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DOD budget would affect pay, health, retirement

The budget that the Defense Department hopes to use to begin charting its way to a leaner, more efficient military includes measures aimed at reining in the amounts the department spends on military pay, benefits and retirement.

The budget that the Defense Department hopes to use to begin charting its way to a leaner, more efficient military includes measures aimed at reining in the amounts the department spends on military pay, benefits and retirement. DOD offered details of its proposed budget at a Jan. 26 briefing led by Defense Secretary Leon Panetta.

“The budget will contain a road map to try to address the costs of military pay, health care and retirement in ways that we believe are fair, transparent and consistent with our fundamental commitments to our people,” Panetta said.

In highlights of the proposed budget released by the department, DOD said it had “created sufficient room” to provide full military pay raises in 2013 and 2014, but would move to “more limited” pay raises beginning in 2015 to begin to achieve cost savings. The department said the lead time would give service members and families “fair notice” of the new pay dynamic.

In terms of military health care, DOD said that “most of the changes” in the budget would not affect active duty personnel or their families. Nor would the changes affect medically retired vets or survivors of service members who died on active duty.

But the situation would be different for working-age retirees under age 65—many of whom are still likely to be employed in the private sector.

DOD’s budget would propose new fees and increases for working-age retirees who remain in the Tricare program. A tiered approach to fees, based on retired pay, would require senior-grade retirees to pay more, and junior-grade retirees to pay less.

The budget would propose a new enrollment fee for Tricare for Life for retirees 65 and older, as well, also using a tiered approach.

“We decided that to help control growth of health care costs, we are recommending increases in health care fees, co-pays and deductibles for retirees,” Panetta said. “But let me be clear that even after these increases, the cost borne by military retirees will remain below the levels in comparable private-sector plans.”

Additionally, the budget would hike certain pharmacy co-pays for Tricare beneficiaries to provide an incentive to increase the use of less expensive generics and mail order pharmacy services.

As for military retirement benefits, DoD said that it will ask Congress for permission to establish a commission to conduct “a comprehensive review of military retirement in the context of total military compensation.”

Any changes to retirement recommended by such a commission would apply only to future recruits, DOD said—retirement benefits of current service members would be grandfathered and exempt from any recommended changes.

 

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