How To Understand The Military Budget

Transcription

1 YOUR 2015 AFBA FINANCIAL PLANNING GUIDE Star Financial, LLC All rights reserved. No part of this book may be reproduced or transmitted in any manner, shape, or form, or by any means electronic or mechanical, including photocopy recording, or by an information storage or retrieval system, without the express written permission of the publisher. Printed in the United States of America. 5 Star Financial, LLC 909 North Washington Street Alexandria, VA For Financial Planning Guide inquiries and/or orders, please call The information contained in this publication is intended for the use of individuals who want to develop and implement a personal financial plan. However, the book is sold or distributed based on the understanding that the publisher is not engaged in rendering any legal, professional, or other service. The information contained herein is as up-to-date as possible, but it must be realized that the benefits and entitlements discussed herein are constantly changing. For this reason, the book is intended to be used only as a planning guide and it is not a final authority on benefits and entitlements..

2 Table of Contents PART I Military and Civil Service Topics Chapter 1. Military Pay & Allowances...5 Military Income & Benefits In General...5 Armed Forces Comparative Ranks...5 Active Duty Basic Pay...5 Other Types of Pay & Allowances...6 Access To Your Pay Account...9 Thrift Savings Plan (TSP)...9 Military Information & Pay Worksheet...11 Chapter 2. Reserve & National Guard...12 Introduction...12 Categories of Service & Duty Requirements...12 Pay...12 Retirement...12 TRICARE...14 Education Benefits...15 Reserve Component Survivor Benefit Plan (RCSBP)...16 Chapter 3. TRICARE...17 Overview of TRICARE...17 Active Duty Members and Dependents...18 Retirees and Dependents...18 TRICARE For Life (TFL)...18 TRICARE Young Adult...19 Pharmacy Benefits...19 DEERS...20 Treatment Priorities at Military Facilities...20 Dental Care...20 TRICARE Telephone Numbers...21 TRICARE Regions and Contacts...22 TRICARE Cost Table...23 Medicare/TFL Cost Share Table...24 Chapter 4. Military Retirements...25 Retired Pay Background...25 DIEMS...25 Retired Pay Formulas...25 Retired Pay Increases...27 Enlisted Personnel Retirements...28 Officer Retirements...28 The Value of Military Retirement Pay...29 Disability Retirements...29 CRSC and CRDP Programs...29 Retirement Services Offices (RSO)...30 Chapter 5. The Survivor Benefit Plan...32 The Survivor Benefit Plan (SBP)...32 Who Can Participate?...32 Who Can Be Beneficiaries?...32 How Much Does The Beneficiary Receive?...32 How Much Does It Cost?...32 Disenrollment...33 Dependency & Indemnity Compensation (DIC)...33 Eligibility Requirements...34 Civil Service Employment and the SBP...34 Additional Provisions of the SBP...35 Taxation of SBP Annuities...35 Chapter 6. Veterans Benefits...36 Veterans Benefits In General...36 Educational Support...36 Vocational Rehabilitation & Employment Program...38 Disability Compensation...38 Pension Benefits...39 Health Care Assistance...39 Home Loan Guaranty Program...40 Life Insurance...40 Other Veteran Benefits...41 Burial Benefits...42 Survivor Benefits...42 Telephone Assistance...43 Chapter 7. Civil Service Pay & Retirements...44 Overview...44 Pay Systems...44 General Schedule Pay Increases...44 Health, Life and Long Term Care Insurance...45 Retirement Systems...45 Thrift Savings Plan (TSP)...45 COLA Increases...45 PART II General Financial Topics Chapter 8. Principles of Financial Planning...46 The Need For Financial Planning...46 How To Start A Financial Plan...46 Financial Ratios...48 Debit or Credit Card?...48 Some Thoughts On Financial Planning...49 Personal Data Worksheet...50 List of Important People Worksheet...51 Family Balance Sheet...52 Budget Worksheet...53 Financial Goals Worksheet...55 Planning Actions Worksheet

