Posted on: Monday, October 18, 2004
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By Tom Philpott
Military survivor benefits for 270,000 elderly recipients, and the future value of the Survivor Benefit Plan for all beneficiaries, will begin to rise next October when the first of four special pay hikes takes effect.
When the last one occurs, in April 2008, SBP annuities for older beneficiaries will have returned to a level that effectively eliminates a long-standing reduction in benefits at age 62.
Phase-out of the SBP offset, cleverly dubbed the widow's tax by change advocates, is the crown jewel among personnel initiatives that Congress passed this month in the 2005 National Defense Authorization Act.
Also set to see pay gains are military retirees with 20 or more years of service and a disability rating of 100-percent for service-connected injuries or illnesses. Effective Jan. 1, 2005, their military retired pay will be fully restored — no longer reduced, dollar-for-dollar, by their VA disability compensation. For this group alone among seriously disabled retirees, the law accelerates the 10-year phased end to the ban on concurrent receipt of military retirement and disability pay.
And for the first time, TRICARE Standard benefits will be made available to some drilling reservists and National Guard members. But the Reserve TRICARE plan is far more restrictive than the one embraced last summer by 70 percent of the Senate.
Indeed, none of the three major personnel initiatives negotiated in a House-Senate conference committee, before Congress adjourned for fall elections, is as inclusive as proponents had hoped.
• On SBP — Senate negotiators accepted the House's shortened phase-out schedule for the age 62 offset. It will disappear in 3y´ years rather than 10. But the House accepted the Senate's higher buy-in formula if current retirees seek to enroll in an improved SBP.Ê
The House proposed only a modest late enrollment penalty, no more than 4.5 percent of covered retired pay. Instead, interested retirees will have to pay all missed premiumsplus interest back to the date they had declined enrollment.
• On Accelerated Concurrent Receipt — Congressional staff members said this change likely will affect 15,000 retirees with 100 percent disability ratings, half the original 30,000 estimate. Left behind could be retirees with disability ratings below 100 percent who receive compensation at the 100 percent level because their disabilities make them unemployable. • On Reserve TRICARE — This first-time opening of TRICARE Standard to certain drilling reservists is far less ambitious than the $5.6 billion amendment (over five years) that Sens. Lindsey Graham (R-S.C.) and Tom Daschle (D-S.D.) pushed through the Senate last summer. Graham-Daschle sought to open TRICARE to any drilling reservist or family member willing to pay monthly premiums, set at 28 percent of the cost of care. The government would pay the remaining 72 percent.
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