Action in Congress

Sept. 1, 2004

Authorization Bill Cliff-Hangers

The $416.2 billion defense appropriations bill for Fiscal 2005 that President Bush signed Aug. 5 includes a 3.5 percent military pay raise in January and other quality of life benefits. However, lawmakers left for August recess before completing final action on the companion defense authorization bill.

That bill contained several cliff-hanger issues. When Congress reconvenes after Sept. 7, House-Senate conferees will begin to negotiate:

  • How to improve the military Survivor Benefit Plan (SBP).
  • Whether to allow retirees with 20 or more years of service and disability ratings of 100 percent full concurrent receipt immediately or to continue them under the 10-year phase-in schedule set for any 20-year retirees with disability ratings of 50 percent or higher.
  • Whether to open Tricare to all drilling reservists and their families.

SBP Reform Alternatives

Authorizers agree there should be a phaseout of the age-62 offset in the Survivor Benefit Plan, but they disagree on the length. Defense officials, on the other hand, have argued for keeping the offset.

At age 62, the SBP benefits paid to surviving spouses of retired military personnel typically fall from 55 percent of covered retirement down to as low as 35 percent.

The House bill would phase out the age-62 cut within four years of passage. Also, retirees who had not enrolled in SBP at retirement would get a second chance during a year-long open season. They would pay a penalty on premiums proportional to years that have passed since they retired, but the penalty could not exceed 4.5 percent of monthly retired pay.

The Senate version would phase out the age-62 reduction over 10 years, not four, and retirees enrolling late would have to pay all missed premiums since their retirement, plus interest. The House plan would cost $6.8 billion over 10 years. The Senate’s would cost a third of that, or $2.2 billion. Either plan, or a compromise between the two, would offer significant SBP changes.

Meanwhile, defense officials have presented lawmakers with a package of appeal documents with some alternative approaches. These ideas probably came in too late to be adopted this year, but they could stimulate support for the Senate’s cheaper SBP plan.

One DOD proposal simply would delay the age-62 offset by three or more years, until the surviving spouse reaches full retirement age under Social Security.

Another proposal would be to make the SBP program more affordable for enlisted retirees by lowering premiums. Currently, only about 65 percent of enlisted retirees enroll in SBP, while some 80 percent of retired officers enroll. Officials recommended “substantial discounts for those with lowest retired pay.”

Proponents of SBP reform, including major service associations, believe the DOD alternatives may be purely cosmetic, rather than true reform.

Housing Fight

Lawmakers in late July debated raising the spending ceiling on the successful military housing privatization program. Included in the House Appropriations Committee’s $10 billion military construction bill (H.R. 4837) was a provision to raise the total spending cap for private industry contracts issued to build military housing on and off base.

If supported, the measure would have raised the cap from $850 million to $1.35 billion, making it possible for DOD to contract to build about 50,000 additional housing units in Fiscal 2005 and 2006.

According to House Budget Committee Chairman Jim Nussle (R-Iowa) the provision posed two problems. First, the $500 million increase was not enough to cover planned housing projects. The Congressional Budget Office had said the projects would require an increase of $1.2 billion. Second, said Nussle, raising the cap would push the construction bill allocation above budget resolution guidance, making it a matter for the defense authorization bill, not construction appropriations.

Nussle suggested Congress could find offsets to cover the increase or pass a separate authorizing bill not subject to appropriation limits. The latter is what Nussle did in introducing the Military Housing Improvement Act of 2004 (H.R. 4879).

The House promptly passed Nussle’s bill, 423-to-0, but Rep. David Obey (Wis.), ranking Democrat on the appropriations committee, called it “an outrageous charade.” He said there was no “guarantee whatsoever that it will be passed in the Senate.”

Oddly, both House Democrats and the Bush Administration opposed Nussle’s point-of-order challenge, which, after a single vote, removed the $500 million from the construction bill.

Rep. Ike Skelton (Mo.), ranking Democrat on the armed services committee, said, “We just saw 24,000 military families getting their just housing delayed for a long time.” However, Rep. Duncan Hunter (R-Calif.), armed services committee chairman, said that something will get worked out to avoid housing project delays. By the time “the dust clears in this process,” he said, “we are going to have these 24,000 units released for construction.”

Making Part B Automatic

By early fall, Tricare beneficiaries entitled to Medicare Part A (hospital insurance) will be enrolled automatically in Part B (doctor and outpatient insurance) coverage. The change implements a provision of 2003 legislation affecting older or disabled Tricare beneficiaries.