3 Table of Contents (Cont.) Chapter 9. Important Papers, Wills & Trusts...56 Important Papers...56 Wills...56 Estate Planning...57 Trusts...57 Health Care Decisions...58 Personal Record System...59 Location of Important Documents Worksheet...60 Chapter 10. Savings & Investments...62 Why Save And Invest?...62 Investment Prerequisites...62 Risk and Return...62 Types of Investments...63 Short Term Investments...63 Common Stock...64 Fixed Income Securities...64 Mutual Funds...65 Derivatives...66 Real Estate...66 Other Tangibles...67 Retirement Accounts 401Ks and IRAs...67 Education Savings...68 Investment Goals and Strategies...68 Time Value of Money...68 Savings & Investment Terminology...70 Investment Worksheet...71 Chapter 11. Personal Credit...72 Credit Cards...72 Consumer Loans...72 Home Mortgages...73 Education Loans...74 Reverse Mortgages...74 Credit History...74 Bankruptcy...75 Consumer Financial Protection Bureau (CFPB)...75 Schedule of Monthly Loan & Mortgage Payments...76 Chapter 13. Life Insurance...84 Introduction...84 Building a Personal Insurance Program...84 Why Life Insurance?...84 Types of Life Insurance...84 Term Life Insurance...84 Whole Life Insurance...85 Universal Life Insurance...86 Other Types of Life Insurance...86 Contract Provisions...86 How Much Life Insurance?...88 Risk Classification...88 Selecting a Life Insurance Company...88 The Language of Life Insurance...89 Insurance Worksheet...90 Chapter 14. Annuities...92 The Annuity Principle...92 Annuity Classifications...92 Annuity Pros and Cons...93 Life Expectancy Table...94 Chapter 15. Federal & State Taxes...95 Federal Income Tax In General...95 Determination of Tax Liability...95 When To File Your Return...96 Combat Zone...97 State Income Taxes...97 Federal Estate And Gift Taxes...97 State Inheritance Taxes...98 Tax Tips...98 Income Tax Worksheet Appendix A Internet Resources Appendix B Military Information Directory Appendix C Identity Theft Chapter 12. Social Security & Medicare...77 Social Security Benefits In General...77 Social Security Eligibility...77 Applying For Social Security...78 Estimating Social Security Benefits...78 Retirement Benefits...78 Disability Benefits...79 Survivor Benefits...80 Supplemental Security Income (SSI)...80 Medicare...80 Nursing Homes

4 2015 ADDITIONS & CHANGES CHAPTER ITEM 1 Updated all rate and table information pertaining to military pay. 2 Updated pay tables, benefit amounts, and information on retirement services offices. 3 Updated beneficiary entitlement information and various cost amounts. 4 Updated various tables, information relating to RSO offices, and the CRSC and CRDP programs. 5 Updated narrative on beneficiary entitlements and cost amounts. 6 Updated beneficiary entitlement information and various cost amounts. 7 Updated pay scale and benefit information. 8 Expanded discussion on the use of debit and credit cards. 9 No substantial changes. 10 Updated information on IRA and 401(k) contributions and market performance data. 11 Added discussion on the Consumer Financial Protection Bureau (CFPB). 12 Updated discussion and information tables. 13 Updated insurance rating information. 14 Updated Life Expectancy Table. 15 Updated all federal and state tax information. 4

5 Chapter 1. Military Pay & Allowances Military Income & Benefits In General Armed Forces Comparative Ranks Active Duty Basic Pay Other Types of Pay & Allowances Access to Your Pay Account Thrift Savings Plan (TSP) Military Information & Pay Worksheet MILITARY INCOME & BENEFITS IN GENERAL. Military compensation is a complex system of over 40 pay and allowance items. Since military compensation is usually the service member s primary source of income and because the entitlements are complex and subject to change, it is important that both the mem ber (and his or her family) understand how these entitlements fit into the family s total financial plan. As we review the most common items of pay and allow ances, keep in mind that the amounts and benefits we dis cuss are subject to change. The information provided is the most current available at the time of publication. It is also important to remember that entitlements to most military pay and allowances are based on satisfying a variety of requirements that are too numerous to outline in this publication. If you think you are en titled to an item we dis cuss, check with your Finance or Personnel Office to determine spe cific requirements ARMED FORCES COMPARATIVE RANKS. While the military grade structure is the same in all departments, the titles that are associated with each rank can vary. For example, depending upon the branch of service, an E 7 may have the title Sergeant First Class, Master Sergeant, Gunnery Sergeant, or Chief Petty