thedrifter
10-10-06, 02:14 PM
October 16, 2006
Breaking down your benefits
’07 authorization bill expands health care, insurance coverage in lieu of big pay hike
By Rick Maze
Staff writer
Congress was accused of being a bit skimpy on basic pay, but in the end, lawmakers built a 2007 military benefits package that is more generous than expected, especially in terms of health care.
Big increases in bonuses for many specialties and for transferring between services are included in the compromise 2007 defense authorization bill that cleared Congress on Sept. 30 and is expected to be signed into law by President Bush in mid-October.
After years of talking about it, lawmakers approved free life insurance coverage for troops in combat, though the initiative is limited to current operations in Iraq and Afghanistan and it may not apply to future wars. Rep. John Spratt Jr., D-S.C., who has pushed for free life insurance, called it “the least we can do for those who put their lives on the line for their country.”
Lawmakers also extended heavily subsidized government health care for National Guard and reserve members and their families.
One of the most significant actions taken by lawmakers involved a rejection rather than an approval — the Pentagon is barred from raising fees for Tricare health coverage and for prescription drugs. While lawmakers share the Pentagon’s concerns about rising medical care costs squeezing the military budget, they were less willing to jump to the conclusion that higher enrollment fees, co-pays and deductibles are the answer. Instead, provisions in the 2007 defense authorization bill freeze the current fee structure.
That was not an easy thing to accomplish, said Rep. John McHugh, R-N.Y., chairman of the House Armed Services personnel subcommittee and one of the negotiators who helped write the final bill.
Congress had to find $486 million to prevent the fee hikes, he said, which ended up limiting options for other increases, such as the 2.7 percent basic pay raise backed by McHugh.
The smaller basic pay raise, 2.2 percent effective Jan. 1, has drawn complaints. The raise “is meager thanks for our men and women in uniform in time of war, experiencing sustained and repeated deployments and absences from their families,” said Rep. Neil Abercrombie, D-Hawaii.
But McHugh said that was a necessary trade-off for holding down Tricare fees.
Expanding Tricare coverage for reservists was a bipartisan issue. Rep. Gene Taylor, D-Miss., a longtime advocate for better reserve benefits, said expanding Tricare at a reasonable price to all drilling members of the Guard and reserve is “long overdue.”
“Providing this health care coverage recognizes the sacrifices our Guard and reserve troops are making every day,” he said. “Insurgents in Iraq don’t differentiate between reserve soldiers and active solders.”
Sen. John McCain, R-Ariz., in line to be Senate Armed Services Committee chairman next year if Republicans retain control of the Senate in November, said this expanded eligibility is “critical for providing reserve forces with the proper care they have earned.”
Key pay-and-benefits provisions of the 2007 defense authorization bill:
Basic pay
The 2007 military pay plan has four distinct components, starting with the 2.2 percent basic pay hike Jan. 1 for all paygrades.
The 2.2 percent raise matches the average increase in private-sector wages last year, but it lags behind inflation, which has risen 3.8 percent in the past year. That puts service members in the same economic boat as the general public, with their purchasing power slowly eroding unless they get promoted.
The second element of the pay plan, also kicking in Jan. 1, extends the current pay table to provide longevity increases for the most senior officers, warrants and enlisted members serving more than 30 years. These new raises will not be provided at all longevity steps. They will occur about every four years.
The current pay table stops longevity raises at 26 years of service; after that, troops receive only the annual raise approved by Congress. But under the new pay table, E-9s, W-5s, O-9s and O-10s have longevity raises at 30, 34 and 38 years of service; O-8s get increases at 30 and 34 years; and E-8s, W-4s and O-6s get an extra raise for passing the 30-year mark.
About 15,000 service members will benefit from the new longevity raises, mostly senior enlisted members, who far outnumber the roughly 450 flag and general officers serving on active duty.
The third element of the 2007 pay plan, also effective Jan. 1, is a lifting of the cap on salaries for top flag and general officers.
