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TREA: The Enlisted Association Blog
Washington Update for week of December 18th, 2017
Monday, December 18, 2017
By Deirdre Parke-Holleman
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TREA: The Enlisted Association's Washington Update
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TREA: The Enlisted Association's Washington Update
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Holiday Message from TREA: The Enlisted Association National President John Adams
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The measure of one's success in the workforce is something to be proud of, but the true meaning of success in life is measured by our relationships with family and friends. This is the time of year to acknowledge and take stock in these relationships, and give thanks for what we have and to remember all the millions of people around the world that are doing without.
My wife and I wish you and your family a happy and healthy New Year and the true ability to be thankful for the opportunity of being able to celebrate the holidays in whatever manner that your family chooses. With that said, 'Happy Holidays to All!'
TREA: The Enlisted Association National President
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Big Changes This Year for all TRICARE Programs - Except TRICARE For Life (TFL)
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By Deirdre Parke Holleman, Executive Director of TREA's Washington Office
It is a new year and there are more changes most TRICARE programs, but there are no changes to the TRICARE for Life (TFL) program. None.
If you are active duty, active duty family members, National Guard and Reserve, Retirees under the age of 65 or not in TFL, retiree family members or survivors at least some of these changes will affect you.
- Changing from a Fiscal year to a calendar year
- Consolidating present 3 U.S. TRICARE regions to 2 regions
- Taking present TRICARE Prime, TRICARE Standard and TRICARE Extra plans and consolidating and changing them into 2 healthcare plans
- Requiring yearly enrollment for all the effected TRICARE programs
- "Cost Changes" (increases) in members' copays, enrollment fees, and cost shares.
Some of these changes are easy to understand, some hard and some near to impossible but here goes:
Changing from a Fiscal year to a calendar year- This one is easy. Starting in 2018 all TRICARE programs will run on a calendar year rather than a fiscal year. So from January 1st to December 31st rather than from October 1st through September 30th. This makes sense and will make life easier. It will match and thus easily coordinate with all American civilian healthcare plans. And let's face it we have not seen an on-time October 1st federal budget in a long time.
Consolidating present 3 U.S. TRICARE regions to 2 regions- When civilian TRICARE regions were created about 20 years ago there were 18 regions and they have been consolidating again and again. For the last 5 years we have had 3 regions and contracts (North, South and West); starting in 2018 there will be only 2 regions East and West.
Health Net currently has the contract for the North Region. United Healthcare currently has the contract for the West Region and Humana Military currently has the contract for the South Region.
On January 1st 2018 the North and the South regions will combine to make the East Region and the West region will remain the same. Humana Military will have the East Region and Health Net will have the West Region.
Unless you were in the South region you will have a new contractor. They should have contacted you already. If you are in TRICARE Prime most of you will have a new provider network.
The new 2018 TRICARE Network Provider Directories are available here:
https://www.humanamilitary.com/provider-locator
https://tricare-west.com/content/hnfs/home/tw/bene/provider-directory.html
If you are having trouble or don't have a computer for this or other programs please call me, Deirdre Parke Holleman at 1-800- 554-8732 and I will do the best I can to help.
Taking Present TRICARE Prime, TRICARE Standard and TRICARE Extra plans and consolidating and changing them into 2 healthcare plans - Those were the easy changes now come the more complicated ones. TRICARE Prime's (basically a military HMO) structure is staying the same. Enrollees will get their medical care through either the MTFs and direct health care system or through the 2 new civilian healthcare contractors (Humana Military and HealthNet see above.) The change is that TRICARE Standard and TRICARE Extra are being abolished and folded into a new TRICARE Select program which is intended to work like a PPO.
If you are enrolled in TRICARE Select you will not be required to have a primary care manager. You will be able to go to any TRICARE authorized provider.
This is an insurance program that you will need in the future to enroll in during a yearly enrollment period and change after a "qualifying life changing event" (examples: marriage, divorces, birth of child etc). After such an event there will be a 90 day period for you to enroll or change the coverage you have for the rest of the year. However, you will not need to enroll for 2018 coverage.
DHA will roll you into the equivalent program you are in now this coming January. Prime is still Prime and those in either Standard and Extra will be placed into Select. You can change program if you want. Then in the fall of 2018 you will need to enroll during the Open Season into either Prime or Select.
