 percent of covered retired pay April 1, 2006; to 50 percent April 1, 2007; and to 55 percent April 1, 2008;
• provides full concurrent receipt payments to otherwise qualifying retirees rated as 100-percent disabled by the VA, as of Jan. 1, 2005 (see “100-Percent Disabled Fix Excludes Unemployables,” page 24);
• authorizes permanent military id cards for spouses and survivors age 75 and older (see “Some to Get Permanent id Cards,” below);
• maintains increased coverage levels for current retirees already paying supplemental SBP premiums but allows these retirees to stop paying extra premiums for the supplemental SBP coverage, as of November 2004;
• allows retirees not enrolled in SBP to participate in a one-year open-enrollment period starting Oct. 1, 2005, provided they make a lump-sum payment covering all back premiums since retirement, plus interest; and
• directs the secretary of defense to carry out a study of whether recalled retired officers should be considered eligible for promotion.

Active Duty Issues:

• authorizes a 3.5 percent pay raise for all servicemembers (including Guard and Reserve) as of Jan. 1, 2005;
• raises the Basic Allowance for Housing to cover 100 percent of the median cost of housing for each grade and location;
• increases Army end strength by 20,000 and Marine Corps by 3,000 for FY 2005, with additional increases authorized in future years;
• removes the funding cap on military housing privatization programs to allow continued military/civilian housing improvement partnerships in FY 2005;
• permanently authorizes 180 days of TRICARE coverage for members and families following separation from active duty (including demobilized Guard and Reserve) and requires a separation physical before leaving active duty;
• specifies the commissary benefit in law and clarifies that the purpose of the commissary and exchange programs is to enhance quality of life for military members, retirees, and family members and to support military readiness, recruiting, and retention; authorizes consideration of reserve members’ quality of life in any assessment of whether to close a commissary;
• authorizes the secretary of defense to commission all new officers as Regular officers and transition all officers now on active duty to Regular status;
• prohibits making servicemembers pay subsistence charges while hospitalized; and
• permanently increases the Family Separation Allowance to $250 a month (versus $100) and Imminent Danger/Hostile Fire Pay to $225 a month (versus $150).

Guard/Reserve Issues:

• authorizes premium-based TRICARE eligibility for Selected Reserve members mobilized for 90 days or more since Sept. 11, 2001, who agree to continue in the Selected Reserve. Qualifying members and their families receive one year of coverage eligibility for each 90 days served on active duty since Sept. 11. Premiums (suspended during a period of mobilization) will be set at 28 percent of the cost of single or family coverage, as applicable; and
• authorizes up to 37,000 reservists to serve on active duty for up to three years before counting against active duty force ceilings.

All in all, MOAA is pleased with the defense bill’s provisions. While there were some disappointments, completing the Defense Authorization Act involves complex negotiation of thousands of issues. As House leaders reminded us earlier this year, “Politics is the art of the possible.”

MOAA is grateful to the armed services committee leaders, members, and staff members for their months of hard work bringing this important legislation to fruition. We’re especially grateful to Rep. Jeff Miller (R-Fla.) and Sen. Mary Landrieu (D-La.), Sen. Harry Reid (D-Nev.), and Sens. Tom Daschle (D-S.D.) and Lindsey Graham (R-S.C.) for their work on SBP, concurrent receipt, and reserve health care provisions, respectively.

We owe particular thanks to the many thousands of MOAA members and others who wrote, called, and e-mailed their senators and representatives in support of these and other issues this year. The importance of your role in winning these positive changes for millions of members of the military community cannot be overstated.

FY 2005 Defense Authorization Act Provisions

Non-Health Care Issues:

Health Care Issues:

Health Care | Change will avoid inadvertent TFL interruption.

Some to Get Permanent ID Cards

As part of the Defense Authorization Act, Congress adopted MOAA’s suggestion to ease the burden of id card renewal for older spouses and survivors. Beginning in 2005, retiree spouses and survivors age 75 and older will be able to obtain permanent id cards.