In 2006, annual military pay was capped at $165,200 a year, the maximum allowed under Level III of the federal Executive Schedule, which sets pay for senior government employees based on their job responsibilities.
As of Jan. 1, pay for uniformed service members will be realigned to max out at Level II of the Executive Schedule, which means maximum annual military pay will rise to $183,500. This action affects only O-9s and O-10s near the top of the pay scale and was taken because they otherwise would not get the full longevity raises under the new pay table.
The bottom-line effect: Some O-9s and O-10s are in line for hefty pay hikes next year. Three-stars with 30 years of service, for example, will get a raise of 7.3 percent, while O-10s with 34 years of service will get a 26.3 percent boost.
The fourth element of the pay package comes April 1, with targeted raises for warrant officers and some E-5s, E-6s and E-7s. These will range from less than 1 percent up to 8.3 percent, and will come on top of the 2.2 percent increase Jan. 1. About 280,000 active-duty members will receive the raise.
The combination of the four pay actions will, in the end, boost overall military pay by an average of 2.7 percent, which slightly closes the gap between military and private sector pay that has existed since 1982, the last time rough parity existed. The gap is now about 4.5 percent.
Thrift Savings Plan pilot
A program created last year that allows the Army to match contributions to the federal Thrift Savings Plan for new recruits, which expired on Oct. 1, will be extended until Dec. 31, 2008, to provide more time to gauge whether this is a good way to encourage people to save money. If so, the idea could expand to other services.
Recouping overpayments
Beginning March 7, the services can waive up to $10,000 of overpayments when a mistake is made in pay, bonuses or incentive pay that is not the fault of the service member. Under current policy, the maximum amount that can be waived is $1,500. The maximum waiver period also will be extended from three years to five.
If overpayments are collected, the amount of money docked from each paycheck cannot exceed 20 percent of the total pay if the member was not at fault, and no money can be withheld while a service member is recovering from injuries suffered in the line of duty or from an illness incurred in combat operations or a combat zone. This restriction takes effect when the bill is signed into law.
The new law also lets service members ask for accelerated recoupment if they wish.
Retired pay calculations
For retirements on or after Jan. 1, people with 30 or more years of service will have their retired pay calculated at 75 percent of basic pay plus 2.5 percentage points for each year of service beyond 30.
Flag and general officers who retired after Sept. 30 will have their pay calculated based on the new Executive Schedule pay cap.
Household goods replacement
By March 1, 2008, all companies transporting household goods and other personal items for service members must provide full replacement value for loss or damage. This will apply to all baggage and household effects shipped at government expense for service members, federal civilians and their families.
Free war-zone life insurance
Beginning Nov. 1, there will be no charge for Servicemembers’ Group Life Insurance for troops in the Operation Enduring Freedom and Operation Iraqi Freedom theaters. The government now pays for up to $150,000 of coverage in war zones, which means troops must pay part of the premium to get the maximum $400,000 of coverage.
In a budgetary sleight of hand to make free coverage possible, a service member will get an allowance equal to the premium, which is then deducted from his paycheck. Today, the allowance is $10.75. As of Nov. 1, it will be $29.
BAH for mobilized reservists
Reservists without dependents who were mobilized for 139 or more days in support of a contingency operation could be eligible for a second housing allowance in lieu of per diem if they are ordered to serve at a duty station too far from home to commute. Lawmakers believe this will save money because the second housing allowance could be lower than per diem rates.
The second allowance will be effective retroactively to Oct. 1, but it is unclear when or if anyone will be paid because Congress gave the Defense Department discretion on setting up this program, and payment rules have yet to be written.
Meal charges when hospitalized
Free meals for service members being treated for combat-related injuries, illnesses or disease are extended through Dec. 31, 2007. This applies to meals consumed by those hospitalized and being treated as outpatients for health problems incurred or aggravated while in support of operations in Iraq or Afghanistan.
