SBP Fixes Nixed

House and Senate leaders drop SBP upgrades, allow modest progress in Defense bill on reserve health care and concurrent receipt for unemployables.

Congress finally finished the FY 2006 Defense Authorization Act just before Christmas but ended up leaving a lump of coal for thousands of military widows and “greatest generation” retirees. House leaders refused to go along with either of the Survivor Benefit Plan (SBP) fixes that Sen. Bill Nelson (D-Fla.) had persuaded the Senate to pass, primarily for cost reasons (combined, the programs would cost about $9 billion over Congress’ 10-year “scoring” period).

So 50,000 widows of members who died of service-related causes will continue to have VA survivor payments deducted from their SBP checks if the member’s death was deemed service-connected. And 250,000 greatest generation retirees who already have paid more than 30 years of SBP premiums will have to wait at least another year to win the same paid-up SBP coverage that post-1978 retirees enjoy.
 
It’s a bitter pill to swallow after this year’s strenuous efforts on these widows’ and retirees’ behalf. It’s cold comfort that we came closer than ever before — but it’s worth remembering that most of our major victories have required multiyear campaigns. MOAA plans to carry the fight on these issues again this year.

We made some modest gains on other key issues but fell well short of what we’d hoped for:

• Concurrent receipt: Congress agreed to accelerate the timetable (from Oct. 1, 2013, to Oct. 1, 2009) for eliminating the disability offset for disabled retirees designated “unemployable” by the VA, but rejected Sen. Harry Reid’s (D-Nev.) Senate-passed plan to enact it immediately.
   
• Reserve health care: Congress agreed to make nearly all drilling Guard and Reserve members eligible for military TRICARE coverage, but the price will be steep for those who haven’t been mobilized since Sept. 11. Unmobilized members who don’t have access to health care through a civilian employer will have to pay almost twice the monthly premiums paid by those who have been mobilized — about $145 versus $81 for single and $452 versus $253 for family coverage, respectively. TRICARE premiums for unmobilized members with access to employer-sponsored coverage will be set even higher, at $246 a month and $768 a month for single and family coverage. MOAA thinks these high fees undercut the purpose of the coverage, and the association will reengage on this front this year as well. In the meantime, Congress deserves credit for making some administrative improvements, such as allowing demobilizing members 90 days after separation to sign up, protecting periods of earned coverage for remobilized members, and extending six months of coverage to survivors if the member passes away.
   
  Want More Defense Bill Details?

  ■A more detailed summary of FY 2006 National Defense Authorization Act provisions appears on MOAA’s Web Base. Link up to learn more.
   
• Military pay raise: All active duty, Guard, and Reserve members will receive a 3.1 percent pay raise — one-half percentage point higher than private-sector pay growth.
   
• Reserve housing allowance: Guard and Reserve members mobilized for more than 30 days will be eligible for full locality-based housing allowances, rather than having to wait 140 days under current law.
   
• Military manpower changes: Army strength is increased by 10,000 and the Marines by 1,000.
   
• Active duty death benefits: The military death gratuity is increased to $100,000 for all deaths in the line of duty (not just the combat-related deaths covered in current law), including all deaths since Oct. 7, 2001. In addition, survivors of all members who died in the line of duty (rather than just combat deaths) since Oct. 7, 2001, will be eligible for the recent $150,000 increase in the maximum Servicemembers’ Group Life Insurance (SGLI).
   
• Commissary privatization protection: The new law bars any further studies of commissary privatization for the next three years.
   
• Combat pay during hospitalization: Servicemembers hospitalized with combat wounds will be eligible to receive a special pay of $430 a month for the duration of their hospitalization or until they start receiving the new SGLI traumatic injury benefits. This represents the combined total of various combat zone pays and allowances.
   
• Guard and Reserve pay differential: Mobilized Guard and Reserve members will be eligible to receive a monthly pay differential equal to their monthly civilian pay loss (up to $3,000 a month) once they have been on active duty for at least 18 months, for at least 24 of the last 60 months, or if remobilized involuntarily within six months of their last active duty tour. Few are expected to qualify because of other rules limiting active duty time.

