New Panel Targets Retirement and TRICARE
Jim_Higgins
http://www.military.com/features/0,15240,222915,00.html
Tom Philpott | November 18, 2010
Military members and retirees have more financial darts to dodge after a
second bipartisan task force on reducing the nation�s debt unveiled a
different set of cost-cutting recommendations on Wednesday.
The Debt Reduction Task Force, co-chaired by former Republican Sen. Pete
Domenici and economist Alice Rivlin, takes sharper aim at the military
community including active duty forces still at war in Afghanistan.
In the unlikely event Congress approves the Domenici-Rivlin plan for
cutting military retirement, members who haven�t served more than 15
years would find themselves under a cheaper, �more flexible� and complex
plan.
Proponents argue that many more members under the proposed plan would
qualify for some retirement, at age 60, if they serve 10 years or more.
But completion of a traditional 20-year career no longer would qualify
for an immediate annuity on leaving service. Retired pay would begin at
age 57.
Debt Panel II, as it might be called, began its work in January at the
Bipartisan Policy Center, a Washington D.C. think tank founded by four
former Senate majority leaders. Like last week�s report from the
National Commission on Fiscal Responsibility and Reform, co-chaired by
Alan Simpson and Erskine Bowles, this report warns of an approaching
debt tsunami that could destroy America prosperity if government
spending isn�t slashed and taxes raised.
Among scores of initiatives are recommendations to raise social security
payroll taxes, cap medical malpractice awards, freeze defense spending
for five years and reduce active force strength by 275,000.
Both this and last week�s report recommend adoption of a modified
Consumer Price Index to dampen annual cost-of-living adjustments (COLAs)
for federal entitlements including military and federal civilian retired
pay, social security, veterans� compensation and survivor benefits.
Both reports also call for cutting military retirement and having
TRICARE beneficiaries pay more out of pocket for coverage. But the
Domenici-Rivlin panel would wield a shaper knife on both major benefits.
On retirement, Debt Panel II embraces reforms proposed by the 10th
Quadrennial Review of Military Compensation in 2008. The idea is to
allow more members to earn some retirement -- making the plan more
�fair� and, for force managers, more flexible � while slashing overall
program costs.
Two of four features -- a defined annuity and a government-funded Thrift
Savings Plan (TSP) with vesting after 10 years -- would apply to all
members who get pushed under the new plan.
The annuity formula is familiar at 2.5 percent of average annual basic
pay (but for their highest five earning years not the highest three
average) multiplied by total years served. Payments would start at age
60 for those who serve 10 to 19 years and at 57 for those who serve 20
or more.
Government contributions to TSP accounts would start in year two and
equal two percent of basic pay. They would climb to three percent in
year three and four, to four percent in year five, and to five percent
thereafter.
The services would control the plan�s other two features: �gate pays� to
help draw members to time-in-service milestones, and separation pay.
Critics argue the plan is too complex and would leave members confused
as to the real value of their retirement. The QRMC proposed that the
plan be tested on a few thousand volunteers. That wasn�t done. Yet
Debt Panel II proposes transitioning most current members to the new plan.
�Under such a plan,� it reports, �current pay will have to rise to make
up for the reduced incentive for members to remain in service. Even
with such adjustments, however, this reform is projected to reduce the
retirement system�s cost by at least 50 percent.�
Recommendations targeting TRICARE also, in effect, are pulled off the
shelf. That is, they were part of President George W. Bush�s final
defense budget request, provisions that Congress simply had ignored.
Domenici and Rivlin note again that TRICARE fees haven�t been raised
since they were set in 1995 and, at the time, covered 27 percent of
program costs. Now the frozen fees cover only 11 percent. And
Medicare-eligible retirees, the report says, �currently do not share in
their TRICARE costs.�
So Debt Panel II says TRICARE fees for working-age retirees should be
raised high enough to again cover 27 percent of costs. A pay expert who
worked for the task force said the plan assumes that enrollment fees for
TRICARE Prime, the managed care option, would be raised from $460 a year
for families and $230 for individuals and tiered based on gross retired pay.
For example, a married retiree with less than $20,000 in annual retired
pay would pay $730 in year one, $900 in year two. These larger
incremental raises would stop in year five when the yearly fee hit $1260.
Those with retired pay of $20,000 to $40,000 would pay more. The
highest enrollment fees, for those drawing more than $40,000 in retired
pay, would top off in year five at $2460, or $2000 higher than they pay now.
These rates then would be adjusted to keep pace with inflation.
Fees for outpatient visits would more than double, to $28. And
working-age retirees using the fee-for-service TRICARE Standard plan or
TRICARE Extra would be charged an enrollment for the first time of $150.
Pharmacy co-pays in TRICARE retail network � now $3 for generic, $9 for
brand-name drugs on formulary and $22 for non-formulary drugs -- would
be reset at zero for generic drugs, $15 for brand names on formulary and
$45 for brand names off formulary.
Without specifying numbers, the panel also recommends that
Medicare-eligible retirees using TRICARE for Life as a supplement to
Medicare begin paying �minimal cost-sharing� amounts. But active duty
members and families would continue to be spared TRICARE premiums or
co-pays.
