Pleasant SurprisesCongress in late December passed the 2006 defense authorization containing a raft of personnel initiatives designed to improve recruiting and force management. Some were unexpected.
Surprises in the Fiscal 2006 bill included a provision opening Tricare Reserve Select, a watered-down version of Tricare Standard, to all drilling reservists and their families. Coverage comes with higher premiums, the steepest of which are for Reservists and Guard members who have other health insurance options. (More on this below.)
Among unexpected new authorities to reshape the force is a voluntary separation incentive that the Navy and Air Force intend to use to entice some midcareer officers in overstaffed specialties to leave active duty.
Another surprise is a provision that extends last year’s gains in death benefits to survivors of any service member who dies on active duty. This step eliminates a requirement that deaths be combat-related for a survivor to qualify for the higher amounts.
Survivors of other service members or retirees who died of service-related causes also were affected. Congress opted not to reduce a dollar-for-dollar reduction in survivor benefits when surviving spouses qualify for Dependency and Indemnity Compensation (DIC) from the Department of Veterans Affairs.
Pay and BenefitsThe defense bill authorizes new spending of $441.5 billion in 2006—3.1 percent more than in 2005. Nearly $109 billion of that is for military personnel.
Most of the pay and benefit gains in the authorization bill were seen as enhancing force readiness. Proposals that would continue to raise entitlements for retirees, reservists, or survivors, most of which the Senate cleared, were tossed out or reduced in effect by House-Senate conferees.
Here are highlights of initiatives endorsed or rejected:
Two premium tiers will be open to any drilling reservist willing to pay more. The first of two higher-tiered premiums will be for reservists who lack alternative health insurance either because they are unemployed, self-employed, or work for a company that has no health insurance plan. These categories of reservists can enroll in TRS if they agree to pay 50 percent of program costs in premiums, about $145 monthly for individual coverage and $452 for family.
Another tier will apply to Reservists who do have alternative health insurance. They will be able to enroll in TRS for premiums set at 85 percent of TRS costs, roughly $245 a month for individual coverage and $768 for family.
Other Personnel InitiativesThe final 2006 defense bill also:
Tricare Hikes?The Joint Chiefs of Staff, led by Marine Corps Gen. Peter Pace, the Chairman, will testify if necessary to support upcoming Pentagon budget proposals to increase Tricare fees. The Tricare price hikes would affect under-65 military retirees and their families, according to a senior military officer.
The Tricare proposals are expected to be unveiled officially when the department delivers its Fiscal 2007 budget request to Congress in early February. Changes would raise enrollment fees and deductibles sharply over the next three years, for three million beneficiaries.
Draft department plans show that annual enrollment fees for Tricare Prime, the military’s managed care option, would triple by October 2008 for working-age retired officers. They would double for enlisted retirees.
Yearly deductibles for Tricare Standard, the fee-for-service health insurance option, would nearly double for officers and rise by nearly a third for enlisted. For the first time, retirees who use Tricare Standard would pay an enrollment fee in addition to their deductible.
Pharmacy co-payments also would climb for retirees and their families, regardless of age, if they use the retail drug network or the Tricare mail order program to buy brand-name drugs on the military formulary.
The intent of these initiatives is to slow a projected sharp rise in military health care costs through Fiscal 2015. The cost growth would be slowed by having working-age retirees either pay a greater share of Tricare costs or switch to employer-provided health insurance.
Defense officials have expressed alarm over an on-going migration of retirees into Tricare and away from employer-provided health insurance. William J. Winkenwerder Jr., assistant secretary of defense for health affairs, has said some civilian employers and even state governments are offering cash incentives to retired military workers in order to entice them to use Tricare rather than company- or government-provided insurance. (See “Action in Congress: Rising Health Care Costs ... And Ways to Curb Them,” December 2005, p. 24.)
High Tide?A senior Capitol Hill staff member predicted that 2005 may represent the “high tide” of Congress expanding entitlements for military retirees, reservists, and survivors. Lawmakers this past year voted to phase out the reduction in SBP benefits that occurs when survivors turn 62 and become eligible for Social Security.
Congress is “improving the benefit without any change in premium, without any change in the overall contribution from the retiree,” said the staffer. Lawmakers have enhanced the benefit in ways that have enormous legacy costs over time, he said. “These are costs that have to be looked at.”
Daily Report: The day's top news on the US Air Force, airpower, and national security issues.
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