Reps Soft on SBP

Many SBP cosponsors haven’t signed discharge petition.

The failure of Congress to adopt the Senate-passed SBP fixes last year prompted MOAA to focus on exactly why the House wouldn’t agree to address this grievous inequity.

Cosponsorship doesn’t mean much if legislators aren’t willing to back up their words of support with real legislative action. See page 36 for a list of representatives who have cosponsored SBP legislation but (as of Dec. 22) have declined to sign the discharge petition.
If your legislator is on the list, please contact his or her office and make it clear you expect follow-through on his or her stated cosponsorship. MOAA offers two ways to communicate that message (see box right).

Medicare, TRICARE Rates Frozen

Impact on participation by doctors remains to be seen.

MOAA pushed hard last year, with the American Medical Association, to get Congress to change the law requiring a 4.4 percent reduction in Medicare and TRICARE payments to doctors, effective Jan. 1, 2006. We worried that such payment cuts would discourage more doctors from seeing TRICARE and TRICARE For Life patients. All acknowledge the statutory payment formula is broken, but Congress also balks at the cost of payment increases.

Congress’s compromise budget savings package (S. 1932) — approved in mid-December — struck a “half-a-loaf” deal.

It repealed the 4.4 percent payment cut but froze 2006 Medicare and TRICARE payments at 2005 levels. That’s better than the scheduled cut, but it still amounts to a modest rate reduction, as physicians’ costs rise every year.

On the positive side, the budget package requires a Medicare Payment Advisory Commission to report to Congress on ways to fix the statutory payment-setting formula, which sets reimbursement rates for physicians. MOAA thinks it’s vital to make that fix as soon as humanly possible. TRICARE and Medicare already are two of the lowest-paying programs in the country. We must do better than a rate freeze to keep providers interested in
accepting military patients.
 
The budget package also updated provisions of the Medicare Modernization Act of 2003 that will effectively raise Medicare Part B premiums for Medicare-eligibles with annual incomes over $80,000, starting in 2007. Currently, Part B premiums are set to cover 25 percent of the government’s total cost per individual to provide Medicare benefits. Under the new law, some higher-income beneficiaries will see their Part B premiums doubled or tripled by 2009, as their premiums will be raised to cover a higher share of the government’s total cost, as follows:

• Under $80,000: 25 percent (no change from current law)
• $80,001 to $100,000: 35 percent
• $100,001 to $150,000: 50 percent
• $150,001 to $200,000: 65 percent
• Over $200,000: 80 percent

Under the 2003 law, those premium increases were to be phased in over five years. The new change shortens the phase-in period to three years, with 30 percent of the increase coming in 2007, 67 percent coming in 2008, and the full increase in 2009. MOAA remains as concerned today as we were two years ago about this plan to means-test what was enacted to be a universal health insurance plan for all older Americans.

Two other provisions of the budget package also may be of interest to MOAA members:

• Cap on physical therapy payments: The new package would implement a $1,740 annual cap on Medicare payments for physical therapy but directs Medicare to implement a process allowing an exception from the cap if therapy is deemed medically necessary.
   
• Long term care coverage under Medicaid: The package tightens rules concerning transfer of assets to qualify for long term care, and applicants will be required to disclose annuities as assets. People with more than $500,000 equity in a home will not be eligible.

MOAA Protests Fee Hikes

Raising retiree, Guard, Reserve health fees sends wrong message.

s this issue was going to press, MOAA learned that Defense leaders plan to propose substantial health cost increases for hundreds of thousands of retirees as of Oct. 1, 2006.

The new plan envisions establishing an enrollment fee for TRICARE Standard, which has none at present. It also would double the TRICARE deductible and more than triple the TRICARE Prime enrollment fee over the next three years, and then increase all of these fees annually by the rate of inflation. Retired officers would be charged about one-third more than enlisted members.
 
