Survivor Benefits  |  Rep. Jeff Miller (R-Fla.) corrals a late-night victory.

House OKs Key SBP Fix

In a late-night, mid-May session drafting the FY 2005 Defense Authorization Bill, the House Armed Services Committee approved Rep. Jeff Miller’s (R-Fla.) Survivor Benefit Plan (SBP) amendment to phase out the age-62 SBP annuity reduction over 31/2 years.

Previously, the Total Force Subcommittee had proposed phasing out the age-62 benefit reduction over 10 years, with the first benefit improvement delayed until 2009. At the time, subcommittee Chairman John McHugh (R-N.Y.) expressed his strong support for the SBP fix, but the subcommittee had not been given the budget “headroom” for a faster timetable.

In a remarkable turn of events as the full armed services committee considered the defense bill (H.R. 4200), Miller persuaded the committee to accept a new amendment that would phase out the age-62 benefit reduction in 31/2 years, with the first upgrade coming Oct. 1, 2005. The turning point came when the committee discovered that a procurement change in another part of the bill created enough technical budget headroom to allow an accelerated SBP fix.

Miller, who has built large bipartisan co-sponsorship lists for his two SBP bills (H.R. 548 and H.R. 3763), has lobbied House leadership and armed services and budget committee members for months, pressing the need for substantive action on SBP this year. The May subcommittee markup was the first indication that his efforts were bearing fruit, and his subsequent discussions with armed services committee Chairman Duncan Hunter (R-Calif.) led to a leadership breakthrough.

Their negotiations produced an implementation schedule that is more accelerated than either of Miller’s two existing bills (both of which call for five-year and 10-year phasing, respectively). Under the committee-approved bill, the minimum SBP annuity for survivors age 62 and older would increase from 35 percent of covered retired pay on the following schedule:

• 40 percent on Oct. 1, 2005;
• 45 percent on April 1, 2006;
• 50 percent on April 1, 2007; and
• 55 percent on April 1, 2008.

The proposal also would authorize a one-year open season to let currently non-participating retirees enroll in the upgraded SBP, with a modest premium penalty proportional to the length of time they have been retired. The open season would not begin until Oct. 1, 2005, to allow DoD time to prepare an application form, develop premium tables, build a publicity plan, disseminate guidance to the services and finance center, and get information to retirees.

After the armed services committee’s approval of the SBP amendment and a host of other initiatives (see below), the full House approved the defense bill by a 391–34 vote.

The committee’s action is a huge step forward in our fight to win an SBP fix this year. MOAA members owe a deep debt of gratitude to Miller’s outstanding efforts as a true SBP champion, as well as to Hunter, McHugh, and all of the leaders and members of the armed services committee for taking this aggressive step to right a long-standing wrong for military widows.

Legislation |  Guard and Reserve gains are among significant improvements.

More Defense Bill Initiatives Coming

Action on the Senate version of the FY 2005 Defense Authorization Bill (S. 2400) still was pending at press time, but the Senate Armed Services Committee had completed its initial draft.

Significant initiatives common to both the House and Senate bills include:

• a 3.5 percent across-the-board basic pay raise for active duty, Guard, and Reserve members;
• permanent authority to provide TRICARE eligibility up to 90 days before mobilization for Guard and Reserve families and up to 180 days of transition coverage after demobilizing or separating from active duty;
• initiatives to authorize TRICARE eligibility for Selected Reserve members and families who have no employer-sponsored health care, with payment of an annual enrollment fee;
• additional protections against imposition of excess health care charges for families of mobilized Guard and Reserve members; and
• permanent increases in Imminent Danger Pay and Family Separation Allowance to $225 and $250 a month, respectively.

In addition, each version of the bill contained a number of unique initiatives. Selected elements of the two bills are summarized in the charts on pages 22 and 23.

Legislation |  Administration opposes SBP but does not threaten veto.

