Action in Congress

Feb. 1, 2005

Brown-Bag Project

Supporters of legislation to restore free lifetime health care to older generations of military retirees, by exempting them from paying Medicare Part B premiums, are raising Congressional awareness of their cause with thousands of letters to Capitol Hill written on brown paper bags.

The “Brown-Bag Project” is the brainchild of retiree Thomas Gould. He suggested it to retiree health care crusader Floyd Sears who presented it to the Class Act Group, headed by retired Air Force Col. George E. “Bud” Day, a lawyer and Medal of Honor recipient. Day has fought in the courts and in the halls of Congress to restore free lifetime health care to retirees who first entered service on or before Dec. 7, 1956, the date Public Law 569 took effect, limiting retiree access to health care in military facilities.

The Keep Our Promise to America’s Military Retirees Act, if passed by the 109th Congress, would, among other things, waive Medicare Part B premiums to retirees who first entered service before lawmakers made free retiree health care conditional, based on the space available in military treatment facilities.

The Class Act Group and the Military Retirees Grass Roots Group kicked off the formal Brown-Bag effort in late fall. Project managers are urging retirees who could gain from “Keep the Promise” legislation to send a brown-bag letter to Congress each week. As of Jan. 10, more than 12,000 brown-bag letters had been mailed.

It’s a gimmick to focus attention of lawmakers, said retired Army Col. Harry Riley, with the Class Act Group. Retirees are asked to rip off a piece of bag, write a quick note to a lawmaker about the broken promise to older military retirees of free lifetime health care, stuff it in an envelope, and mail it.

“Every week, just about every member of Congress is going to be getting these pieces of brown bag,” said Riley. News reporters and TV news programs soon will begin doing stories, he added.

“There is no cheaper way to do this with as much force,” said Riley.

The brown bag symbolizes the government’s broken promise to the “Greatest Generation,” treating them like “used bags” by forcing them to pay for a portion of their health care, he explained.

These same retirees acknowledge that Congress made significant progress on retiree health care in 2000 with passage of Tricare for Life, the military’s health insurance supplement to Medicare. But some older retirees maintain they shouldn’t have to pay any health care costs, given promises of free lifetime care made during their careers.

More Help for Vets

Three senior Senators banded together to entreat President Bush to support upcoming legislation to improve veterans’ programs.

The new Senate Democratic leader, Harry Reid (Nev.), Sen. Daniel Akaka (D-Hawaii), and Sen. Barbara Mikulski (D-Md.) sent a letter to the President outlining a 2006 budget for the Department of Veterans Affairs that would allow major gains in veterans’ health care, education, and transition benefits for troops returning from the war on terror. Among their recommendations were:

•Fully fund VA health care and reopening the system to new “Priority 8” veterans, those who have no service-connected disabilities and have incomes above poverty-level thresholds. The cost would be a few billion dollars a year.

•Ensure “seamless transition from active duty to veteran status” with guarantees of timely access to VA health care and greater reliance on computerized transfer of service and medical records. (They said VA and DOD had made progress on coordinating records but should do more to relieve the administrative burden on veterans.)

•Eliminate backlogs of 338,000 VA compensation claims and 132,000 appeals by adding claim adjudicators.

•Increase GI Bill education benefits to match rising college and technical school costs.

The Senators advised Bush that they will introduce legislation early in the 109th Congress “to correct many of the injustices currently endured by America’s veterans” and urged his support.

Anytime Thrift Savings

Both the House and Senate unanimously passed legislation that will allow military and federal civilian employees to start or change contributions to the Thrift Savings Plan at any time instead of having to wait for twice-yearly “open seasons.”

In the final session of the 108th Congress, the lawmakers approved the Thrift Savings Plan Open Elections Act of 2004 (H.R. 4324), a bill sponsored by Rep. Thomas M. Davis III (R-Va.), to allow anytime changes in TSP contributions. Davis said the passage marked “a great day for federal employees.”

President Bush on Dec. 21 signed the bill, making it Public Law No. 108-469.