Officer. The table below provides a summary of the grade structure and titles used in the United States Armed Forces ACTIVE DUTY BASIC PAY. A military member s basic month ly pay is similar to a civilian s salary and, like the civilian, it is usually the member s primary source of income. Each year the President submits a pay raise request to Congress and, if approved, it is enacted into law with an effective date of 1 January. The table on the next page shows the Fiscal Year 2015 pay raise of 1%. The table does not reflect the longevity increases associated with service in excess of United States Armed Forces Comparative Ranks Rank U. S. Army Titles U. S. Air Force Titles U. S. Marine Corps Titles U. S. Navy Titles Rank Commissioned Officers O 10 General General General Admiral O 10 O 9 Lieutenant General Lieutenant General Lieutenant General Vice Admiral O 9 O 8 Major General Major General Major General Rear Admiral (Upper) O 8 O 7 Brigadier General Brigadier General Brigadier General Rear Admiral (Lower) O 7 O 6 Colonel Colonel Colonel Captain O 6 O 5 Lieutenant Colonel Lieutenant Colonel Lieutenant Colonel Commander O 5 O 4 Major Major Major Lieutenant Commander O 4 O 3 Captain Captain Captain Lieutenant O 3 O 2 First Lieutenant First Lieutenant First Lieutenant Lieutenant Junior Grade O 2 O 1 Second Lieutenant Second Lieutenant Second Lieutenant Ensign O 1 Warrant Officers W 5 Chief Warrant Officer Chief Warrant Officer n/a W 5 W 4 Chief Warrant Officer (The United States Air Force Chief Warrant Officer Chief Warrant Officer W 4 W 3 Chief Warrant Officer has no Chief Warrant Officer Chief Warrant Officer W 3 W 2 Chief Warrant Officer Warrant Officer Grades) Chief Warrant Officer Chief Warrant Officer W 2 W 1 Warrant Officer Warrant Officer Warrant Officer W 1 Enlisted Personnel E 9 Cmd. Sgt. Major or Sgt. Major Chief Master Sergeant Sgt. Major or Master Gun. Sgt. Master Chief Petty Officer E 9 E 8 Master Sergeant or 1st Sergeant Senior Master Sergeant Master Sergeant or 1st Sergeant Senior Chief Petty Officer E 8 E 7 Sergeant First Class Master Sergeant Gunnery Sergeant Chief Petty Officer E 7 E 6 Staff Sergeant Technical Sergeant Staff Sergeant Petty Officer First Class E 6 E 5 Sergeant Staff Sergeant Sergeant Petty Officer Second Class E 5 E 4 Corporal or Specialist 4 Sergeant or Senior Airman Corporal Petty Officer Third Class E 4 E 3 Private First Class Airman First Class Lance Corporal Seaman E 3 E 2 Private Airman Private First Class Seaman Apprentice E 2 E 1 Private Airman Basic Private Seaman Recruit E 1 5

6 30 years which was a provision included in the 2010 Defense Authorization Act OTHER TYPES OF PAY & ALLOWANCES. In addition to basic pay, active duty personnel often receive several other items of pay and allowances depending on their marital status, type of duties performed, professional skills, and areas of assignment. It is important to note that items of pay are generally subject to taxation and are included in the taxable income reported to the federal and state government at the end of the year. However, allowance items are not subject to taxation and are not included in annual taxable income. The most common special and incentive pay and allowances are discussed below. PAY Career Sea Pay. A monthly amount ranging from $50 to $750 for enlisted members; $180 to $700 for warrant officers; and $100 to $669 for commissioned officers. Amounts are based on the member s rank and years of sea duty. When members receiving Career Sea Pay have served 36 consecutive months of sea duty, they are entitled to an additional $100 a month for each month of subsequent sea duty. There are two incentives associated with Career Sea Pay: a. Submarine Duty Pay. This is a monthly pay for submarine crew members. The amount payable is based on the member s rank and years of service. Enlisted crew members receive from $75 to $600 while warrant officers Rank Under 2 Years Over 2 Years Over 3 Years Over 4 Years 2015 United States Armed Forces Basic Pay Table Over 6 Years Over 8 Years Over 10 Years Over 12 Years Commissioned Officers O 10 16,072 16,150 16,486 17,071 17,071 17,925 O 9 14,056 14,259 14,552 15,062 15,062 15,816 O 8 9,946 10,272 10,488 10,548 10,818 11,269 11,373 11,802 11,924 12,293 12,827 13,319 13,647 13,647 13,647 13,647 13,989 O 7 8,264 8,648 