Requiring yearly enrollment for all the effected TRICARE programs- As noted above from the fall of 2018 you must enroll yearly into the Prime and Select programs. You will not be able to decide to use Select at different times of the year without enrollment as you were able to do with TRICARE Standard. If beneficiaries are not enrolled in a TRICARE plan only the first "episode" of care in the civilian healthcare network will be covered by TRICARE. You must then enroll in either TRICARE Prime or Select. If you do not enroll after your first "episode of care" you will only be able to receive care and prescriptions at an MTF for the rest of the year. Please read below to make sure that your method of payment is correct.
2018 will be a grace period for both enrollment and changing the type of coverage.
"Cost Changes" (really increases) in members' copays, enrollment fees, and cost shares- Late in 2017 DoD published its "interim final rule" which included the shift from cost shares (in Standard and Extra) to a copayment structure with higher cost shares for retirees under the age of 65. If this goes into effect (we have been on the Hill all of December objecting to this.) it will make last year's NDAA's grandfathering of those who retired before January 1st 2018 totally useless. If this would harm you, please continue to contact your Congressional representatives and urge them to stop this bait and switch. You can see DoD's out of pocket costs by going to www.tricare.mil/changes.
Again, this does not affect those of you who are in TRICARE for Life (TFL). These changes affect Active Duty Family Members, Retirees under the age of 65, survivors and those who are in TRICARE premium based programs (examples TRICARE Reserve Select and TRICARE Young Adult.) But such massage changes will affect all of military healthcare. We will need to be vigilant about how this is effecting care on the ground and what new proposed legislation we will need to deal with. 2018 is going to be a very important year in military healthcare.
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Increases to TRICARE pharmacy copayments coming Feb. 1, 2018
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On Feb. 1, 2018, copayments for prescription drugs at TRICARE Pharmacy Home Delivery and retail pharmacies will increase. These changes are required by law and affect TRICARE beneficiaries who are not active duty service members.
While retail pharmacy and home delivery copayments will increase, prescriptions filled at military pharmacies remain available at no cost. You can save the most money by filling your prescriptions at military pharmacies.
"Military pharmacies and TRICARE Pharmacy Home Delivery will remain the lowest cost pharmacy option for TRICARE beneficiaries," said U.S. Air Force Lt. Col. Ann McManis, Pharmacy Operations Division at the Defense Health Agency.
Using home delivery, the copayments for a 90-day supply of generic formulary drugs will increase from $0 to $7. For brand-name formulary drugs, copayments will increase from $20 to $24, and copayments for non-formulary drugs without a medical necessity will increase from $49 to $53.
At a retail network pharmacy, copayments for a 30-day supply of generic formulary drugs will increase from $10 to $11 and from $24 to $28 for brand-name formulary drugs.
In some cases, survivors of active duty service members may be eligible for lower cost-sharing amounts.
TRICARE groups pharmacy drugs into three categories: generic formulary, brand-name formulary and non-formulary. You pay the least for generic formulary drugs and the most for non-formulary drugs, regardless of whether you get them from home delivery or a retail pharmacy.
To see the new TRICARE pharmacy copayments, visit www.tricare.mil/pharmacycosts. To learn more about the TRICARE Pharmacy Program, or move your prescriptions to home delivery, visit www.tricare.mil/pharmacy.
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Why Do 70 Percent of New Recruits Sign up for the Montgomery GI Bill?
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The Consumer Financial Protection Bureau, published an article last week that raised a fantastic point: over one hundred thousand servicemembers in all five armed services ship out to basic training each year. While their uniforms might be different shades of camouflage, active duty servicemembers are all given the option to sign up for the Montgomery GI Bill, which costs them $100 a month for the first 12 months of their careers.
However, the Post-9/11 GI Bill was passed in 2008 and went into effect in 2009 - almost a decade ago. Active duty servicemembers qualify for this new much more comprehensive GI Bill program without having to pay anything up front.
7 out of 10 new recruits still pay the $1,200 for the MGIB
"New data from the Department of Defense shows that last fiscal year 70 percent of new recruits (over 112,000 recruits) still paid the $1,200 to buy into the MGIB, even though they likely qualified for the more generous Post-9/11 GI Bill for free. This means that new enlistees and newly commissioned officers spent over $134 million last year to buy into a GI Bill benefit they will probably not use.
