What’s In Store for Military Families in 2013?

Since last summer’s debt ceiling debate and the passage of the Budget Control Act, we’ve known the Department of Defense (DoD) would be forced to find cuts of almost $500 billion over the next ten years. On Monday, February 13, we learned where the first cuts would be made as the administration released its budget proposal for Fiscal Year 2013 (FY13). The baseline budget of $524.4 billion is $5 billion less than this year’s. In addition to the $524.4 billion, the administration is asking for $88.5 billion of war funding, primarily for operations in Afghanistan.

There’s some good news in this budget request, some areas for concern, and many unanswered questions. The National Military Family Association was invited to budget briefings with Defense leaders at the Pentagon, TRICARE Management Activity, and the Department of Veterans Affairs. We asked about this budget’s effect on military families.

The Good News for Military Families 

So, what’s the good news? Despite the slightly-smaller overall budget, the critical operations and maintenance budgets, which fund installations and programs, including family programs, will see a slight increase. Defense leaders said family programs would be protected and funded at close to current levels. However, they noted that the military Services must evaluate which programs are not working and shift funds to those programs that are working.

The budget request includes $8.5 billion to support military families, from child care and education for military children to counseling and employment programs for the entire family. Of that funding, $1.3 billion would be used for child care spaces for more than 200,000 children. $1.4 billion would go to family support centers and morale, welfare and recreation programs. $50 million would be available to address poor conditions of public school buildings on military installations. We were relieved to see proposed funding for military commissaries remains steady.

The Budget and Military Pay

What about pay? At a time when federal civilian employees have experienced a pay freeze and are now set to receive only a modest raise, DoD proposes to increase military pay by the full amount of the Employment Cost Index (ECI) in 2013 and 2014. The 2013 raise will be 1.7%. We are deeply concerned about DoD’s pay proposals for 2015 and beyond. DoD officials state they plan to set raises below ECI beginning in 2015—their proposals show these raises would be almost miniscule—starting with just 0.5% in 2016, significantly lower than any recent ECI annual increase.

Military retirement has been in the news and the proposed budget doesn’t include any immediate changes to the system. It calls for a “Military Retirement Modernization Commission” to evaluate whether there are cost-effective changes DoD or Congress could make.

TRICARE

The budget proposals that will cause most concern to military families, especially retirees, are those related to new and increased TRICARE fees. DoD officials cite both the overall increase in health care costs and the decreased share of costs paid by beneficiaries as the reasons increased fees are necessary. Costs for prescriptions filled outside of a Military Treatment Facility (MTF) will increase as well. However, increases would not apply to active duty service members. 

DoD is proposing higher annual increases in TRICARE Prime fees for retirees under age 65 and their families, but the increases will not be the same for all. DoD is adopting the recommendation of the 2007 Task Force on the Future of Military Health Care that recommended a tiered pricing structure based on retired pay. Last year, the Prime enrollment fee for a family for all under age 65 retirees was set at $520 per year. If the budget proposal is adopted, annual Prime family enrollment fees will range between $600 and $820 beginning October 1, 2012. By 2016, these fees will jump to a range of $850 to 1,950. 

Surviving spouses of service members who died on active duty and service members who were medically-retired and their families would be exempt from the increases in TRICARE Prime enrollment fees. In a big change, the enrollment fee will no longer count toward the catastrophic cap, meaning beneficiaries would have to meet the cap with actual health care costs. The catastrophic cap is the maximum amount beneficiaries must pay in a year before the government picks up all costs for care. Active duty families in Prime will still not have to pay an enrollment fee or co-pay when seeking care in the civilian sector.

In addition to the increased Prime enrollment fees for retirees, DoD proposes instituting a first-ever enrollment fee for retirees and families using TRICARE Standard/Extra. These fees would not be tiered, but would be set at $70 for an individual in FY2013 and $140 for a family. TRICARE Standard deductibles would also increase from the current level of $300 for a retiree family and $150 for an individual to $320 and $160.

Retirees and spouses over the age of 65 are eligible for TRICARE for Life, in which TRICARE covers the costs, usually 20%, not paid by Medicare. The cost of that benefit since it was created in 2001 was enrollment in Medicare Part B. Using the same tiered structure being proposed for Under Age 65 retirees in Prime, DoD proposes to implement an annual TRICARE for Life fee on top of the Medicare Part B premiums of $99 and up. The annual fee for each beneficiary beginning in FY13 would range from $35 to $115 with planned annual increases.

Caregivers

The Department of Veterans Affairs (VA) proposed budget for FY13 is $140.3 billion that contains $64 billion for discretionary and $76 billion for mandatory funds. According to the VA, their top three priorities are: expand access; eliminate the claims backlog; and end veteran homelessness. For medical care, the VA will also target expanding telehealth and telemental health, women veteran-specific medical care, mental health services, and new and enhanced health care facilities. The VA also included $200 million for supportive services for veteran families, which include the Caregiver benefit.

What's Next?

It’s important to remember that all of the above are administration proposals only. The budget was sent to Congress, which begins its work evaluating the proposals by holding hearings and meeting with government officials. The National Military Family Association and other military and veterans associations will be preparing Congressional testimony as well to provide input on these proposals and to bring issues affecting military families to the attention of policymakers. Our Government Relations team has already met with the staffs of the Personnel Subcommittees of the House and Senate Armed Services Committees and will continue to keep them apprised of their concerns.

Tell us how this plan will affect your family. If your comment is personal in nature, please email info@MilitaryFamily.org.

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