8,826 8,967 9,222 9,475 9,767 10,059 10,351 11,269 12,043 12,043 12,043 12,043 12,105 12,105 12,347 O 6 6,186 6,796 7,242 7,242 7,270 7,582 7,623 7,623 8,056 8,822 9,272 9,721 9,977 10,236 10,738 10,738 10,952 O 5 5,157 5,810 6,212 6,288 6,539 6,689 7,019 7,261 7,574 8,083 8,281 8,506 8,762 8,762 8,762 8,762 8,762 O 4 4,449 5,151 5,495 5,571 5,890 6,232 6,659 6,990 7,221 7,353 7,430 7,430 7,430 7,430 7,430 7,430 7,430 O 3 3,912 4,435 4,787 5,219 5,469 5,744 5,921 6,213 6,365 6,365 6,365 6,365 6,365 6,365 6,365 6,365 6,365 O 2 3,380 3,850 4,434 4,584 4,678 4,678 4,678 4,678 4,678 4,678 4,678 4,678 4,678 4,678 4,678 4,678 4,678 O 1 2,934 3,054 3,692 3,692 3,692 3,692 3,692 3,692 3,692 3,692 3,692 3,692 3,692 3,692 3,692 3,692 3,692 Commissioned Officers With Over Four Years of Enlisted or Warrant Officer Service O 3E 5,219 5,469 5,744 5,921 6,213 6,459 6,600 6,793 6,793 6,793 6,793 6,793 6,793 6,793 O 2E 4,584 4,678 4,827 5,079 5,273 5,418 5,418 5,418 5,418 5,418 5,418 5,418 5,418 5,418 O 1E 3,692 3,942 4,088 4,237 4,383 4,584 4,584 4,584 4,584 4,584 4,584 4,584 4,584 4,584 Warrant Officers W 5 7,189 7,554 7,825 8,126 8,126 8,533 W 4 4,043 4,349 4,474 4,597 4,808 5,018 5,229 5,548 5,828 6,094 6,311 6,523 6,835 7,092 7,384 7,384 7,531 W 3 3,692 3,846 4,004 4,056 4,221 4,546 4,885 5,045 5,229 5,419 5,761 5,992 6,130 6,277 6,477 6,477 6,477 W 2 3,267 3,576 3,671 3,736 3,948 4,278 4,441 4,602 4,798 4,951 5,091 5,257 5,366 5,453 5,453 5,453 5,453 W 1 2,868 3,176 3,259 3,435 3,642 3,948 4,091 4,290 4,486 4,641 4,783 4,956 4,956 4,956 4,956 4,956 4,956 Enlisted Members E 9 4,885 4,995 5,135 5,299 5,465 5,730 5,954 6,190 6,551 6,551 6,879 E 8 3,999 4,175 4,285 4,416 4,558 4,815 4,945 5,166 5,289 5,591 5,591 5,703 E 7 2,780 3,034 3,150 3,304 3,424 3,630 3,747 3,953 4,125 4,242 4,367 4,415 4,577 4,664 4,996 4,996 4,996 E 6 2,404 2,645 2,762 2,876 2,994 3,261 3,364 3,565 3,627 3,672 3,724 3,724 3,724 3,724 3,724 3,724 3,724 E 5 2,202 2,350 2,464 2,580 2,761 2,951 3,107 3,125 3,125 3,125 3,125 3,125 3,125 3,125 3,125 3,125 3,125 E 4 2,019 2,122 2,238 2,351 2,451 2,451 2,451 2,451 2,451 2,451 2,451 2,451 2,451 2,451 2,451 2,451 2,451 E 3 1,823 1,938 2,055 2,055 2,055 2,055 2,055 2,055 2,055 2,055 2,055 2,055 2,055 2,055 2,055 2,055 2,055 E 2 1,734 1,734 1,734 1,734 1,734 1,734 1,734 1,734 1,734 1,734 1,734 1,734 1,734 1,734 1,734 1,734 1,734 E 1 1,546 1,546 1,546 1,546 1,546 1,546 1,546 1,546 1,546 1,546 1,546 1,546 1,546 1,546 1,546 1,546 1,546 Over 14 Years Over 16 Years Over 18 Years Over 20 Years Over 22 Years Note: Monthly base pay for O 7 to O 10 in 2015 is limited to $15,125 by Level II of the Executive Schedule. Over 24 Years Over 26 Years Over 28 Years Over 30 Years 6

7 receive from $285 to $425. Officer payments range from $230 to $835. b. Nuclear Qualified Officer Pay. In order to train and retain nuclear qualified officers, the Navy is authorized to pay two types of special pays: an annual Continuation Pay not to exceed $25,000 and an annual Incentive Bonus not to exceed $20,000. Diving Pay. A monthly payment of up to $240 is given to officers and up to $340 to enlisted members whose duties involve diving. Enlistment & Reenlistment Bonus. Existing laws currently authorize the military departments to award an Enlistment or Reenlistment Bonus to individuals who initially enlist or extend their period of active duty. The normal period of enlistment or extension is four years. The amount of the enlistment bonus cannot exceed $40,000 and varies by occupational skills and service department. The military departments are also authorized to award an additional Selective Reenlistment Bonus to enlisted members who are serving in a designated critical military speciality. This additional bonus can be as high as $100,000. The designated critical military specialities and amounts payable are different for each military department. Flight Pay. There are four primary special pays for members whose military duties involve aerial flight. a. Aviation Career Incentive Pay. Commissioned and warrant officers may receive a monthly incentive pay based upon their years of aviation service. The amount payable ranges from $125 to $840 per month. b. Enlisted Flier Incentive Pay. This pay may be authorized in lieu of HDIP for enlisted crew members. Enlisted aviators may receive