In 2005, military members can contribute up to 10 percent of basic pay, not to exceed an IRS limit on annual tax-deferred investments of $14,000, into the TSP. They also can invest all or part of bonuses or special pay. Members serving in tax-free combat zones are allowed up to $41,000 in annual contributions.

Davis said that the “work is not finished.” Davis expects to make “additional improvements to the TSP program in the near future.”

One of those improvements, he said, would be to remove the inequity that exists concerning when employees begin to receive matching federal funds; it still is tied to open-season dates. Under current provisions, some employees receive matching funds after seven months, while others have to wait nearly 12 months, depending on when they entered federal service during the year.

Housing Allowances Go Up

Lawmakers authorized a boost of about 20 percent in spending for 2005 Stateside housing allowances. The total of $12.3 billion is about $2.5 billion more than was paid in 2004.

A portion of that increase stems from the mobilization of large numbers of Guard and Reserve members and the move to privatize more military housing units. The increase also reflects the final phase of the housing increase Congress authorized to reduce out-of-pocket expenses for military members who live off base.

The initiative would eliminate the more than 20 percent disparity between the average allowance paid to a service member and the average cost of off-base housing. The gap was narrowed each year to reach 3.5 percent in 2004 and zero in 2005, based on local median cost for housing deemed appropriate to a particular pay grade, said Tim Fowlkes, director of basic allowance for housing (BAH).

The housing allowance is being paid this year to 910,000 service members living off base in the States. That is 90,000 more than qualified for BAH last year, a consequence of wartime activations and more service members moving into privatized housing. The move to privatized housing is enabling DOD to eliminate old, costly, and substandard base housing. Members are charged, by agreement between the services and developers, set monthly rents equal to the member’s monthly BAH.

BAH for 2005 shows an average rise of eight percent for an individual with dependents, but the rise in BAH rates varies widely, based on rank, dependency status, and assignment area.

Supplemental SBP

Paychecks for 12,000 military retirees who elected to take Supplemental Survivor Benefit Plan coverage should have risen on Dec. 1, 2004, when DOD stopped charging them for the cost of supplemental coverage. The coverage itself was to remain in force until early 2008.

Typically, those retirees bought the additional coverage to protect surviving spouses from the standard drop, known as the “widow’s tax,” that occurred in SBP benefits when the spouse reached age 62. Congress overturned the widow’s tax in the Fiscal 2005 National Defense Authorization Act, ushering in a four-year phaseout of the SBP benefit reduction. A little noticed feature of SBP reform was the end of supplemental charges. (See “Action in Congress: SBP Reform Tops Personnel Gains,” December 2004, p. 22.)

The Defense Finance and Accounting Service said it stopped deducting costs for SSBP effective Nov. 1. This would first show up in Dec. 1 paychecks. The retirees affected should have received by now an account statement showing lowered SBP costs, adjusted taxable income, adjusted federal income tax withholding, and a net increase in retired pay.

Typical SBP benefits dropped at age 62 from 55 percent of covered retired pay down as low as 35 percent. The age-62 reduction in SBP made the supplement an attractive option for some retirees, despite its high premiums. Congress called for a staged phaseout to be completed in 2008.

Under the new law, in October, benefits for most survivors 62 and older will increase to 40 percent and another five percent each year until April 2008, when it will be fully restored to 55 percent. That will eliminate the need for a supplement to SBP.

DFAS officials said service members who retire on or after Oct. 28, 2004, the date the new law was signed, and who elect full SBP coverage for a spouse or former spouse or receive automatic SBP spouse coverage, also will receive automatic supplemental coverage until April 2008.

Contractual Investments

With Congress moving to ban sale of “contractual” investment products to military personnel, the leading brokerage firm offering them, First Command Financial Planning Inc. of Fort Worth, Tex., stopped marketing the products in December.

First Command also agreed to pay $12 million to settle charges brought by the Securities and Exchange Commission and the National Association of Securities Dealers, the primary private-sector regulator of the US securities industry. According to a Dec. 15, 2004, SEC news release, the money will be used, in part, for restitution to certain investors and investor education programs for military members and their families.

First Command accepted the censure and fine, but a company news release did not admit to or deny the allegations or findings. It said that First Command life insurance and banking services were not involved in this action.