In the report accompanying the bill, lawmakers said they are prepared to make free meals a permanent right for combat-injured troops next year unless the Pentagon has reasonable objections.
Housing allowance for survivors
Effective Oct. 1, service members who are surviving spouses of another service member who dies on active duty will receive one year of the deceased member’s housing allowance, just as a nonmilitary spouse would after a member’s death. Also, Service members whose military spouses have died since Oct. 1, 2005, will receive the deceased spouses’ housing allowance until the one-year anniversary of the death.
Bonuses extensions, increases
Several bonus programs that would have expired on Dec. 31 have been extended through the end of 2007. These include active-duty and reserve enlistment and re-enlistment bonuses; special pay for high-priority units; prior-service enlistment bonuses for reservists; accession bonuses for dental officers, pharmacy officers, nurses, nuclear career officers and officers in critical skills; special pay for registered nurses, nurse anesthetists and nuclear-qualified officers; and aviation officer retention bonuses.
Assignment incentive pay and education loan repayments for health care professionals will be extended through 2008.
And the maximum bonus for transferring from one service to another will increase from $2,500 to $10,000 effective Oct. 1.
To encourage retirees and reservists to volunteer for active duty in high-density, low-demand assignments, an incentive bonus of up to $50,000 could be offered. Anyone receiving this bonus would not be promoted while on active duty. No one can receive the bonus until the Pentagon develops a plan for this program, with no set date for when that might occur. The bonus authority expires at the end of 2010.
Several bonus increases for medical personnel are authorized effective Oct. 1, but payable only if the services decide to offer them. Accession bonuses will jump to a maximum $400,000 for medical officers in critically short wartime specialties, including dental officers, and the maximum reserve health care special pay for critically short specialties increases to $25,000, a hike of $15,000.
Nuclear officer incentive pay, previously available only in installments, can be paid in a lump sum as of Oct. 1. Payments are capped at $30,000 for each year of active service. Also, the nuclear career accession bonus increases by $10,000 to a new maximum of $30,000.
An Army recruit referral bonus, now $1,000 if a recruit completes initial training, increases to $2,000 when the bill is signed into law, but there are new restrictions, such as prohibition on payment of the bonus to Junior ROTC instructors or former instructors. With the increase, up to $1,000 could be paid when a recruit begins basic training and the rest after the completion of basic and advanced training.
Tricare fees
Congress has ordered a freeze in Tricare Standard, Prime and Reserve Select premiums, deductibles, co-payments and other charges, and also prohibits any increase in co-payments for using retail pharmacy benefits. The bill also imposes a cap on inpatient care of $535 per day. The Tricare fee and retail drug-charge freezes remain in place until Sept. 30, 2007.
Over-the-counter drugs
In a test program at up to five locations, the Defense Department will provide free over-the-counter drugs instead of prescription drugs if they represent a less expensive and therapeutically equivalent alternative.
Expected to start no later than May 1 and last for two years, the test could involve military facilities, retail pharmacies or the military’s mail-order pharmacy. Patients would be notified they were getting an over-the-counter drug in lieu of a prescription drug, similar to the documents provided when they receive a generic drug rather than a brand name.
Tricare for reservists
For drilling reservists, Congress is simplifying Tricare coverage and lowering costs effective Oct. 1, 2007. All members of the drilling reserve will be allowed to enroll in the Tricare Reserve Select health plan, paying a premium that covers 28 percent of the cost. The government would pay the rest.
This will replace a three-tiered system that required some reservists — employees of large companies offering employer-provided health benefits — to pay premiums covering 85 percent of the costs, an amount so high that most reservists were not interested.
Today, Tricare Reserve Select premiums range from $81 a month (for a member without dependents and no available employer health plan who served in a recent contingency operation) to $767.41 a month (for family coverage for a reservist who could sign up for employer-provided benefits). With the change, premiums would be $81 for a single person and $253 for family coverage if Tricare fees do not change before Oct. 1, 2007.