continuous flight pay as long as they meet flying requirements. The pay ranges from $150 to $400 a month. c. Aviation Continuation Pay. An annual bonus of up to $25,000 may be paid to selected officers who agree to extend their aviation service. d. Hazardous Duty Incentive Pay (HDIP). HDIP is payable to non-rated crew members whose duties can only be performed on an in-flight aircraft. Monthly officer payments range from $150 to $250 while the monthly entitlement for enlisted personnel ranges from $150 to $240 per month. Foreign Language Proficiency Pay. A monthly payment, not to exceed $1,000 for Active Duty and $500 for Guard and Reserve members, is payable to those who maintain proficiency in specific foreign languages designated by the military departments. Hardship Duty Pay. There are two types of monthly Hardship Duty Pay: a. HDP L are payments to officers and enlisted personnel for service in designated locations. Payments range from $50 to $150 depending upon the duty location. b. HDP M are payments for the performance of designated missions generally involving the recovery of the remains of U.S. service members. Hazardous Duty Incentive Pay. A $150 monthly payment is authorized for members required to perform certain hazardous duties. Qualifying duties include demolition work, parachute jumping, work with toxic fuels or pesticides, work inside pressure chambers, flight duty as a non crew member, flight deck operations, and similar hazardous duties. Additionally, in the field of parachute jumping, there is a monthly High Altitude Low Opening (HALO) pay of $225 which may be authorized for members who perform unique parachute duties. Hostile Fire and Imminent Danger Pay. A $225 monthly payment is authorized to members who perform duties within areas designated as imminent danger zones. Involuntary Separation Pay. This is a special lump sum payment authorized for certain members who are involuntarily separated from the service (for reasons other than misconduct) after having served at least six years but less than 20 years on active duty. Medical Pay. Military personnel who are serving in various medical specialities are entitled to receive a variety of special pays. a. Medical Doctors. Military doctors may receive several special pays. Eligibility is determined by the doctor s medical specialty, intern training and board certification status, time in service, and the length of the physician s additional active duty service commitment. The amounts of these special pay items can be substantial and are designed to ensure that qualified medical personnel are retained on active duty and that their pay remains fairly compatible with their civilian counterparts. These special pay items include: 1. An annual Variable Special Pay; 2. An annual Multiyear Special Pay; 3. An annual Incentive Special Pay; and 4. Additional payments if the physician is Board Certified in his or her medical specialty. b. Dentist Pay. A monthly variable special pay is paid to dentists based on their years of service. Also, an addi tional annual special pay ranging from $10,000 to $15,000 is pay able based upon the length of the dentist s active duty commitment. Board Certified dentists may also receive an annual payment ranging from $2,500 to $6,000. Additionally, dental officers are eligible for a multiyear retention bonus of up to $50,000 depending on his or her specialty. c. Nurse Bonus Payments. An accession bonus of up to $30,000 may be paid to nurses who agree to serve on active duty for at least four years. Additionally, Registered Nurses who extend their active service are eligible for incentive special pays of up to $20,000 per year. 7

8 d. Pharmacy Officers. Pharmacy officers in paygrades O 6 and below may receive a retention special pay of up to $15,000 per year. e. Nonphysician Board Certified Pay. Military members serving in a number of healthcare fields (e.g., physical therapists, radiation specialists, optometry, etc.) may be eligible to receive Board Certified Pay up to $5,000 per year. Special Duty Assignment Pay. A monthly payment ranging from $75 to $450 is given to enlisted members who perform duties that have been designated as being extremely difficult or involving a high degree of responsibility. ALLOWANCES Basic Allowance for Housing (BAH). BAH is a monthly