Domenici quoted Adm. Mike Mullen, Joint Chiefs chairman, as calling
rising U.S. debt �the most serious threat to America�s national security.�
Let the DoD and your elected officials know how you feel about these
cost cutting proposals.
http://www.capwiz.com/military/issues/alert/?alertid=19823501
--
"I have tried to live my life so that my family would love me and my
friends respect me. The others can do whatever they please."
John Wayne
Jack G.
> New Panel Targets Retirement and TRICAREhttp://www.military.com/features/0,15240,222915,00.html
>
> Tom Philpott | November 18, 2010
>
> Military members and retirees have more financial darts to dodge after a
> different set of cost-cutting recommendations on Wednesday.
>
> The Debt Reduction Task Force, co-chaired by former Republican Sen. Pete
> Domenici and economist Alice Rivlin, takes sharper aim at the military
> community including active duty forces still at war in Afghanistan.
>
> In the unlikely event Congress approves the Domenici-Rivlin plan for
> years would find themselves under a cheaper, more flexible and complex
> plan.
>
> Proponents argue that many more members under the proposed plan would
> qualify for some retirement, at age 60, if they serve 10 years or more.
> But completion of a traditional 20-year career no longer would qualify
> for an immediate annuity on leaving service. Retired pay would begin at
> age 57.
>
> Debt Panel II, as it might be called, began its work in January at the
> Bipartisan Policy Center, a Washington D.C. think tank founded by four
> National Commission on Fiscal Responsibility and Reform, co-chaired by
> Alan Simpson and Erskine Bowles, this report warns of an approaching
> debt tsunami that could destroy America prosperity if government
>
> Among scores of initiatives are recommendations to raise social security
> payroll taxes, cap medical malpractice awards, freeze defense spending
> for five years and reduce active force strength by 275,000.
>
> Consumer Price Index to dampen annual cost-of-living adjustments (COLAs)
> for federal entitlements including military and federal civilian retired
>
> Both reports also call for cutting military retirement and having
> TRICARE beneficiaries pay more out of pocket for coverage. But the
> Domenici-Rivlin panel would wield a shaper knife on both major benefits.
>
> On retirement, Debt Panel II embraces reforms proposed by the 10th
> Quadrennial Review of Military Compensation in 2008. The idea is to
> allow more members to earn some retirement -- making the plan more
> program costs.
>
> Two of four features -- a defined annuity and a government-funded Thrift
> Savings Plan (TSP) with vesting after 10 years -- would apply to all
> members who get pushed under the new plan.
>
> The annuity formula is familiar at 2.5 percent of average annual basic
> pay (but for their highest five earning years not the highest three
> average) multiplied by total years served. Payments would start at age
> 60 for those who serve 10 to 19 years and at 57 for those who serve 20
> or more.
>
> Government contributions to TSP accounts would start in year two and
> equal two percent of basic pay. They would climb to three percent in
> year three and four, to four percent in year five, and to five percent
> thereafter.
>
> help draw members to time-in-service milestones, and separation pay.
>
> Critics argue the plan is too complex and would leave members confused
> as to the real value of their retirement. The QRMC proposed that the
> Debt Panel II proposes transitioning most current members to the new plan.
>
> up for the reduced incentive for members to remain in service. Even
> with such adjustments, however, this reform is projected to reduce the
>
> Recommendations targeting TRICARE also, in effect, are pulled off the
> defense budget request, provisions that Congress simply had ignored.
>
> since they were set in 1995 and, at the time, covered 27 percent of
> program costs. Now the frozen fees cover only 11 percent. And
> their TRICARE costs.
>
> So Debt Panel II says TRICARE fees for working-age retirees should be
> raised high enough to again cover 27 percent of costs. A pay expert who
> worked for the task force said the plan assumes that enrollment fees for
> TRICARE Prime, the managed care option, would be raised from $460 a year
> for families and $230 for individuals and tiered based on gross retired pay.
>
> For example, a married retiree with less than $20,000 in annual retired
> pay would pay $730 in year one, $900 in year two. These larger
> incremental raises would stop in year five when the yearly fee hit $1260.
>
> Those with retired pay of $20,000 to $40,000 would pay more. The
> highest enrollment fees, for those drawing more than $40,000 in retired
> pay, would top off in year five at $2460, or $2000 higher than they pay now.
>
> These rates then would be adjusted to keep pace with inflation.
>
> Fees for outpatient visits would more than double, to $28. And
> working-age retirees using the fee-for-service TRICARE Standard plan or
> TRICARE Extra would be charged an enrollment for the first time of $150.
>
> brand-name drugs on formulary and $22 for non-formulary drugs -- would
> be reset at zero for generic drugs, $15 for brand names on formulary and
> $45 for brand names off formulary.
>
> Without specifying numbers, the panel also recommends that
> Medicare-eligible retirees using TRICARE for Life as a supplement to
> members and families would continue to be spared TRICARE premiums or
> co-pays.
>
> Domenici quoted Adm. Mike Mullen, Joint Chiefs chairman, as calling
>
> Let the DoD and your elected officials know how you feel about these
>
> --
> "I have tried to live my life so that my family would love me and my
> friends respect me. The others can do whatever they please."
> John Wayne
This so-called debt comission should be disbanded and each member
given a lot lead enema.