Military retirees already receive id cards with no expiration date. But until now, all dependents and survivors have had to appear in person to renew their id cards every four years — or navigate a burdensome renewal-by-mail process.

In the past, many Medicare-eligible family members simply let their id cards expire rather than put up with renewal hassles. But since enactment of TRICARE For Life and TRICARE Senior Pharmacy coverage several years ago, older family members now face suspension of these benefits if they inadvertently let their id cards expire.

MOAA thought this was too big a penalty and asked Congress earlier this year to authorize permanent id cards for all spouses and survivors age 65 and older. The intent is not only to avoid inadvertent loss of benefits, but also to ease the burdens on thousands of older beneficiaries for whom traveling or dealing with complex renewal-by-mail requirements poses a significant problem.

The House agreed, but delayed eligibility to age 70. The Senate put no similar provision in its defense bill. In the end, the House-Senate conference committee kept the initiative in the final bill, but further delayed the age threshold to 75.

While we would have preferred permanent id cards for all Medicare-eligible beneficiaries, we’re pleased that this new law will at least ease this administrative burden for our oldest beneficiaries who need it most.

MOAA will report implementation details as soon as they become available.

Retired Pay | Cost concerns forced restriction during Senate floor action.

100-Percent Disabled Fix Excludes Unemployables

The FY 2005 Defense Authorization Act authorizes full concurrent receipt of retired pay and veterans’ disability compensation for the 14,000 retirees with 100-percent VA (non-combat) disability ratings, as of January 2005. That means they’ll be exempted from the 10-year phase-in schedule that will gradually restore full retired pay for other retirees with non-combat-related disabilities rated at 50 percent or higher.

Unfortunately, MOAA learned that approximately 30,000 retirees being paid at the 100-percent disability rate because the VA rated them as “unemployable” won’t be covered by the new change but will remain under the 10-year phase-in schedule. (The “10-year” description is somewhat misleading, because the phase-in schedule is relatively front-loaded. Retirees with 50 percent and higher disabilities will get 96 percent of their retired pay back within the next five years.)

MOAA and others have fought hard to win equal treatment for all disabled retirees paid at the 100-percent rate, and we’ve received many inquiries from understandably upset members in this category, asking how they were excluded from the change.

Here’s the story as we understand it:

Sen. Harry Reid (D-Nev.) authored the Senate amendment proposing immediate payments for totally disabled retirees, which included the unemployables with the 100-percent disability ratings. However, during consideration on the Senate floor, it was made clear to him that the cost of his amendment would prevent it from gaining the necessary leadership support to win passage and that the cost would have to be reduced if he hoped to win Senate approval.

Rather than face losing the whole initiative, Reid was forced to accept a modification restricting it to cover members specifically rated as 100-percent disabled and excluding all with lower ratings, including those designated as unemployable.

MOAA and other associations learned of the change only after the Senate already had passed it. Although we’re unhappy with the exclusion, we won’t criticize Reid for being forced into a compromise we know he didn’t want to make. We’ve learned the hard way over many years that the secret to success is to keep making progress every year and not just go down swinging.

Congress now has established a precedent for immediate payment of the severely disabled and we will seek to build on that precedent next year, especially including the unemployables.

We also can’t forget that thousands of other disabled retirees still are left out of the concurrent receipt solution entirely, to include those who were medically retired with less than 20 years of service. These disabled retirees — many of whom were combat-injured — forfeit their medical retired pay for VA disability compensation.

MOAA will be working with Reid, Rep. Mike Bilirakis (R-Fla.), and other military and veterans’ associations to develop and pursue new concurrent receipt legislation in the 109th Congress.

Guard/Reserve | Amendment would help Guard and Reserve employers.

Landrieu Seeks Reserve Tax Credits

For years, MOAA and The Military Coalition have urged Congress to provide tax relief to employers of National Guard and Reserve members to recognize employers’ support of reserve force volunteers who increasingly are called up to support operational missions. Now, Sen. Mary Landrieu (D-La.), the Survivor Benefit Plan champion, again has shown extraordinary leadership in pressing skeptical colleagues to award tax credits to employers who continue paying mobilized employees the difference between their military and civilian salaries.