Ellie
Breaking down your benefits
’07 authorization bill expands health care, insurance coverage in lieu of big pay hike
By Rick Maze
Staff writer
Congress was accused of being a bit skimpy on basic pay, but in the end, lawmakers built a 2007 military benefits package that is more generous than expected, especially in terms of health care.
Big increases in bonuses for many specialties and for transferring between services are included in the compromise 2007 defense authorization bill that cleared Congress on Sept. 30 and is expected to be signed into law by President Bush in mid-October.
After years of talking about it, lawmakers approved free life insurance coverage for troops in combat, though the initiative is limited to current operations in Iraq and Afghanistan and it may not apply to future wars. Rep. John Spratt Jr., D-S.C., who has pushed for free life insurance, called it “the least we can do for those who put their lives on the line for their country.”
Lawmakers also extended heavily subsidized government health care for National Guard and reserve members and their families.
One of the most significant actions taken by lawmakers involved a rejection rather than an approval — the Pentagon is barred from raising fees for Tricare health coverage and for prescription drugs. While lawmakers share the Pentagon’s concerns about rising medical care costs squeezing the military budget, they were less willing to jump to the conclusion that higher enrollment fees, co-pays and deductibles are the answer. Instead, provisions in the 2007 defense authorization bill freeze the current fee structure.
That was not an easy thing to accomplish, said Rep. John McHugh, R-N.Y., chairman of the House Armed Services personnel subcommittee and one of the negotiators who helped write the final bill.
Congress had to find $486 million to prevent the fee hikes, he said, which ended up limiting options for other increases, such as the 2.7 percent basic pay raise backed by McHugh.
The smaller basic pay raise, 2.2 percent effective Jan. 1, has drawn complaints. The raise “is meager thanks for our men and women in uniform in time of war, experiencing sustained and repeated deployments and absences from their families,” said Rep. Neil Abercrombie, D-Hawaii.
But McHugh said that was a necessary trade-off for holding down Tricare fees.
Expanding Tricare coverage for reservists was a bipartisan issue. Rep. Gene Taylor, D-Miss., a longtime advocate for better reserve benefits, said expanding Tricare at a reasonable price to all drilling members of the Guard and reserve is “long overdue.”
“Providing this health care coverage recognizes the sacrifices our Guard and reserve troops are making every day,” he said. “Insurgents in Iraq don’t differentiate between reserve soldiers and active solders.”
Sen. John McCain, R-Ariz., in line to be Senate Armed Services Committee chairman next year if Republicans retain control of the Senate in November, said this expanded eligibility is “critical for providing reserve forces with the proper care they have earned.”
Key pay-and-benefits provisions of the 2007 defense authorization bill:
Basic pay
The 2007 military pay plan has four distinct components, starting with the 2.2 percent basic pay hike Jan. 1 for all paygrades.
The 2.2 percent raise matches the average increase in private-sector wages last year, but it lags behind inflation, which has risen 3.8 percent in the past year. That puts service members in the same economic boat as the general public, with their purchasing power slowly eroding unless they get promoted.
The second element of the pay plan, also kicking in Jan. 1, extends the current pay table to provide longevity increases for the most senior officers, warrants and enlisted members serving more than 30 years. These new raises will not be provided at all longevity steps. They will occur about every four years.
The current pay table stops longevity raises at 26 years of service; after that, troops receive only the annual raise approved by Congress. But under the new pay table, E-9s, W-5s, O-9s and O-10s have longevity raises at 30, 34 and 38 years of service; O-8s get increases at 30 and 34 years; and E-8s, W-4s and O-6s get an extra raise for passing the 30-year mark.
About 15,000 service members will benefit from the new longevity raises, mostly senior enlisted members, who far outnumber the roughly 450 flag and general officers serving on active duty.
The third element of the 2007 pay plan, also effective Jan. 1, is a lifting of the cap on salaries for top flag and general officers.
