1. Military Officers Association of America Legislative Update on Military and Veterans Benefits
Presented by
Shane Ostrom, CFP®
Lt Col, USAF (Ret)
Program Director, Finance and Benefits Information
Military Officers Association of America

2. are wearing the uniform… supported your Service member…
To All of You Who…
are wearing the uniform…
have worn the uniform…
supported your Service member…
THANK YOU!

3. The Military Coalition
33 Associations million voices
AAAA
CWOA
MOAA*
TREA
AFA
EANGUS
MOPH
USCGCPOA
AFSA
FRA *
NMFA
USAWOA
AFWOA
GSW
NCOA
VFW
AMSUS
IAVA
NERA
VVA
AMVETS
JWV
NGAUS
WWP
AUSA
MCL
ROA
AUSN
MCRA
SWAN
COA
MCA
TAPS
*Co-Chairs

4. The Legislative Backstory

5. Military Experience in Congress
Senate
68% 56 43 35 31 29 25 19 20 21
House
48% 37 27 23 22 18 17

6. Where the Fed Money Goes
1965
Mandatory Spending
Discretionary Spending
33%
Now
67%
Discretionary Spending
27%
Mandatory Spending
73%
“Discretionary spending now makes up only about a third of the federal budget, with the remaining two-thirds coming from entitlement programs and other "mandatory" spending, according to figures from the House Budget Committee. And it wasn't always so. In 1965, those ratios were almost precisely reversed, with entitlement money making up just a third of the budget, committee figures show.” Congressional Quarterly 5Feb16 “Evading the Elephant” Numbers from

7. Personnel-Health Care Growth Rate
Concurrent Receipt, ECI+ raises, TFL, BAH, end strength, etc.
Reflects avg. 7.8% growth from
The media stories relate how costs have skyrocketed in the early 2000s. Sure they’ve skyrocketed if you start the clock in year 2000.
The truth is this growth was required to fix the declines to pay and benefits we experienced in the 1990s. These 1990 fixes were to bring us up to legal standards and intents.
The extra expense was Especially required as we continue the years of war after 9-11 given the manpower requirements and all volunteer force considerations.
Necessary growth between 2000 and 2011
wars
Pay raises in excess of ECI to reach the pay standard intended by law
Bring housing allowances back to competitive levels
End strength increases
Concurrent receipt
Tricare for life
Since 2011 growth has not just slowed but actually declined. Yet calls for more cuts continue.
Outlays in $ Billions
Source: OMB historical tables

8. Media Marketing Matters
Fact
MOAA helped fix serious problems from budget cuts in the 1990s
13.5% private sector pay gap
25% lifetime reduction in retirement value
20% out-of-pocket housing costs
Health care for retirees age 65+
Ability for DoD to recruit and retain
As told by DoD…
Officials say they:
Must “slow the growth”
“Overshot the mark”
However they use FY2000 as the benchmark for increases
Real baseline should be 1990s

9. Military Personnel Costs Aren’t Exploding
About one-third of the defense budget goes to military personnel and health care costs – the same share it has been for more than 38 years. That’s no more unaffordable now than in the past.
Furthermore, about one third of the defense budget goes to personnel and health care costs – the same share it has been for more than 30 years.
Why the continued calls for cuts and fee increases? The argument is usually “because the raw dollar amount has increased even though it’s the same proportion.”
If that’s the argument, everything went up in raw dollars—it’s called inflation. The costs of doing business. If this is the argument, their logic is that people end up paying for inflation in other areas. Then people issues will continue to suffer in the future as all other costs continue to rise.
((Note the red health care costs expanded a bit. Tricare for life came on board 2001 and two major war fronts.))
While this shows the proportion of the DOD budget, what about the actual dollars? Next slides…
Health Care Personnel

10. DOD Health Care Costs Dollars in billions
Here is the DOD health care budget in dollars.
Purchased care is medical costs outside the military-owned health care community; e.g. Tricare Standard, Tricare prime remote, excluding the TFL.
The TFL line stands alone.
Again, where are the skyrocketing costs?
Dollars in billions
Source: DOD Report to Congress FY2017

12. $203 mil in total savings

13. Health Care Costs in Perspective
So how does the DOD health care budget stack up with other budgets in the country?
Seems to us, the DOD health care program is a bargain…
…And this is in an employment environment that puts people in harm’s way—both in combat and general safety concerns.
All of these budget slides paint the picture of how we have to consider all the relevant information.
Keep these budget slides in mind as we discuss the following dod budget proposals and their calls for more cuts and fee increases.

14. National Defense Authorization Act
What’s New for 2018/19?
FY2018 & FY2019
National Defense Authorization Act
(NDAA)
Specific topics cherry picked from the FY 2017 NDAA.
The main issue is what has been passed and changed for some changes impact your audience.
These are topics we find are the hot button issues that impact the audiences’ lives most.

