Action in Congress

Jan. 1, 2005

Reserve Tricare Boost

The Department of Defense says it will meet a Congressionally mandated April 26 deadline to develop and launch a Tricare Standard enrollment plan for reservists who return to drill status after active duty deployments.

The first-ever offer of Tricare benefits to drilling National Guard and Reserve members is one of several health care enhancements approved as part of the 2005 National Defense Authorization Act.

Deactivated reservists will be able to buy Tricare Standard, the military’s traditional fee-for-service health insurance which has co-payments and deductibles, if they agree to pay monthly premiums set at 28 percent of program costs and if they sign an agreement to remain in the selected Guard or Reserve.

They will be able to take a year’s worth of coverage, for themselves or their families, for every 90 consecutive days they were mobilized. The plan is available to any member who served on active duty in support of a contingency operation for 90 days or more after Sept. 10, 2001, and who was released from active duty before Oct. 28, 2004, or within 180 days of that date. Members must enter into the agreement to serve in the selected reserve within a year of Oct. 28, 2004.

The Tricare Standard coverage will not take effect until after other “transition” medical benefits expire. In 2003, Congress gave mobilized reservists and their families up to 180 days of Tricare to ease return to civilian life. That was approved under temporary authority. The 2005 defense bill makes the six-month transition benefit permanent.

Also made permanent is up to 90 days of premobilization Tricare for reservists and their families, when the reservist received delayed activation orders.

The new law additionally directs the services to give mobilized reservists complete physicals before they leave active duty to identify and treat service-related injuries or ailments.

Among other recent medical improvements for reservists, deductibles charged under both Tricare Standard and Tricare Extra, DOD’s preferred provider network, are waived for family members when sponsors are ordered to active duty for more than 30 days.

No Employer Tax Credits

The political pressure applied by Sen. Mary Landrieu (D-La.) failed to move the 108th Congress in its final days to approve new tax credits for civilian employers of mobilized Guard and Reserve members. (See “Action in Congress: Employer Tax Credits, Almost,” December 2004, p. 23.)

Indeed, her late-hour attempt to add the provision to a House bill that would allow deployed reservists to make penalty-free withdrawals from their individual retirement accounts to help address deployment-related financial hardships stopped passage of that bill last year.

As introduced originally by Rep. Bob Beauprez (R-Colo.), H.R. 1779 would allow reservists to make penalty-free withdrawals from IRAs if mobilized for six months or longer. His bill would have cost $4 million, in reduced tax revenue, over 10 years. With Landrieu’s amendment, the cost jumped to $328 million over 10 years.

“That sunk it,” said a spokesman for Beauprez. Both Landrieu and Beauprez are expected to reintroduce their bills in the new Congress.

Favorable Pay Link

Despite complaints from the Bush Administration that Congress harms readiness when it ties the size of raises for federal civilian employees to the pay hikes for military members, lawmakers have done it again. Effective Jan. 1, federal civilian employees received a 3.5 percent raise, matching the military’s increase.

The civilian raise was a percentage point higher than proposed by the White House.

In a Nov. 17 letter to the chairmen of the House and Senate Appropriations Committees, Joshua B. Bolten, director of the Office of Management and Budget, argued that 3.5 percent exceeds both inflation and the average increase in private sector pay as measured by the government’s Employment Cost Index. He said the higher raise also isn’t warranted by recruitment or retention problems.

Bolten warned of “reductions in force or shifts of resources away from critical programmatic priorities” if the higher raise were approved.

Days later, Congress passed the 3.5 percent increase anyway. Lawmakers pointed to a tradition of pay parity between the military and federal civilian workforce.

Vet Benefits Rise

Congress passed three bills in November to help veterans. One raises the value of some benefits, another strengthens their legal rights, and a third raises pay for VA doctors and broadens work schedule options for nurses.

The most significant of the three is the Veterans Benefits Improvement Act (S. 2486). Its highlights include:

•Raising Montgomery GI Bill (MGIB) benefits for apprenticeship or on-the-job training to $853 a month for the first six months of training, $653 a month for the second six, and $452 for additional months. Coverage takes effect in October.

•Offering active duty MGIB to drilling reservists who complete two consecutive years of active service. Those who elect to enroll will have a year after returning to drill status to pay the $1,200 “buy-in” contribution.

•Increasing the maximum home loan covered under the VA loan guaranty program to $333,700. The VA guarantees 25 percent of the home loan up to the maximum. The new ceiling will be adjusted for inflation.

•Raising by $250 a month Dependency and Indemnity Compensation to surviving spouses who have children under age 18. The new increase is set to expire in two years.

•Requiring the VA to exclude life insurance payments when calculating “income” to determine veterans’ eligibility for death pension benefits.