In 2006, annual military pay was capped at $165,200 a year, the maximum allowed under Level III of the federal Executive Schedule, which sets pay for senior government employees based on their job responsibilities.
As of Jan. 1, pay for uniformed service members will be realigned to max out at Level II of the Executive Schedule, which means maximum annual military pay will rise to $183,500. This action affects only O-9s and O-10s near the top of the pay scale and was taken because they otherwise would not get the full longevity raises under the new pay table.
The bottom-line effect: Some O-9s and O-10s are in line for hefty pay hikes next year. Three-stars with 30 years of service, for example, will get a raise of 7.3 percent, while O-10s with 34 years of service will get a 26.3 percent boost.
The fourth element of the pay package comes April 1, with targeted raises for warrant officers and some E-5s, E-6s and E-7s. These will range from less than 1 percent up to 8.3 percent, and will come on top of the 2.2 percent increase Jan. 1. About 280,000 active-duty members will receive the raise.
The combination of the four pay actions will, in the end, boost overall military pay by an average of 2.7 percent, which slightly closes the gap between military and private sector pay that has existed since 1982, the last time rough parity existed. The gap is now about 4.5 percent.
Thrift Savings Plan pilot
A program created last year that allows the Army to match contributions to the federal Thrift Savings Plan for new recruits, which expired on Oct. 1, will be extended until Dec. 31, 2008, to provide more time to gauge whether this is a good way to encourage people to save money. If so, the idea could expand to other services.
Recouping overpayments
Beginning March 7, the services can waive up to $10,000 of overpayments when a mistake is made in pay, bonuses or incentive pay that is not the fault of the service member. Under current policy, the maximum amount that can be waived is $1,500. The maximum waiver period also will be extended from three years to five.
If overpayments are collected, the amount of money docked from each paycheck cannot exceed 20 percent of the total pay if the member was not at fault, and no money can be withheld while a service member is recovering from injuries suffered in the line of duty or from an illness incurred in combat operations or a combat zone. This restriction takes effect when the bill is signed into law.
The new law also lets service members ask for accelerated recoupment if they wish.
Retired pay calculations
For retirements on or after Jan. 1, people with 30 or more years of service will have their retired pay calculated at 75 percent of basic pay plus 2.5 percentage points for each year of service beyond 30.
Flag and general officers who retired after Sept. 30 will have their pay calculated based on the new Executive Schedule pay cap.
Household goods replacement
By March 1, 2008, all companies transporting household goods and other personal items for service members must provide full replacement value for loss or damage. This will apply to all baggage and household effects shipped at government expense for service members, federal civilians and their families.
Free war-zone life insurance
Beginning Nov. 1, there will be no charge for Servicemembers’ Group Life Insurance for troops in the Operation Enduring Freedom and Operation Iraqi Freedom theaters. The government now pays for up to $150,000 of coverage in war zones, which means troops must pay part of the premium to get the maximum $400,000 of coverage.
In a budgetary sleight of hand to make free coverage possible, a service member will get an allowance equal to the premium, which is then deducted from his paycheck. Today, the allowance is $10.75. As of Nov. 1, it will be $29.
BAH for mobilized reservists
Reservists without dependents who were mobilized for 139 or more days in support of a contingency operation could be eligible for a second housing allowance in lieu of per diem if they are ordered to serve at a duty station too far from home to commute. Lawmakers believe this will save money because the second housing allowance could be lower than per diem rates.
The second allowance will be effective retroactively to Oct. 1, but it is unclear when or if anyone will be paid because Congress gave the Defense Department discretion on setting up this program, and payment rules have yet to be written.
Meal charges when hospitalized
Free meals for service members being treated for combat-related injuries, illnesses or disease are extended through Dec. 31, 2007. This applies to meals consumed by those hospitalized and being treated as outpatients for health problems incurred or aggravated while in support of operations in Iraq or Afghanistan.