At this point, it appears Medicare-eligibles would be exempt from most increases. It’s not yet known whether the plan would apply to survivors as well, but that would appear likely. (See chart, this page, for specifics of the plan, as related to MOAA by multiple sources.)

In December, DoD also announced an 8.5 percent 2006 premium increase for TRICARE Reserve Select (TRS), the new health care option for drilling members of the Guard and Reserve. This increase — imposed only a few months into the new plan — is almost triple the troops’ 2006 pay raise (3.1 percent). Monthly premiums rose from $75 to $81 for singles and $233 to $253 for families.

Guard and Reserve members are already laying their lives on the line and disrupting their families for years at a time. This program was supposed to be a recruiting and retention incentive, but we’re going to price the troops out of the market with these kinds of annual increases.

MOAA and The Military Coalition have sent letters to all House and Senate Armed Services committee members protesting the retiree and reserve fee hikes.

The fundamental issue is that military medical and retirement programs need to be substantially better than civilian programs. They are an essential offset to the extraordinary demands and sacrifices inherent in a military career — sacrifices that civilians don’t have to deal with and wouldn’t put up with. Jacking up health care costs for military retirees to follow corporate trends misses the whole point of why we have a unique military health care plan.

Guard, Reserve, and retired families already gave to their country through careers of personal sacrifice. If we’re at all concerned about future recruiting, retention, and readiness, we’d best not forget that.

A country that can afford billions for pork every year can afford the cost of health coverage for servicemembers and their families who spent decades sacrificing their own freedoms to protect freedom for the rest of America.

Pretax Health Payments: Why Not?

MOAA pushes equal treatment for military.

For more than a year, MOAA has pushed for legislation that would allow pretax payment of health care premiums by active duty, reserve, and retired military members. Rising health care costs affect all federal employees, civilian or uniformed, active or retired, and this proposal is essential to ensure all are provided the same benefit.

The two key bills in the 109th Congress on the issue are H.R. 994, sponsored by Rep. Tom Davis (R-Va.), and S. 484, sponsored by Sen. John Warner (R-Va.).

Both bills would amend the law to allow retired federal civilian and military beneficiaries to pay health insurance premiums on a pretax basis and to allow a deduction for TRICARE supplemental premiums. Currently, active federal workers and private-sector employees can pay their health insurance premiums with pretax dollars, but military members and retirees can’t.

In November, MOAA testified in support of the bill before the House Ways and Means subcommittee hearing. MOAA pointed out that many military beneficiaries pay premiums for TRICARE supplements, the active duty dental plan or TRICARE Retiree Dental Plan (TRDP), long-term care insurance, or TRICARE Prime enrollment fees, but they can’t do so on a pretax basis.

Private sector and federal workers already enjoy tax exemptions for such expenses.

Some legislators are concerned that the proposed pretax treatment of health care premiums would extend benefits to military and federal civilian retirees, but not to other retirees. MOAA thinks the federal government should set the standard as a model employer. Providing this benefit to military and federal retirees is a reasonable step in recognition of their careers of service to their country, which may ultimately lead to providing this benefit to all retirees.

Media Myopia

Reserve health care critics just don’t get it.

In a Dec. 6 article entitled “The Benefits Explosion,” Wall Street Journal columnist Brendan Miniter got MOAA’s dander up claiming that the country can’t afford reserve health coverage and that the government already has given Guard and Reserve troops all they deserve.

MOAA President Vice Adm. Norb Ryan Jr., USN-Ret., fired off a response citing another Journal column (“They Are All So Wrong,” by Mark Halperin, Sept. 9) that showed the current defense budget, at the height of the war on terrorism, represents “only 3.2 percent of the gross domestic product, as opposed to the average of 5.7 percent of GNP in the peacetime years between 1940 and 2000.”

Ryan pointed out that servicemembers and families are “paying premiums of sacrifice that far exceed what any civilian will ever pay” and that the government provides health coverage for part-time civilian employees.

“We need to keep our priorities straight here,” Ryan said. “No Americans deserve health coverage more, and no country was ever more able to afford that coverage than the United States of America.”