Digging Deeper Into How the Proposed Budget will Impact Military Families

Digging Deeper Into How the Proposed Budget will Impact Military Families

We’re starting to get a better idea of what the 2015 Budget Proposal, released by the Department of Defense (DoD) means for military families. The proposal impacts service member pay, allowances, and other programs including TRICARE, the commissary, and Basic Allowance for Housing (BAH). Here’s the breakdown:

Smaller Pay Raises

For the second year in a row, service members will only receive a one percent pay raise, instead of the 1.8 percent pay raise that was programmed. General and Flag officers will have their pay frozen for Fiscal Year 2015. Besides the impact on daily life, these changes would also result in lower retirement pay for those who spend 20 years in the military.

Changes to Health Care Access and Cost

We have three main concerns regarding the TRICARE proposal as we understand it today. 

  1. It creates out-of-pocket costs for active duty family members who are currently enrolled in Prime. They will now be responsible for co-pays when using network providers. 
  2. The new plan will be particularly detrimental to military families who don’t have access to a Military Treatment Facility (MTF). They will face co-pays for all care with the exception of clinical preventative services. 
  3. We are concerned about how this plan will impact access to care and continuity of care for all Active Duty Family Members.

The main TRICARE proposal creates a Consolidated TRICARE Health Plan to replace the TRICARE Prime, Standard, and Extra health plans currently available.

Highlights of the Consolidated TRICARE Health Plan include: 

  • No change for active duty service members. They will maintain priority access to health care without any cost sharing and would still require authorization for civilian care. 
  • No more referral/authorization for specialty care. Active duty family members will have open access to providers. Beneficiaries can self-refer to a specialist. The Consolidated TRICARE Health Plan would operate more like a Preferred Provider Organization (PPO) or the current TRICARE Standard plan. 
  • No change to MTF cost for most services. Active Duty Family Members will continue to have no cost shares for most health care they receive at a Military Treatment Facility (MTF), your military hospital or clinic. 
  • Active Duty Family Members will have co-pays for TRICARE network care. The co-pay is a fixed amount you pay whenever you use a TRICARE network provider. 
  • Active Duty Family Members will pay a percentage of the cost for out-of-network care. Out of network cost shares are likely to be higher than TRICARE network co-pays. 
  • Cost shares will depend on beneficiary category (excluding active duty service members) and care venue. Cost shares will be the lowest in MTFs, higher in the network, and highest out of network. This is intended to encourage beneficiaries to use military clinics and hospitals, which are less costly for DoD. 
  • No deductible for TRICARE network care. A deductible is a fixed dollar amount during the fiscal year that a TRICARE beneficiary pays before TRICARE starts to make payments for covered medical services. 
  • Deductibles for out-of-network care. They will be lower for E1-E4 families and higher for E5 and above. 
  • Catastrophic caps will increase. The catastrophic cap is the maximum you will pay out of pocket each fiscal year (October 1 – September 30.)

Gutting the Commissary

Currently the Defense Commissary Agency (DeCA) receives $1.4 billion in funding from the DoD, which enables the commissaries to sell groceries to customers at cost. This model allows a typical family of four to save up to $4500 annually. The 2015 budget proposal cuts $1 billion from commissary funding over a 3 year period, leaving it at $400 million annually. Overseas and selected remote area commissaries would continue to receive funding. The “remote area” commissaries have yet to be identified.

While the budget proposal states: “The Department will not direct any commissaries to close. In the end, patron usage of the commissaries will determine the savings and their competitive advantage,” the real impact will be to the savings military families receive by shopping at the commissary. In order to continue operating, commissaries would have to make up the funding shortfall by raising prices. DoD estimates that under this plan families shopping at the commissary would save 10 percent over private grocery stores and a “modest” amount compared to budget/big box stores. This cut would hurt more than it would help – reducing family spending power by over $2000 a year for a family of four, but only saving DoD $1 billion over three years. Additionally, commissary cuts impact the ENTIRE military community: service members and retirees, their families and survivors, National Guard and Reserve, and all other eligible commissary patrons. The overall $1 billion “savings” will do little to buffer the cuts to the military at large.
 
Increasing Out of Pocket Housing Expenses

The proposal is to slow the growth of BAH payments from paying for 100 percent of housing costs to an average of 95 percent. The BAH reduction would be gradually implemented over three years to achieve the 5 percent cut, using the average national BAH for each paygrade. Service members would see a reduction in the dollar amount on their Leave and Earning Statement (LES), equally applied within each pay grade regardless of location. Additionally, the allowance for renter’s insurance will be removed resulting in an overall average reduction of 6%.

Currently, BAH rates are calculated using the median current market rent, average utility costs (electric, heat, and water), and the average renter’s insurance for a given market. The proposed new rates will still include the averages of market rent and utilities, but will not include renter’s insurance.

Individual rate protection or what is known as “grandfathering” will still exist. This means service members who are already receiving a higher rate will NOT see a decrease. However, new service members moving to the area will receive the lower rate, if any.

What are the answers we do know?

Lower pay raise + loss of commissary savings + reduced BAH + more out of pocket medical costs = service members and families bearing the costs of flat budgets and sequestration

Increasing out of pocket costs hurts currently serving families + reduces morale + reduces retention = military families feel betrayed.

 

Tell us what you think:

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Comment: I feel like the military is getting shafted and if they continue to cut funds we will have no military left. Our military members deserve better than this.
Submitted by: panfoil on March 28, 2014
Comment: Why is it that Congress is always ready to cut military benefits? Why not cut other things? How can our government spend billions of dollars on a shrimp treadmill, or any one of a hundred other research grants, and refuse our Veterans? A bunch of lip service about supporting our Veterans and military without any backbone behind it. What happened to "I've got your 6"?
Submitted by: Army Wife on March 25, 2014
Comment: Cheated, lied to, made to be a liar to those I recruited. The list goes on & on. I was promised "free for life if I & my family survived a military career. It had no statements of, "unless it cost too much or we change our minds. Money is short everywhere & our government seems to find endless piles for whatever they wish but not for it vets/retirees. I tell people now to only enlist if they have to, also to know that the rules can & will be changed at our elected officials whims. I tell those who think we are over compensated or get everything free that they could have endured the moves, separations, stress, no family support & God forbid duck bullets if they'd had the guts. I think it's time we stop letting our organizations speak for us but rather speak for ourselves with our ballots & our peaceable but disrupting presence at everything our government/military does until we are at least heard & given legal assurances that we can have no more taken from us & that future ranks can trust in delivery of promises made.
Submitted by: messdog on March 24, 2014
Comment: We most definitely feel betrayed by these changes and by this administration! Is THIS how we as a nation express our thanks for the loss of life and limb, the sacrifices and hardships our service members and families have endured for our freedom?! Less than 10% of the US population has served in the armed forces. That's a very small number. Of that number, how many will stand up and voice their opposition to these changes? We NEED people and organizations that support the military to stand up and fight for us.
Submitted by: ADArmyfamily on March 16, 2014
Comment: This is ridiculous. Cutting benefits for military families is going to affect service member continuity. We already get paid very little, relative to the civilian sector and the way families make it work is the commissary, affordable healthcare, etc. This will make retention to retirement much less feasible.
Submitted by: Katebentrup on March 16, 2014

 

 

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