15. Key Legislative Actions
2.4% & 2.6% Active Duty Pay Raise (2018/19)
BAH calculation unchanged (2018/19)
TRICARE Pharmacy Fee Increases (2018)
Retail/Mail-order Pharmacy Co-pays
“To Fund Military Readiness and SSIA”

16. Key Legislative Actions
Permanent extension to SSIA $310/month (2018)
COLA protected, partially relieves Widow’s Tax
Authorizes 19,600/15,700 additional Troops (2018/19)
Arlington National Cemetery (2019)
Directs Sec Army to take action on burial criteria
Extend life “well into the future” – assumption 100 years

17. Military Pay Raises Since 2000
Congressional Support to Eliminate 13.5% Pay Gap$
Pay Growth Slowed
Raises Under ECI:
2014: - .8%
2015: - .8%
2016: - 1%
= 2.6% behind
$ Pay gap per Employment Cost Index (ECI)

18. Military Pay Steady but Behind
This indicates the level of currently serving pay in relation to the Employment Cost Index. The 0-line at the top is the Employment Cost Index—where currently serving pay is intended to be.
We fixed the problems in early the 2000’s with the pay increases shown in the last slide. For 3 years, we were fixed.
With the last several years of decreased raises, we are falling behind again.
The 2.4% pay increase in 2018 slowed the bleeding but you see where we show the issue we are trying to stop. We got things fixed in and now the last several years of decreased raises has us falling behind again.
2018 needed the 2.4% increase to stay steady state. We need 2.9% to catch up with eci. Dod and Senate Proposed 2.1% but after conference the 2.4% was agreed to and signed by the president.
It seems we continue to ride the pendulum

19. Housing Allowance
Phased-in reduction to Basic Allowance for Housing (BAH)
1% less BAH for next 5 years ( )
Total 5% decrease in BAH
This is still in effect
2005 to 2014: BAH covered full
housing cost per housing index

20. Avoided disproportional TRICARE fee hikes and NO TFL Changes
TRICARE Changes
The good news…
Avoided disproportional TRICARE fee hikes and NO TFL Changes
New TRICARE fee structure applied to TRICARE Select co-pays
Deductible: $150 ind, $300 fam
Network: Flat fee; Primary care $28, Specialty $41
Non-network: 25% co-pay
TRICARE Prime Enrollment Fee increases
Slightly more than COLA, but not HEI*
Annual premium: $289 ind, $578 fam
* Health Expense Index – Measures increases in government healthcare spending; not an inflation index. Recent rates approx. 6%.

21. TRICARE Changes What has changed as of Jan 1st…
TRICARE Standard is now TRICARE Select
Annual enrollment at end of CY—Open Season
Automatic enrollment if no change to your existing plan
You can now choose NOT to enroll—not have Tricare coverage
Must make future changes during the Open Season
Open Season, 12 Nov – 10 Dec 2018 for 1 Jan 2019 effective date
“Qualifying Life Event” changes any time
From 3 to 2 Regional Contractors
East (Humana) / West (Health Net Federal Services (HNFS)

22. Tricare Changes Effective Jan 1, 2020, “Select” annual enrollment fee
$150 individual; $300 family
Medical retirees, currently serving, AD survivors – NO FEE
COLA applies to enroll fee in future years
Deductibles still apply at current rates ($150/$300)
‘Select’ Catastrophic Cap increased to $3500
Retirees only
COLA in future years
Currently serving remains $1000

23. Pharmacy Increases Phased Increases Over the Years
FY 2017
Rate
FY 2018
FY 2027 Proposed Rate
MTF Pharmacy (90-days)
Retail (30-days)
Generic
$10
$11
$14
Brand
$24
$28
$48
Non-Formulary
$50
$53
$90
Mail Order (90-days) $7
$20
$44
$49
$85

24. New Dental & Vision Plans
Starting 1 Jan 2019
Administered: Federal Employees Dental and Vision Insurance Plans (FEDVIP)
Eligibility:
Retirees and families both dental and vision
AD families vision only
Replaces Tricare Retiree Dental Plan (no auto enroll to new plan)

25. New Dental & Vision Plans
Enroll during Open Season
Nov 12 to Dec 10, 2018
Changes during Open Season only
Unless for qualifying life event
Lots of coverage options
10 Dental and 4 Vision
Follow updates
MOAA FEDVIP Webinar Oct 9th
How to shop for a Dental/Vision Plan

26. Hearings aids at DOD cost for
Other TRICARE Changes
Hearings aids at DOD cost for
Retirees and Spouses
Retiree-at-Cost Hearing Aid Program (RACHAP)
Currently being implemented on an “as able” basis
Check with your nearest base hospital or clinic

27. MOAA’s Report Card for FY 2019
Sustain military pay comparability (2.6% to reach ECI) Concurrent receipt for Chapter 61 (medical retirees) Stop Tricare disproportional fee increases Stop financial penalties to survivors (SBP-DIC offset) Match DOD funding to troop levels and mission requirements Protect military retirement and COLAs

28. Other Benefit Updates
DEPENDING ON THE AMOUNT OF TIME YOU HAVE, CHERRY PICK THESE BENEFITS TO MEET AUDIENCE INTEREST.