•Restoring VA guarantees for adjustable-rate mortgages though 2008.

•Extending VA’s hybrid adjustable-rate mortgage loan program through 2008.

• Increasing to 24 months the period that an employer must make company health benefits available to mobilized reservists.

•Clarifying legal protections under both the Uniformed Services Employment and Re-employment Rights Act and the Service Members’ Civil Relief Act. For example, the law now makes clear that not only deployed reservists but also their spouses can terminate leases on apartments or automobiles, without financial penalty.

Another bill, the Veterans Health Programs Improvement Act (H.R. 3936), ends patient co-payments for VA-provided hospice care and requires VA to establish its first multitrauma centers to study new treatments for the most severe type of war wounds. It also increases assistance to homeless veterans.

Consistency Lacking

Veterans often fall victim to inconsistent treatment in review of disability compensation claims because the regulations used by VA regional offices are open to interpretation, according to Congressional auditors. Furthermore, the VA has no way to track and correct such differences.

In a briefing to a pair of House subcommittees last fall, the Government Accountability Office said the VA “cannot provide reasonable assurance that similarly situated veterans who submit claims for the same impairment to different regional offices receive reasonably consistent decisions.”

A 2002 GAO report recommended that VA assess the consistency of claims adjudication through various means, including development of hypothetical claims for specific medical conditions to reduce “impairment-specific variations” found when adjudicators must use their own judgment.

GAO said the department has not done this.

VA officials said they are developing a new data collection system that could allow detection of claim inconsistencies between regions. But it won’t be operational until 2006. GAO said several years of data collection will be needed after that to assess consistency of decision-making among VA’s 57 regional offices.

The 2005 Priorities

The 108th Congress adjourned without addressing several high-profile issues, particularly for retirees and their survivors. Here’s a rundown of legislation likely to resurface as service association priorities for the 109th Congress:

Expanded Concurrent Receipt. While Congress has ended or begun phasing out the ban on concurrent receipt of both military retirement and disability benefits for the most severely disabled retirees, it also left a lot of meat on that legislative bone.

Expect pressure this year, for example, to phase out the CR ban on disabled retirees forced to leave service short of 20 years and also to ease the ban for 20-year retirees who still see retired pay reduced by VA payments tied to disabilities rated below 50 percent.

At a minimum, Congress will be pressured to accelerate phaseout of the CR ban for 15,000 retirees with 20 or more years of service who are rated “unemployable” but have disability ratings below 100 percent.

Widows’ Concurrent Receipt. Survivors of service members who die while on active duty or of retirees who die from service-related disabilities can receive tax-free Dependency and Indemnity Compensation from VA. But in a situation similar to the ban on CR for disabled military retirees, survivors who draw DIC see a dollar-for-dollar offset in military Survivor Benefit Plan payments. Expect associations to press for a redress.

Keep the Promise. The Florida-based Class Act Group will continue to urge Congress to pass the Keep Our Promise to America’s Military Retirees Act, which has as its major feature waiver of Medicare Part B premiums to retirees who first entered service on or before Dec. 7, 1956. Such relief becomes more significant and costly with the 17 percent increase in Part B premiums that went into effect this year.

Paid-up SBP. Congress several years ago passed a bill to end Survivor Benefit Plan premiums when members reach age 70 or when they have paid premiums for 30 years, whichever occurs later. However, lawmakers delayed the effective date until Oct. 1, 2008. Retirees will continue to urge lawmakers to pass legislation granting immediate relief.

More Reserve Tricare. Reserve personnel advocates say all drilling Guard and Reserve members should be able to enroll in Tricare if they agree to pay premiums. So expect pressure on Congress to cut the mobilization strings now attached to the new Tricare Standard option.

Reserve Retirement. Numerous bills in the 108th Congress would have improved reserve retirement by lowering the retirement age threshold (currently 60) at which benefits are paid. New bills will be introduced, but the Bush Administration is expected to resist any move toward earlier retirement.

Pay Raise Comparability. The 3.5 percent military pay raise on Jan. 1 was the last of a Congressionally mandated series of extra increases to close the pay gap between the military and private sector workers of comparable age and education, particularly for midgrade and senior enlisted members. Look for Congress to weigh whether the pay gap has been closed or whether larger or more targeted pay raises are needed for 2006 and beyond.

Tricare Standard. Congress could decide in 2005 to strengthen Tricare Standard, a benefit largely neglected in recent years as the focus stayed on improving Tricare Prime, the military managed care option. Expect more bills such as H.R. 5152, introduced by Rep. Charlie Norwood (R-Ga.) late in the last Congress, that called for lower patient co-payments and inpatient costs and more competitive reimbursement rates for doctors.