allowance for members not assigned to government quarters. The objective of the BAH program is to ensure the same out of pocket housing expense for each member regardless of duty location. The BAH allowance for each duty location is based on commercially gathered price data of local rental properties. Data is collected to establish the average rental and utility costs for various types of housing units. The information reflects the cost of rental properties with housing characteristics similar to those rented by civilian counterparts with salaries comparable to military members. The data is collected every summer with the new rates effective 1 January of the next year. BAH rates vary by grade and duty location. For example, in 2015 an E 8 with dependents stationed in Savannah, GA will receive $1,758 and an O 3 with dependents will receive $1,779. If the same members are stationed in San Diego, the E 8 will receive $2,568 and the O 3 will be paid $2,610. A key feature of the BAH program is rate protection. Rate protection ensures that service members will not have a reduction in their BAH payment even if rates go down. The rate in effect when the member arrives at their duty station is the guaranteed minimum rate they will receive during their current assignment. Also, if rate increases are made for a given location, then everyone assigned to that location will receive the benefit of the new rate increase. In addition to the standard BAH, there are three other types of BAH: a. BAH RC/Transient. A prorated housing allowance paid to Reservists who are mobilized for 30 days or less. b. BAH Partial. This may be paid to members without dependents who reside in government quarters. c. BAH Differential. Used for personnel who live on base in single quarters and make alimony or child support payments. Basic Allowance for Subsistence (BAS). BAS is a monthly allowance de signed to offset the cost of meals to the member. Officers receive $ a month regardless of rank. Upon completion of initial training, enlisted members who are authorized to mess separately will receive $ per month. Clothing Allowance. All officers are entitled to an initial uniform allowance. The initial uniform allowance is payable only once to an officer except for the following circumstance: Upon transfer to another Reserve Component that requires a different uniform, a Reserve officer may receive another initial uniform allowance. Regular officers may not receive this allowance when transferring to another Military Service. Enlisted personnel receive an initial uniform issue at the time of entry into the service. To provide for uniform replacement, enlisted personnel are subsequently paid an annual clothing replacement allowance. There are two types of clothing replacement allowances Basic and Standard. The Basic Rate is payable during the first three years of service. After three years of service, the member receives the Standard Rate which is a higher level of reimbursement. The Basic and Standard rates vary by gender and service. The table below provides allowance information. In addition, there are special clothing allowances which are payable to members whose duties require them to wear either civilian type clothing or special military clothing (e.g., members of the Army Band). CONUS COLA. The Cost of Living Allowance for the Continental United States is designed to partially offset the higher, non housing costs experienced by active duty members living in designated high cost areas in the United States. The amount varies based upon rank, dependent status, years of service and geographical location. Although most payments are in the range of $20 to $300 per month, the monthly allowance can be over $700 for certain members living in particularly high cost locations. Dislocation Allowance (DLA). Dislocation Allowance is designed to partially reimburse active duty personnel for the expenses they incur in relocating their households in conjunction with a permanent change of station. The allowance is determined by the member s grade and is paid at either a Annual Clothing Replacement Allowance Enlisted Men BASIC STANDARD Army $ $ Navy (E1-E6) $ $ Navy (E7-E9) $ Air Force $ $ Marine Corps $ $ Coast Guard $ $ Enlisted Women Army $ $ Navy (E1-E6) $ $ Navy (E7-E9) $ Air Force $ $ Marine Corps $ $ Coast Guard $ $