29. DIC Should be Added to SBP; Not Subtracted from It
Survivors should get
But only receive
They lose
SBP
$15,522
DIC
$15,397
SBP Lost
$125
The affected…survivors whose military sponsors died of service-caused conditions.
When military people retire, they can buy the ‘Survivor Benefit Plan’ to provide their survivor 55% of their retired pay if they die for any reason.
A survivor plan option is a requirement of ALL pension plans by law; not just the military.
If the death was caused by the service, the VA provides Dependency Indemnity Compensation (DIC), which is a flat rate -- currently $15,096 a year/$1258mo tax-free.
But under current law, the full DIC amount is deducted dollar-for-dollar from the SBP annuity if a survivor receives compensation from both programs. The government considers it double dipping; dual-compensation for the “same event.”
This is the “SBP-DIC Offset.”
This chart shows how that eliminates most or all of the SBP annuity for SBP-eligible survivors. Considering that DIC is currently $1258mo (2016), for a large retiree population, DIC wipes out the SBP for many survivors.
(Technically, if a survivor is denied SBP payments due to the DIC offset, DFAS computes what the SBP premium would have been for the smaller SBP benefit and refunds that portion of the SBP past premium. A one-time, taxable lump sum—with no interest included. Not a good substitute for survivors who value the guaranteed lifetime income.)
SSIA extended past May - $3720 offset returned!
*Example is for E-6 with 10 YOS

30. SSIA extended past May - $3720 offset returned!
SBP-DIC-SSIA
How it All Works
Social Security Offset was eliminated…
The SBP-DIC Offset still applies
Offset is dollar-for-dollar:
$SBP
- $DIC
SBP “Benefit”
+ $SSIA
Max Benefit
Special Survivor Indemnity
Allowance (SSIA)
FY $100 month
FY $200
FY $275
FY2017 thru May $310
Extended at $310 – COLA protected
SSIA extended past May - $3720 offset returned!

31. SBP-DIC Offset SBP & DIC Paid for Different Reasons
SBP is Purchased Insurance
DIC Should Be Added Indemnity for Service-Caused Death
Survivors of Fed Civilian-Vets Don’t Forfeit Civilian SBP When DIC Payable

32. Concurrent Receipt How it Works
CR – restoration of vested retired pay due to years of service
Without CR
Retired pay
VA Waiver
Net Retired Pay +
Full VA comp
Total compensation
With CRDP
Retired pay
VA Waiver
Full Retired pay +
Full VA comp
Total
compensation
With CRSC
Retired pay
VA Waiver
Net Retired pay +
Full VA comp
CRSC Check
Total
compensation
Without CR
<50% VA rating or
<20 years of service
No Service combat rating
CRDP
50%(+) VA rating and
20(+) years of service
Automatic approval
CRSC
Any VA rating
Any years of service
Must be combat rated
by applying to Service

33. Congress Has Fixed For Some
Combat Non-Combat Related Related 20+ Yrs/100% and IUs Yes Yes 20+Yrs/50+% Disability Yes Yes 20+ Yrs/0-40% Disability Yes No Under 20 Yrs—Med Retire Yes No
In the works: follow MOAA.org

34. Military Retirement “Modernization” Blended Retirement System (BRS)
Reduced retirement benefit for years of service
20% decrease in retirement benefit
40% High-3 base pay for 20yos instead of 50%
60% at 30yos instead of 75%
Lifetime earnings substantially reduced
Thrift Savings Program (TSP)
Adding bonuses and matching contribution
Match 1% automatic
Up to 4% more starting in 3yos thru 26yos
Bonus at 8-12yos; 3yr commitment
Match vested in 3rdyos

35. Cost of Living Adjustment (COLA)

36. Where’s the COLA? Fiscal Year Increase 2016 0% 2017 0.3% 2018 2.0%
2019
2.7%...so far
Based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W)

37. Add Your Voice Contact Your Politicians

39.
54656
Insert Zip Code click GO

40. WWW.MOAA.ORG 54656 Note the Key Bills! For Zip Code
Bam! There are your people. Click the text and send an directly to your people.
“But (your name), how do I know what to say?” Next slide…

41.
Scroll down to Website for contact info and office locations
Bam! There are your people. Click the text and send an directly to your people.
“But (your name), how do I know what to say?” Next slide…

42. Military Officers Association of America WWW.MOAA.ORG
Please contact your elected representatives
Strength comes in numbers
Your single voice does matter
Come see us at the MOAA table