OMB Critiques Defense Bill

In response to the House’s passage of H.R. 4200, the Office of Management and Budget (OMB) issued a Statement of Administration Policy clarifying the executive branch position on a number of the issues addressed. In the statement, the White House expressed disagreement with a number of provisions in the defense bill, among them:

• the elimination of the Survivor Benefit Plan (SBP) “widows tax”;
• the planned end-strength increases that will add 30,000 troops to the Army and 9,000 to the Marine Corps in the next three years; and
• Guard and Reserve provisions that would make certain active duty bonuses available to reservists and require DoD to pay a civilian income differential for reservists mobilized involuntarily.

The Bush administration reserved its ardent opposition for the House proposal to delay the next Base Realignment and Closure (BRAC) from 2005 until 2007. The statement said the secretary of defense will recommend a presidential veto if the final defense bill includes the BRAC delay. No such threat was made about the SBP fix.

The relatively mild expression of opposition to SBP is good news. During the battle over concurrent receipt last year, a White House veto threat led to drawn-out negotiations, until Republican leaders could convince the administration to accept a partial concurrent receipt initiative. Without a veto threat on SBP, we have a good chance of avoiding a prolonged debate this fall.

Health Care |  DoD plans phased-in health benefit.

Reserve TRICARE Plan Announced

At a May meeting with MOAA and other military association representatives, TRICARE officials announced the start of a congressionally directed program to offer cost-share access to TRICARE benefits to National Guard and Reserve members who lack access to health coverage through a civilian employer. Previously, officials had announced expanded TRICARE coverage for Guard and Reserve families immediately before and after mobilization periods. The pilot program for uninsured reservists would permit TRICARE enrollment for these citizen-soldiers when they are not on active duty.

Under the program authorized by Congress last year, qualifying Guard and Reserve members will be able to sign up to purchase TRICARE eligibility 90 days after the new TRICARE Managed Care Support Contracts begin. The contracts are being phased in over the next year by geographic region, so Guard and Reserve eligibility will begin on the schedule below for each region:

• Region 11 (Oregon, Washington, and parts of Idaho): Sept. 1
• Regions 2, 5, 9, 10, and 12 (Alaska, Hawaii, the Mid-Atlantic, and the Midwest east of Mississippi): Oct. 1
• Regions 3 and 4 (the Southeast, Gulf South, Tennessee, and southeast Louisiana.): Nov. 1
• Region 1 (Northeast, northern Virginia.): Dec. 1
• Regions 7 and 8 (remaining Midwest, Plains, Southwest, and west Texas): Jan. 1, 2005
• Region 6 (Texas, Oklahoma, Arkansas, and western Louisiana): Feb. 1, 2005

Meanwhile, the House-passed version of the FY 2005 Defense Authorization Bill extends the new pilot program for uninsured reservists for three years to assess cost and feasibility “at 10 or more sites.” MOAA is concerned that this phrase could provide DoD authority to backtrack from the nationwide requirement in previous legislation, but that remains to be seen.

We’re encouraged that, before this article went to press, the Senate adopted a far more comprehensive Selected Reserve health care amendment offered by Sens. Lindsey Graham (R-S.C.) and Tom Daschle (D-S.D.). Like the provisions they won in last year’s defense bill, the Graham-Daschle plan would allow Selected Reservists a choice. They could purchase TRICARE coverage for themselves and their families by paying a relatively modest premium during periods of inactive service (premiums would stop upon mobilization). Alternatively, if they have health coverage through a civilian employer, the Graham-Daschle plan would authorize the government to contribute toward paying their premium to continue that coverage during periods of mobilization.

Unlike the one-year authority Graham and Daschle won in last year’s defense bill, the provision the Senate approved this year would establish a permanent statutory authority. This summer, leaders of the two armed services committees will have to reconcile the different House and Senate provisions.
MOAA strongly supports permanent authority for TRICARE access in the Guard and Reserve to support long-term retention and readiness objectives. We think it’s important to ensure every reservist has access to health coverage without having to pay excessive fees.

Survivor Benefits  | Concurrent receipt and SBP are under consideration.