9 with dependents or without dependents rate. The table to the right provides the Dislocation Allowance rates for Family Separation Allowances (FSA). FSA is payable only to members with dependents. The monthly payment of $250 is designed to provide compensation for the added expenses incurred because of an enforced family separation under one of the following conditions: a. FSA-R. Transportation of dependents is not authorized at government expense and the dependents do not live in the vicinity of the member s home port/permanent duty station. b. FSA-S. The member is on duty aboard a ship, and the ship is away from the home port continuously for more than 30 days. c. FSA-T. The member is on TDY/away from the permanent duty station continuously for more than 30 days and the member s dependents do not reside at or near the TDY/ TAD station. Overseas Station Allowances. Overseas Station Allowances consist of a series of payments designed to help defray the additional costs for food, lodging, and related incidental expenses incurred by active duty members and their dependents as a result of assignment to permanent duty outside the United States. This allowance contains four separate components: Paygrade Dislocation Allowance Without Dependents With Dependents O 10 $3, $4, O 9 3, , O 8 3, , O 7 3, , O 6 3, , O 5 3, , O 4 3, , O 3 2, , O 2 1, , O 1 1, , O 3E 2, , O 2E 2, , O 1E 1, , W 5 3, , W 4 2, , W 3 2, , W 2 2, , W 1 1, , E 9 2, , E 8 2, , E 7 1, , E 6 1, , E 5 1, , E 4 1, , E 3 1, , E 2 1, , E , ) Cost of Living Allowance (COLA); 2) Overseas Housing Allowance (OHA); 3) Temporary Lodging Allowance (TLA); and, 4) Interim Housing Allowance (IHA). The amount of each of these allowances varies geographically because the excess costs upon which they are based vary from one foreign locality to another. Temporary Lodging Expense (TLE). Temporary Lodging Expense is designed to partially offset the lodging and meal expenses incurred by active duty personnel and/or their dependents when it is necessary to occupy temporary lodgings in conjunction with a permanent change of station (PCS). The allowance is payable for a limited period of time up to ten days in connection with a CONUS PCS and up to five days in conjunction with a PCS to a duty station outside CONUS ACCESS TO YOUR PAY ACCOUNT. MyPay is a great tool to help members of the military, defense civilians, retirees, and annuitants manage their pay. This tool lets you make changes to your pay account information online at anytime at MyPay allows you to view your LES, adjust the amount of your federal and state tax withholdings, change direct deposit accounts for your monthly pay, etc. Features vary slightly by service and status THRIFT SAVINGS PLAN (TSP). The Thrift Savings Plan is an optional retirement investment program that is similar to the various plans administered by many private corporations. Active, reserve, and guard members can contribute to the plan from their military pay and are entitled to keep both their contributions and additional earnings regardless of whether they leave the service prior to retirement or actually retire from military service. The following discussion examines various features of the plan. Website. The TSP website is You can use the website to get current information on the performance of various funds and to access your investment account. Enrollment. If you are a member of the uniformed services, your account is established by your service after you make a contribution election using your service s automated system, if it has one. For example, most members of the uniformed services use mypay. If your service does not use an electronic system, you can complete form TSP-U-1. These forms can be downloaded at You may sign up to contribute to the TSP at any time. Member Contributions. You may invest up to 100 percent of your basic pay each pay period. Contributions are limited only by the restrictions imposed by the Internal Revenue Code. For 2015, tax rules limit the annual dollar amount that can be contributed to $18,000. If you contribute to the TSP from your basic pay, you may also contribute up to 100 percent of 9

