Wednesday, November 27, 2013

About Those Benefits...

For anyone who was career military, you can easily list those "guaranteed benefits" that were promised from that first visit to the recruiter's office. 

Let's see...on-base healthcare for life, covering the military member and spouse; 

A pension after 20 years of honorable service, pegged at 50% of your base pay, (and)

Lifetime access to the commissary, base exchange and other on-base services. 

So how are those benefits holding up?  Not very well, it would seem.  I retired in time to collect my pension, but various advisory boards and think tanks are recommending major changes to compensation for armed forces members, including an end to 20-year retirement.  One proposal would still encourage service members to retire from the military at some point between 15 and 30 years, but they wouldn't start collecting their pension until age 62. 

Never mind that 20-year retirement has been highly successful, or that the typical service member who leaves at after two decades on active duty is an E-6, who brings home less than $2,000 a month, after taxes and other deductions.  The "experts" believe that a civilian-style retirement plan would somehow be attractive, and--more importantly--reduce costs. 

On the healthcare front, military retirees were pushed into an HMO-style system called TriCare more than a decade ago.  There were problems with access in some locations (many physicians didn't want to comply with the onerous regulations associated with TriCare Prime, the "Cadillac" version of the health plan).  And more recently, the Pentagon has announced plans for increased premiums and co-pays, to deal with rising healthcare costs.  At one time, TriCare was less attractive than many private-sector plans but with millions losing their coverage due to Obamacare, the military retiree plan is looking like a better deal. 

Still, there is cause for concern.  It's not inconceiveable that the military could follow the example of corporate America and simply drop retiree coverage, offering instead an annual payment that could be used to buy a policy from a private insurer or (God forbid) on one of the Obamacare exchanges.  At the very least, TriCare will become more expensive in the years to come, though the situation of military retirees is still far better than the millions of Americans who are losing coverage, thansk to the "Affordable Care Act." 

And sadly, there is one more "guaranteed" benefit that is slowly eroding.  The Pentagon is now looking at closing its stateside commissaries, which offer discounted groceries for active-duty personnel and retirees.  From the Norfolk Virginian-Pilot

"...the Defense Commissary Agency has been asked to develop a plan for shutting down 178 commissaries in the United States. About 70 commissaries serving U.S. military personnel overseas would not be affected.

The measure reportedly was discussed during a planning meeting related to the Pentagon's 2015 budget request, which is due in February.

Even if such a plan were included in the defense budget, it would have to get congressional approval. That would be a high hurdle: Lawmakers are often reluctant to trim military benefits.

More than 100,000 Hampton Roads residents and their families are eligible to shop at the region's five commissaries, where active-duty families and military retirees can buy groceries and household goods tax-free.


Commissary shoppers are required to pay a 5 percent surcharge on all purchases, which goes toward building construction and maintenance. The salaries of commissary workers are paid through a $1.4 billion annual subsidy from the federal government.

Even with the surcharge, most of the name-brand goods sold at the commissaries go for about 30 percent less than at private grocery stores, according to Department of Defense estimates."

The commissary is an important benefit, not only for retirees, but for junior active-duty personnel with families.  If you're an E-4 with a couple of kids--and stationed in a high-cost-of-living area, that 30% savings at the commissary goes a long way towards maintaining the monthly budget.  And lest we forget, at least 5,000 military families are currently receiving food stamps, despite Pentagon efforts to provide supplemental subsistence payments to lower-ranking personnel with large families.  Commissary sales paid for by that program have more than trippled since 2008, reaching almost $100 million last year.  That's a small fraction of the $6 billion in commissary sales in 2012, but it's an important benefit for struggling military families--their food dollars go a lot further at the commissary than at competing civilian stores. 

This proposal has been making the rounds for several months.  During an appearance at Camp Pendleton in August, President Obama took note of the issue, saying that "closing commissaries is not how a great nation should be treating its military and military families."  Yet, the plan to shut down stateside commissaries is still on the table.  No wonder that many commissary patrons put the President's remarks in the same category as his famous line about "keeping your healthcare plan."  By that standard, commissaries at CONUS bases will go the way of the individual health insurance market in the near future.        



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