The Landrieu proposal would give employers a 50-percent tax credit on the salaries paid to employees during activations. In addition, it would permit small businesses a $6,000 tax credit for hiring a temporary worker to replace a mobilized employee. Small manufacturers would receive a credit of up to $10,000 to help find an interim replacement.

The GAO recently reported that more than 40 percent of mobilized Guard and Reserve personnel take a pay cut from their primary civilian jobs. Many employers voluntarily make up this “pay gap.”

Outraged that the Senate didn’t include her provision in its omnibus tax-relief bill, Landrieu waged a passionate floor fight to convince her fellow senators to reconsider. “If we can give a tax break to companies that import ceiling fans from China,” she said, “we can certainly give a break to the patriotic employers who are going the extra mile to support their employees who are volunteering to lay their lives on the line for every one of us.” Ultimately, the Senate agreed to attach her provision to another reserve-related bill, passed it, and sent it to the House for possible action in the lame-duck session.

Although the outlook for action remained uncertain at press time, MOAA thanks Landrieu and her hardworking staff for fighting to keep this issue alive, and we pledge MOAA’s support for its passage.

Guard/Reserve | Changes include MOAA-recommended fixes.

Reemployment Rights Rules Updated

Responding to concerns about the rising number of reemployment rights claims from returning Guard and Reserve combat veterans, the Department of Labor’s Veterans Employment and Training Service has published new rules to explain the Uniformed Services Employment and Reemployment Rights Act (USERRA).

USERRA protects the rights of workers who leave their civilian jobs for military service and bars employers from discriminating against them because of their military service or obligations. The law protects both voluntary and involuntary military service. Under the proposed regulations, employers would be required to restore the pay, seniority rights, and other benefits as if the reservist employees had never left the workplace for military duty.

The new rules are presented in a user-friendly, plain-language style in a question-and-answer format. The introduction section cites several important case law examples to help users interpret how the law is to be applied.

MOAA testified in July on USERRA and urged prompt publication of implementing regulations as a resource for reservists and employers alike. We noted that the employment environment has changed even since the first Gulf War, and returning Guard and Reserve veterans need proper information and support to protect their reemployment rights.

General reemployment rights information and support services for National Guard and Reserve servicemembers and their employers are available on the Employer Support section of the Guard and Reserve Web site at www.esgr.org.

The new reemployment rights rules can be accessed via MOAA’s Web Base, www.MOAA.org/legislative/reserve/.

Retired Pay | Plaintiff’s attorneys plan appeal to higher court.

Judge Dismisses USFSPA Lawsuit

Judge James C. Cacheris, a U.S. Federal District Court judge in Alexandria, Va., has dismissed the lawsuit brought by the Uniformed Services Former Spouse Protection Act (USFSPA) Legal Support Group (ULSG) against the secretary of defense.

ULSG filed the suit on behalf of 58 servicemembers and retirees alleging that the law requiring division of military retired pay with a former spouse violates constitutional due process and equal protection rights. Lawyers for the secretary of defense filed a motion to dismiss the lawsuit, and the court held a hearing on that motion Sept. 10. At that time, Cacheris heard DoD’s arguments to dismiss the lawsuit and opposing arguments from ULSG lawyers. He acknowledged there was “a lot of public interest in this issue” and said he would need some time to consider a decision.

On Oct. 14, 2004, Cacheris rendered his decision, dismissing the lawsuit. He ruled that the lawsuit belongs in state courts because federal courts (with the exception of the Supreme Court) do not have subject matter jurisdiction over the case. In other words, the judge held that plaintiffs are required to sue states individually because divorce law is a state-level issue. He also ruled that ULSG failed to show that it had the “standing” required to file this lawsuit.

ULSG plans to appeal this ruling to the U.S. Circuit Court of Appeals in Richmond, Va. You can read more about the USFSPA, including the judge’s written decision, on MOAA’s Web Base at www.MOAA.org/legislative/USFSPA.