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Washington Update for week of May 8th, 2017

TREA Washington Update for Monday, May 8th 2017


Today is the 75th Anniversary of the Battle of the Coral Sea- a legendary World War II battle in which American and Australian forces turned back the Japanese thrust at Australia (And was the reason for the dinner on the USS Intrepid that President Trump and Australian Prime Minister Malcolm Turnbull attended last week in NYC.)


Problems With New Military Retirement System Recently Discovered


Health Care Bill Passes House of Representatives but Effect on Veterans is Not Clear


Next week?...House Budget Committee hopes to mark up its FY 2018 Budget Resolution


VA recognizes Mental Health Awareness Month with promotion of ‘Use Your Voice’ awareness program to urge Veterans to speak up about mental illness






Problems With New Military Retirement System Recently Discovered

Two years ago when Congress was considering changing the military retirement system TREA was skeptical about what they wanted to do.  While we were not opposed to giving active duty personnel a retirement account they could take with them if they left the service before twenty years, we were opposed to making military retirees pay higher fees for medical services in order to pay for those portable retirement savings accounts.

We were also concerned that Congress was trying to rush legislation through because history has taught us that when Congress rushes legislation that makes major changes in programs they usually make some serious mistakes.  Nonetheless, Congress went ahead and implemented a new retirement system that will go into effect for all individuals who enter the services after January 1 of next year.

However, just as we feared, it has been discovered that there are some major flaws in the new retirement system.  For active duty personnel, it turns out that if they take a lump sum payout as soon as they retire from the military, they could lose a tremendous amount of money that they would otherwise receive as retirement pay.

This is a complicated issue, but according to military reporter Tom Philpott, a 37-year old E7 could take a lump sum payment after 20 years of service and receive $174,454 in return for forfeiting 50 percent of retired pay until age 67.  On the other hand that same E7 could receive a lump sum payment of $87,277 in return for accepting a 25-percent cut in retired pay until age 67.

However, it turns out that if he accepted the $174,454 lump sum payment immediately after retiring, he would lose $488,363 in retired pay between ages 38-67.  His net loss would be $313,909.

In the case of the $87,277 lump sum, that individual would lose $244,182 in retired pay that he would otherwise have gotten.  His net loss would be $156, 905.

This is extremely unfair.  In fact, the DoD Board of Actuaries has called it inappropriate and has asked Congress to not allow servicemembers to have this choice.

But if Congress doesn’t act to stop it, or unless someone lets servicemembers who come in under the new system know about this, it is likely that thousands of them will end up losing a tremendous amount of money they would otherwise have had.

Unfortunately, that’s not the only problem.  It turns out that members of the Reserve Components (RC) also may end up losing out in the new retirement plan.

The new retirement system reduces the amount of retirement pay that is guaranteed to be paid by DoD in return for establishing new individual retirement accounts (IRAs) for each Reserve Component member.  The idea was supposed to be that by establishing the IRA, an individual can leave the RC prior to reaching 20 years of service and still be able to have earned part of a retirement.  If the individual stays until 20 years, the IRA was supposed to make up for the cut in guaranteed retirement pay that will be in place.

 However, in order for this system to work as was theorized, the individual would have to contribute the maximum amount of money allowed by law ($18,000) to her IRA every year.  But if that individual already has an IRA through her full-time employer, she can only contribute the maximum amount of $18,000 to one of her IRAs.  If she contributes to her full-time employment IRA, she loses out on her military retirement.  If she contributes to her military IRA, she loses out on her full-time employment IRA.

TREA is supporting new legislation to correct this problem for RC members.  The Servicemember Retirement Improvement Act (HR1317) would fix this problem by allowing RC members to contribute the maximum of $18,000 per year to both IRAs.

Of course, how many members earn enough money to contribute a total of $36,000 to their IRAs in a single year is another question altogether and one that convinces us that we were right to be skeptical of this new retirement system in the first place.



Health Care Bill Passes House of Representatives but Effect on Veterans is Not Clear


On March 24 the House of Representatives had scheduled a vote on a bill to repeal and replace the Affordable Care Act, otherwise known as “Obamacare.”  The vote was scheduled for late in the afternoon but earlier that day TREA had learned there was a provision in the bill that we were told would hurt poorer veterans by taking away the subsidy that otherwise would be used to help them pay for health care insurance.  As a result we sent out an alert and the response from so many of you was amazing.

Before they could vote on the measure the bill was pulled and no vote was ever taken.

As you know, last week another bill to repeal and replace Obamacare was voted on in the House and this time it passed.  After the vote we learned that the same provision regarding veterans was again in the House bill.  However, it turns out that there was a very partisan disagreement about the effects of the provision.

Republicans insist that it doesn’t change anything and will not hurt any veterans.  Democrats insist that it will hurt veterans, specifically those who are eligible for VA health care or TRICARE but who don’t use them and instead buy their own health care insurance.

Since the bill now moves to the Senate where major changes are expected to be made, TREA will ask the Senate to clarify the provision regarding veterans so there can be no argument about exactly what it may or may not do.

We are committed to make sure no changes in the law harm any veterans.


Next week?...House Budget Committee hopes to mark up its FY 2018 Budget Resolution

Now that the House of Representatives has passed its version of repealing and replacing Obamacare we expect that after they return from this week’s recess the focus will be on next fiscal year’s federal budget. That should start with the House Budget Committee marking up its Budget Resolution. After that we expect that there will be House floor votes during the week of May 22nd. (So probably before the White House sends its full budget request which the Office of Management and Budget says they expect to release in late May.

The budget resolution is needed to give the House Appropriations Committee a top-line level of spending to start work on spending bills for the fiscal year that begins October 1st 2017. There will be a real push to get this all done before the Memorial Day recess. 




VA recognizes Mental Health Awareness Month with promotion of ‘Use Your Voice’ awareness program to urge Veterans to speak up about mental illness


Last week VA announced that, as part of its recognition of Mental Health Awareness Month in May, it is promoting “Use Your Voice,” a national awareness program that encourages Veterans to seek mental health treatment if they need it.

The Use Your Voice program is designed to let Veterans, and all Americans, know that reaching out for mental health information and support is just as important as talking to one’s doctor about diet, blood pressure, joint pain and other health challenges.

“It’s time to break down barriers and reverse the stigma of mental illness,” said Dr. Poonam Alaigh, acting VA under secretary for Health. “We want Veterans to know there are effective options available right now and reaching out for help is a sign of strength, resilience and courage.”

Individuals and organizations can make a difference and get involved by downloading, sharing, tweeting or posting a variety of content located

While many Veterans do not experience mental health issues in their lifetime, it is critically important for those who do to know that support and treatment are available. By changing how people discuss mental health conditions and symptoms of mental illness, VA is making it easier for Veterans who need support to feel comfortable reaching out.

For more information on mental health treatment, Veterans’ personal stories of recovery and a locator tool to find Veterans’ resources across the country, visit VA’s Make the Connection website.



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