The Post-9/11 GI Bill is the most generous and comprehensive GI Bill program since WWII, providing benefits that pay for tuition and fee costs, a monthly housing allowance, and an annual book stipend. The MGIB, on the other hand, pays a flat monthly benefit regardless of where a servicemember attends school, and that benefit is usually worth significantly less than the Post-9/11 GI Bill. This is probably why 96 percent of active duty servicemembers starting to use their GI Bill benefits choose the Post-9/11 GI Bill and not the MGIB to pay for their education (130,995 out of 136,569 new beneficiaries)."
There are very rarely instances when it is a better deal to go with the Montgomery GI Bill versus the Post 9/11 GI Bill. Check it out for yourself with the VA's GI Bill comparison tool, which will clearly show you the difference in the two GI Bill benefits.
For some reason, the Coast Guard is the only service that does a good job explaining the different programs. Unlike the other branches of the military, only a handful of Coast Guard recruits agree to pay the $1,200 to buy-in to the MGIB (only 13 percent in FY17). The Marine Corps has the next lowest rate, but still 64% of new Marine recruits are taking the buy-in.
Below is a breakdown of new recruits buying into the MGIB by military service last year, according to DoD information:
13 percent Coast Guard
64 percent Marine Corps
70 percent Air Force
74 percent Army
76 percent Navy
Somebody told me I could get my MGIB money back. How do I do that?
While it is possible to get your $1,200 back, it is not very easy to do. The VA will only refund the $1,200 buy-in if you exhaust every single day of your Post-9/11 GI Bill benefits and meet other specific criteria. Here is a list of all the requirements servicemembers need to meet to get the refund. This is why many veterans who paid the $1,200 but used the Post-9/11 GI Bill never saw that money again.
Saving that $1200 and investing it in DoD's new Blended Retirement System (BRS) could be a good choice. In January 2018, the military will transition to a new retirement program for servicemembers called blended retirement . This new retirement program expands retirement benefits to most servicemembers, not just those who served 20 years or more.
This new retirement program strongly encourages servicemembers to contribute to their Thrift Savings Plan (TSP), to which DoD will provide some matching contributions.
If newly enlisting servicemembers were to stop buying into the MGIB-whose benefits they likely won't use-and instead invest the $1,200 in their TSP account, this investment, combined with the DoD's matching funds, will likely produce a far greater long-term benefit.
For example, if an 18-year-old recruit invested their $1,200 in TSP, combined with the 1 percent DoD match, that investment, by the time they were eligible to collect Social Security, could have grown to over $35,000 (assuming a 7 percent rate of return). Check out DoD's Blended Retirement Calculator to see for yourself and begin your journey to educational and financial success.
For help handling financial challenges at every step of a servicemember's military career, visit the CFPB guide through the military lifecycle.
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Federal Crackdown Coming On Scams Targeting Veteran Home Loans
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Veterans nationwide are being targeted because of their VA home loans, and federal officials are aiming to crack down on the scam artists.
The scam involves repetitive re-financings that produce large fees for lenders and loan brokers but leave borrowers in worse financial shape than they were before the mortgage refinance.
Lenders are dangling teaser interest rates, "cash out" windfalls and lower monthly payments, sometimes using shady marketing materials that resemble official information from the Department of Defense or the Department of Veterans' Affairs.
Sometimes borrowers end up owing more on their loan balance than their house is worth.
Officials at the Government National Mortgage Association, known as Ginnie Mae, say some veterans are being flooded with misleading re-fi offers and are signing up without assessing the costs and benefits. Some properties are being refinanced multiple times a year, thanks to "poaching" by lenders who aggressively solicit competitors' recent borrowers to re-fi them again and roll the fees into a new loan balance.
The transaction fees that veterans pay can far outweigh the relatively modest reductions in monthly payments. In an analysis of questionable re-financings, Ginnie Mae found "many" examples where the borrowers were persuaded to switch from a long-term fixed interest rate to a lower-rate short-term adjustable, but saw the principal amount owed to the lender jump by thousands of dollars.
A typical pitch for one of these loans was received recently by a veteran and his wife who live in Silver Spring, Md. Along with a fake "check" made out to the veteran in the amount of $30,000 -- all he had to do to get the cash was sign up for a re-fi -- were come-ons like this: a new 2.25 percent interest rate, no out-of-pocket expenses, a refund of his escrow money and up to two months with zero mortgage payments.