Landrieu, Reid Plan Senate Amendments

After the House passed its version of the FY 2005 Defense Authorization Bill, Senate leaders had hoped to complete action on their own version of the defense bill (S. 2400) before leaving for the Memorial Day recess. But they were stymied by the need for hearings about Iraqi prisoner treatment and a seemingly endless list of potential amendments.

As this article went to press, Congress had returned for action in early June, and Senate Survivor Benefit Plan (SBP) champion Mary Landrieu (D-La.) was planning to present a floor amendment to phase out the age-62 annuity reduction. Her proposal will be similar to that passed by the House.

With 55 senators on record as cosponsors of various bills to eliminate the SBP annuity reduction, we think the Senate will be reluctant to do less for military widows than the House. MOAA members have sent thousands of letters and

e-mails to let the Senate know in no uncertain terms that military widows have waited too long for fair treatment and that Congress must do the right thing by this long-suffering group.

Sen. Harry Reid (D-Nev.) planned to offer an amendment calling for immediate elimination of any disability offset to military retired pay. However, the lack of ready funding will present a challenge, as will the fact that the House side has no corresponding provision. At the least, we hope Reid’s amendment will draw more attention to the continuing inequities in concurrent receipt legislation and remind Congress and the public that this issue is by no means settled.

Health Care | Some under-65 disabled retirees need TRICARE waivers.

Data Review Catches Part B Glitch

When military retired beneficiaries (including retirees and their spouses) under age 65 become medically disabled and qualify for Medicare coverage, they must enroll in Medicare Part B to retain their TRICARE eligibility. That’s the law.

But many never were formally notified that TRICARE wouldn’t pay for their care if they didn’t enroll in Part B. Others were led to think they didn’t need Part B because (they thought) they had TRICARE coverage. DoD reinforced that thought by continuing their TRICARE coverage for years, even though they hadn’t enrolled in Part B.

In mid-April, a DoD data match with Medicare discovered nearly 26,000 disabled beneficiaries under age 65 who were not enrolled in Part B. Almost 12,000 have been using TRICARE as their primary source of care, and TRICARE has paid claims for their health care services.

For a period in April (after the data match), TRICARE stopped paying their claims. When the matter was raised to senior defense health leaders, they reinstated these beneficiaries’ TRICARE eligibility until a fairer solution could be found. But now that beneficiaries have been identified, the question of recoupment for claims paid erroneously must be addressed. The government has the authority to grant recoupment waivers on a case-by-case basis. But that would be a paperwork nightmare for all these beneficiaries and DoD.

MOAA and The Military Coalition have urged DoD to waive any recoupment from these beneficiaries, and we’re grateful that Pentagon leaders supported this.

Blanket waiver authority has since been included in both the House and Senate versions of the FY 2005 Defense Authorization Act. But the affected individuals will need to enroll in Part B to retain TRICARE coverage in the future and to avoid potential recoupment of past TRICARE payments, for which they technically were ineligible.

Medicare will be conducting a special open-enrollment period, beginning in September or October, to allow Medicare-eligibles currently not enrolled in Part B to do so without incurring the normal late-enrollment premium penalty. This also applies to older beneficiaries who did not enroll in Part B upon reaching age 65.

Another eligible group are older retirees living overseas, who never had any incentive to enroll in Part B because Medicare doesn’t provide coverage overseas. But Part B coverage is required to obtain eligibility for TRICARE For Life, and many overseas retirees have been deterred by substantial late-enrollment penalties for Part B. That group now will be able to enroll in the open season, avoid the late-enrollment penalty, and start using TRICARE as their first-payer health coverage.

To eliminate the risk of any potential beneficiary not getting the word (the open season will end Dec. 31), Medicare will automatically enroll every Medicare-eligible beneficiary who is not currently enrolled in Part B. Letters will be sent to all beneficiaries explaining what is being done, and they will have the opportunity to decline enrollment if they choose.

Beneficiaries will have the option to elect Part B coverage effective the first day of the following month or any earlier date back to Jan. 1, 2004. By electing an earlier date of coverage, new enrollees under age 65 will avoid any possible recoupment of TRICARE costs during the earlier period.