In the report accompanying the bill, lawmakers said they are prepared to make free meals a permanent right for combat-injured troops next year unless the Pentagon has reasonable objections.
Housing allowance for survivors
Effective Oct. 1, service members who are surviving spouses of another service member who dies on active duty will receive one year of the deceased member’s housing allowance, just as a nonmilitary spouse would after a member’s death. Also, Service members whose military spouses have died since Oct. 1, 2005, will receive the deceased spouses’ housing allowance until the one-year anniversary of the death.
Bonuses extensions, increases
Several bonus programs that would have expired on Dec. 31 have been extended through the end of 2007. These include active-duty and reserve enlistment and re-enlistment bonuses; special pay for high-priority units; prior-service enlistment bonuses for reservists; accession bonuses for dental officers, pharmacy officers, nurses, nuclear career officers and officers in critical skills; special pay for registered nurses, nurse anesthetists and nuclear-qualified officers; and aviation officer retention bonuses.
Assignment incentive pay and education loan repayments for health care professionals will be extended through 2008.
And the maximum bonus for transferring from one service to another will increase from $2,500 to $10,000 effective Oct. 1.
To encourage retirees and reservists to volunteer for active duty in high-density, low-demand assignments, an incentive bonus of up to $50,000 could be offered. Anyone receiving this bonus would not be promoted while on active duty. No one can receive the bonus until the Pentagon develops a plan for this program, with no set date for when that might occur. The bonus authority expires at the end of 2010.
Several bonus increases for medical personnel are authorized effective Oct. 1, but payable only if the services decide to offer them. Accession bonuses will jump to a maximum $400,000 for medical officers in critically short wartime specialties, including dental officers, and the maximum reserve health care special pay for critically short specialties increases to $25,000, a hike of $15,000.
Nuclear officer incentive pay, previously available only in installments, can be paid in a lump sum as of Oct. 1. Payments are capped at $30,000 for each year of active service. Also, the nuclear career accession bonus increases by $10,000 to a new maximum of $30,000.
An Army recruit referral bonus, now $1,000 if a recruit completes initial training, increases to $2,000 when the bill is signed into law, but there are new restrictions, such as prohibition on payment of the bonus to Junior ROTC instructors or former instructors. With the increase, up to $1,000 could be paid when a recruit begins basic training and the rest after the completion of basic and advanced training.
Tricare fees
Congress has ordered a freeze in Tricare Standard, Prime and Reserve Select premiums, deductibles, co-payments and other charges, and also prohibits any increase in co-payments for using retail pharmacy benefits. The bill also imposes a cap on inpatient care of $535 per day. The Tricare fee and retail drug-charge freezes remain in place until Sept. 30, 2007.
Over-the-counter drugs
In a test program at up to five locations, the Defense Department will provide free over-the-counter drugs instead of prescription drugs if they represent a less expensive and therapeutically equivalent alternative.
Expected to start no later than May 1 and last for two years, the test could involve military facilities, retail pharmacies or the military’s mail-order pharmacy. Patients would be notified they were getting an over-the-counter drug in lieu of a prescription drug, similar to the documents provided when they receive a generic drug rather than a brand name.
Tricare for reservists
For drilling reservists, Congress is simplifying Tricare coverage and lowering costs effective Oct. 1, 2007. All members of the drilling reserve will be allowed to enroll in the Tricare Reserve Select health plan, paying a premium that covers 28 percent of the cost. The government would pay the rest.
This will replace a three-tiered system that required some reservists — employees of large companies offering employer-provided health benefits — to pay premiums covering 85 percent of the costs, an amount so high that most reservists were not interested.
Today, Tricare Reserve Select premiums range from $81 a month (for a member without dependents and no available employer health plan who served in a recent contingency operation) to $767.41 a month (for family coverage for a reservist who could sign up for employer-provided benefits). With the change, premiums would be $81 for a single person and $253 for family coverage if Tricare fees do not change before Oct. 1, 2007.
Ellie