Last week, the Military Compensation and Retirement Modernization Commission released 15 recommendations that have the potential to save the Pentagon $12 billion a year. This equates to a much needed boost to a budget sagging under the weight of personnel expenses.
The commission, which was established by the National Defense Authorization Act in July 2013, has spent two years determining the best ways to modernize military compensation and retirement systems. Here’s a breakdown of their 15 recommendations.
- Modernize Retirement: Under the current retirement system, only 17 percent of enlisted personnel will benefit from a traditional 20-year Uniformed Service retirement. To help more service members save for retirement, the commission recommended implementing at 401(k)- type Thrift Savings Plan with retention benefits of the current retirement annuity, lump sum career continuation pay and retention bonuses at career milestones. The proposed changes would open up retirement benefits to 75 percent of the troops. They also recommended that the government match TSP contributions up to 5 percent of the service member’s basic monthly pay. The TSP would vest after two years so if a service member leaves before serving 20 years, they’d have the option of rolling their TSP into a civilian 401(k) plan. They also recommended a drop in retirement pay, starting at 20 years, from 50 to 40 percent. Service members currently serving would be grandfathered using the current retirement pay system.
- Survivor Benefits: The commission recommended adding a new Survivor Benefit Plan without the offset of Dependency and Indemnity Compensation. However, this plan would cost the service member more money up front. They also recommended leaving the current SBP in place for those that prefer a less expensive option.
- Financial Literacy: A 2013 Blue Star Families Annual Lifestyle Survey reported that only 12 percent of the surveyed service members received financial information from their command or installation. With the recommended changes to retirement and health benefits, the commission recommended providing more financial information and counseling to service members.
- Reserve Updates: The commission recommended increasing the efficiency within the Reserve Component by consolidating 30 duty statuses into 6 broader statuses. This should help with issues like timely pay for its service members.
- New Medical Command: The commission recommended forming a Joint Readiness Command that incorporates all of the service branches and is led by a four-star military officer. They also want Congress to establish statutory requirements for the Department of Defense to maintain certain essential medical capabilities within the military.
- More Health Insurance Options: One huge recommendation that would affect nearly everyone is the implementation of Tricare Choice. This would give dependents and retirees the freedom to choose their own commercial insurance plan from a list under Tricare Choice. This also means that service members will pay for part of the new health insurance. To help offset the expense, the commission also recommended adding a Basic Allowance for Health Care to the service member’s paycheck. One part of the BAHC would be paid directly to the health insurance provider and the other would go directly to the service member to be used for co-pays, deductibles and coinsurance. One stipulation of the new insurance plans is that they must cover services at military treatment facilities for those that prefer a military health care provider. Military retirees will continue to have access to the unchanging Tricare for Life. However, military retirees who are of working age can expect to pay for part of their health insurance. Cost-sharing will start at 5 percent with a 1 percentage point increase each year until 20 percent is reached. The individual will then pay 20 percent of health care costs until becoming eligible for Tricare for Life at age 65. Active duty serve members will continue to receive free health care at military treatment facilities.
- Special Needs: It was reported that some families who have special needs children struggle each time they move because of different state laws and waitlists. The commission recommended aligning services offered under the Extended Care Health Option to those of state Medicaid waiver programs to ease the transition when moving.
- Collaboration: The commission recommended better coordination of electronic medical records and a uniform formulary for transitioning service members when it comes to the Department of Veterans Affairs and the DoD.
- Commissaries/Exchanges: The commission sees the value in maintaining commissaries and exchanges, but recommends they are realigned under one single defense resale organization.
- Child Care: In September 2014, there were about 11,000 children on waitlists for child care facilities. The commission recommended budgeting up to $15 million for new facilities with the goal of providing child care within 90 days of need.
- Education Benefits: The commission recommended ending the Montgomery GI Bill and the Reserve Educational Assistance Program in favor of the Post 9/11 GI Bill, which offers better benefits. They also recommended increasing the amount of time served before a service member can transfer their GI Bill to a dependent. The time would go from six years served, plus an additional four years of service to 10 years served, plus an additional two years of service.
- Expand Education: With transitioning service members struggling to find employment, the commission recommended expanding education programs and making participation mandatory in the Transition GPS education track. They also recommended granting states more flexibility to administer the Jobs for Veterans State Grants Program.
- Supplemental Nutrition: The commission recommended ending the Family Subsistence Supplemental Allowance program, which only served 285 service members in fiscal year 2013. Instead, families would be encouraged to use the Supplemental Nutrition Assistance Program. Families overseas would still have access to the FSSA program since SNAP isn’t available there.
- Space-A Travel: The commission recommended changing accessibility to Space-Available travel for spouses of deployed service members. Rather than wait 120 days into a deployment, spouses should have access to travel benefits after 30 days of deployment.
- Military Children: The commission recommended assigning a national military student identifier to each military child. The data collected would be used to analyze how the military lifestyle affects military children and their schoolwork.
Keep in mind these are currently recommendations and are not scheduled for implementation. This week, the commission will meet with the Senate and House Armed Services Committees to discuss the recommendations and a path forward.