"Call now and lock in your rate before rates go any higher," urged the lender. In small print on the back of the check were a couple of key disclosures: Homeowners would have to switch from their current 3.75 percent fixed rate to a "3/1" adjustable rate that could increase 36 months after closing and rise to as high as 7.25 percent during the life of the loan. There was nothing about fees or the fact that opting for the re-fi could add to the family's debt load.
Some of the abuses are reminiscent of the worst practices of the mortgage industry in the years right before the 2008 financial crisis. Some borrowers are refinancing three times in less than six months, their loan balances are going up all while they are swapping out fixed-rate loans for riskier adjustable rate mortgages.
If you are offered one of these mortgage refinance plan, please read the fine print and consider all of the possible downsides to make sure it is right for you.
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The Tax Bill of 2017
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It is difficult to write about something that isn't finalized yet but barring a major surprise this week the 2017 Tax bill will be passed by both the House and Senate and will be sent to President Trump for his signature. This is a major piece of legislation that is very controversial and also is likely to affect most Americans, some for better and some for worse.
Here is what we know about the agreement so far:
- The corporate rate would be reduced to 21%, from 35%. That is an additional point added from the 20% originally proposed in the House and Senate versions. It would take effect in 2018.
- The top individual tax rate would be set at 37%, down from the 39.6% proposed in the House and 38.5% in the Senate.
- The State and Local Tax deduction will be expanded, beyond just property taxes, to include income tax. It would be capped at $10,000.
- The corporate alternative minimum tax, included at the last minute in the Senate version, would be fully repealed.
- The individual alternative minimum tax would remain, but the threshold would be tweaked to exclude any individual under $500,000 or family below $1 million.
- The mortgage interest deduction threshold -- dropped to $500,000 in the House and left untouched in the Senate -- would be set at $750,000.
- The rate for pass-through income -- business entities like s-corporations and partnerships that pay taxes through the individual side -- would be set at 20%, 3% lower than the Senate version.
- The estate tax exemption would be doubled, but the tax would not be repealed entirely, as it was in the House proposal.
- The Obamacare individual mandate to have health insurance would be repealed.
- A House provision that proposed taxing graduate school tuition is not included in the final deal.
- Federal student loans that are forgiven due to death or due to a determination of total disability (by the Secretary of Veterans' Affairs) will no longer be considered taxable income. This is a long time goal of TREA: The Enlisted Association and is a major win. However, the provision, just like all of the tax cuts involving individual income taxes, will expire at the end of 2025.
These deductions will remain untouched (they were all repealed in the House bill, but left alone in the Senate bill). Of note, repeal of these deductions were some of the most controversial elements of the House plan. None will be repealed in the final version:
- Medical expense deduction
- Tax-free graduate school tuition waivers
- Private activity bonds
- Student loan interest deduction
- Teacher spending deduction
- The Work Opportunity Tax Credit (VOW To Hire A Hero Act): this is something that TREA believes leads to increased veteran employment; it was repealed under the House version but the rumors are that the Senate version won out, meaning that the provision will live until at least the end of 2019 (a big win for TREA and for veterans).
- Tax exclusion from gain of sale of a principal residence: it looks like the 2 year provision was unchanged.
At this time, we do not know the status of these deductions:
- Qualified medical expense deductions: the House repeals the deduction, the Senate preserves it
- Moving expense deduction: the House and Senate both preserve the deduction if you have to move on orders - but it's unclear whether that counts for all of the uniformed services, including the Public Health Service and the National Oceanic and Atmospheric Administration.
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New VA ID Applications System Still Down
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The system for new veteran ID cards is still down as of December 19, 2017.
The system went down less than a week after Veterans Affairs' official rollout of new identification cards and there are few details on when the system will be working again.
Here is the website in question: https://www.vets.gov/veteran-id-card/
VA spokesman Curt Cashour said in a statement that department officials are aware that "some veterans have experienced issues with the application process, but leaders of VA's Office of Information and Technology are actively engaged in fixing them."
The new cards won't replace VA medical cards or official defense retiree cards, and will not carry any force of law behind them. Once the system is operational again, veterans will need to register for an online account with VA to apply for the card.
TREA: The Enlisted Association will keep you updated on the issue.
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