These beneficiaries, according to the Social Security Administration, will receive in the mail this fall a form inviting them either to change their Part B entitlement date to another month in 2004 or to formally opt out of Part B, thus reversing automatic enrollment. If they decline Part B, however, that means they have declined to participate in Tricare for Life, which requires enrollment in Medicare Part B.

The automatic Part B enrollment is part of a plan to implement, simply and efficiently, two provisions of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (P.L. 108-173).

The first provision allows Medicare Part A-eligible military retirees and their family members who want to participate in Tricare for Life, but who have not yet enrolled in Medicare Part B, to enroll in Part B without facing a penalty, or surcharge, on premiums. This one-time open enrollment period runs through Dec. 31, 2004.

A second provision brings relief to TFL beneficiaries who enrolled in Part B from January 2001 through December 2004 and had to pay surcharge premiums of more than $66.60 a month for late enrollment. Those beneficiaries will have Part B premiums reduced to $66.60 and automatically will receive refunds back through January 2004.

CRSC Backlog To Ease

After months of wrangling among the Defense Finance and Accounting Service (DFAS), Pentagon policy-makers, and Defense Department lawyers, the Combat-Related Special Compensation (CRSC) payments made to retirees rated “unemployable” or who are eligible for Special Monthly Compensation (SMC) from the VA were set to be raised early this fall.

According to DFAS, those veterans who lost retired pay based on Individual Unemployment (IU) entitlements would be paid retroactively back to June 1, 2003, beginning around Aug. 30. Higher CRSC payments for those affected by SMC offsets were expected to begin by Sept. 30.

DFAS said the SMC-related CRSC payment “requires additional time due to required coordination” with the services.

New Service Members’ Protections

Before summer recess, the House Veterans’ Affairs Committee approved and sent to the floor the Service Members Legal Protection Act of 2004 (H.R. 4658), to strengthen legal, economic, and job rights for activated reservists and deployed service members.

A key feature of the bill closes loopholes found in the Service Members Civil Relief Act (SCRA), regarding lease protection for deployed active duty and reserve members. The new bill ensures the residential and motor vehicle protections also apply to joint leases with dependents.

The new bill also would:

  • Clarify lease termination provisions for cases of individual deployments as well as unit deployments.
  • Increase from 18 months to 24 months the maximum period that mobilized employees can elect employer-provided health coverage under the Uniformed Services Employment and Re-employment Rights Act (USERRA).
  • Require employers to provide notice to employees about employee rights and benefits and employer obligations under USERRA.
  • Establish a demonstration project for expedited handling of alleged violations of USERRA for veterans employed by the federal government.
  • Authorize the VA to pay for the cost of care for newborn infants of women veterans enrolled in VA health care.

The House committee also approved the Veterans Medical Facilities Management Act (H.R. 4768). It would provide funding authority for the VA to open 16 new outpatient clinics and to better manage capital assets by allowing VA to keep proceeds from the sale, leasing, or transfer of excess property.

Behind Rare IRR Call-Up

Army officials in July said unexpected violence in Iraq, with insurgents attacking roads and bridges and interrupting supply lines, was behind the rare, involuntary recall to active duty of 5,674 soldiers in the Individual Ready Reserve.

Labeled as a “back door draft” by some lawmakers, the IRR call-up was a central focus of a special House Armed Services Committee hearing in July. David S.C. Chu, undersecretary of defense for personnel and readiness, testified that IRR service “is part of the obligation of military service that each entrant into the military assumes.”

The IRR comprises those former service members who completed their extended active duty or reserve drill obligations but who still have some time left before they have completed their statutory eight-year service obligation. They remain in a nondrilling status for the term of that commitment and can be recalled, if needed. Some IRR members were activated for the 1990-91 Persian Gulf War, Chu said.

Gen. Richard A. Cody, the Army’s vice chief of staff, blamed the recall on a level of violence in Iraq that had forced changes in deployment requirements several times over the last year. The Army continues to impose a Stop-Loss order, barring certain troops being sent to Iraq or Afghanistan from leaving service, even after their commitments are up.

Cody acknowledged that the Army can benefit from a provision in the House-passed defense authorization bill to raise active duty numbers by 30,000 soldiers—10,000 a year over three years.

Chu said the Bush Administration supports a “temporary” increase that could “last several years during this period of Army transition.” Both Republicans and Democrats have criticized that stand, saying the increase should be permanent.