President’s Budget Released – Questions Still Persist for Military Families

Spouse wrapped in a hug

The Administration released the 2015 Budget Proposal on March 4, 2014, giving us more details on the Department of Defense (DoD) proposal we caught a glimpse of a week earlier.

The proposed budget includes cuts to military compensation and benefits which – if passed by Congress – will affect you as a military family. The proposals include a one percent pay raise for service members in 2015, significant cuts in commissary funding, reduction in Basic Allowance for Housing (BAH) rates, and increased TRICARE fees for some currently serving families and retirees.

We will spend the next few weeks in meetings and roundtable discussions asking a lot of questions about how all of this will be implemented and how it will impact military families’ quality of life.

Here’s what 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.

Proposed Cuts and Changes to Compensation and Commissaries

The DoD budget proposal includes the following changes that will affect military families:

  • A one percent pay raise for service members in 2015. General and Flag Officers will have their salaries frozen at present levels.
  • A $1 billion cut to funding for commissaries over a three-year period. Overseas commissaries and those in remote areas will still be subsidized. Cutting DoD support to commissaries will result in significantly smaller commissary savings for military families. DoD says it will not close any commissaries but will a reduction from 30 percent to 10 percent savings discourage you from shopping at the commissary?
  • Slowing the growth of Basic Allowance for Housing (BAH) payments from covering 100 percent of housing costs to an average of 95 percent. DoD will no longer include the cost of renter’s insurance in BAH calculations. This will be a phased-in cumulative decrease of 6% over time.
  • Modifying the TRICARE fee structure so some currently serving family members and retired beneficiaries will pay more in deductibles and co-pays. This may change the TRICARE Prime, Standard and Extra options as we know them today. DoD says these changes are designed to encourage TRICARE beneficiaries to get health care from facilities and doctors who operate at lower cost to the government, such as military treatment facilities (MTFs) and preferred network providers. Medically-retired service members and their families, as well as survivors whose military sponsors died on active duty, would see smaller fee increases. Bottom line: if you go outside the MTF or the network, currently serving or retired, you would pay more.
  • Adjustments to pharmacy co-pay structures and establishment of a modest annual enrollment fee for the TRICARE-for-Life coverage for Medicare-eligible retirees.
  • The plan does not propose any other changes to retirement benefits. The overview recognizes the role of the Military Compensation and Retirement Modernization Commission and the importance of allowing the commission to complete its task.

Proposed Cuts Have a Long-Term Impact

These changes to military compensation and benefits will have a profound effect on the financial well-being of service members, their families, retirees and their families, and survivors. We understand cuts and changes need to be made. But why should military families absorb those cuts while we remain a military at war?

Our Association continues to stress to policy makers the importance of the commissary savings, a realistic and responsive housing allowance, robust access to health care, and overall compensation commensurate with the service performed and the sacrifices military families are asked to make. We will continue to share with DoD, Congress, and other policy makers why this compensation is so important to maintain a ready force. Remember, this is a process. Add your voice to ours. We call on Congress to honor its commitment to our military.

Posted March 11, 2014

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