10 any incentive, special, or bonus pays that you earn. You may start, stop, or change your contribution at any time using form TSP-U-1. You may not invest any allowances (BAS, BAH, etc.) that you receive. If you are age 50 or older in 2015 and are already contributing the maximum amount of regular TSP contributions, you may elect to make up to $6,000 in additional catch up contributions. Service Matching Contributions. Currently, members of the uniformed services do not receive Matching Contributions. However, the law that extended participation in the TSP to members of the uniformed services allows the secretary of each individual service to designate critical specialties as eligible for Matching Contributions under certain circumstances. Investment Options. The TSP provides six mutual fund investment opportunities: a. Government Securities Investment Fund G Fund. Investment focus is on short term U.S. Treasury securities. b. Fixed Income Index Investment Fund F Fund. Investment focus is on government and corporate bonds and mortgage backed securities. c. Common Stock Index Investment Fund C Fund. Investment focus is on the stocks of large and medium size companies included in the S&P 500 Index. d. Small Capitalization Stock Index Investment Fund S Fund. Investment focus is on the stocks of medium and small companies that are not included in the C Fund. e. International Stock Index Investment Fund I Fund. Investment focus is on international stocks of 22 developed countries. f. Lifecycle Fund L Fund. These funds are a mix of investment vehicles (i.e., domestic stocks, international stocks, bonds, etc.). The specific mix is chosen based on the date when you will need your money. For younger investors, the mix is equity or stock weighted, while for older investors, the allocation is weighted toward bonds and other fixed income securities. Note, all new money coming into your TSP account is automatically invested in the G Fund unless you request a contribution allocation. You may make the allocation online, by phone, or mail. Loans. If the need arises, the TSP loan program gives you access to the money in your account. There are two types of loans a general purpose loan and a loan for the purchase of your primary residence. Repayment periods are one to five years for a general purpose loan and one to fifteen years for a home loan. The interest rate charged is the G Fund rate at the time the loan is initiated. Interest and principal repayments are credited back to your account. Withdrawal. Generally, withdrawals from your account will be taxed at your normal tax rate provided the withdrawal is made after you reach 59 1/2 years of age. Since the TSP is designed to be a long term retirement savings program, withdrawals made before 59 1/2 years of age may be subject to a 10% early withdrawal tax. In addition, there are special rules covering a financial hardship withdrawal for members who are still in service. Plan Administration/Costs. The TSP is administered by the Federal Retirement Thrift Investment Board which is an independent government agency. TSP s operating expenses (e.g., computer costs, statement preparation, etc.) are paid by the fund s investors. In recent years this annual administrative cost has averaged approximately $0.29 per $1,000 of investment balance. Tax Implications. The TSP program allows contributions to be made on either a pre-tax (Traditional TSP) basis or an after tax (Roth TSP) basis. a. Traditional. Contributions that you make today are deducted from your pay before taxes are computed, meaning that you pay less taxes now. The payment of taxes on this income is deferred until you actually withdraw the money from your account. Additionally, taxes on fund earnings are not paid until the money is withdrawn. b. Roth. Taxes on contributions are paid up front. Consequently, contributions are not taxed at the time of withdrawal as long as five years have passed since 1 January of the year you made your first Roth contribution and you are 59 1/2 or older. 10

11 1 7. MILITARY INFORMATION & PAY WORKSHEET Service Number: Date Entered Service: Enlistment Date: Commission Date: Promotion List Service Date: General Military Information Present Rank: Regular/Reserve: Flying Status: Pay Date: Total Active Military Service Date: Dates of Rank or Promotion Dates of Active Duty Tours Rank Date Rank Date From To From To Present Military Income Deductions From Military Pay Basic Monthly Pay... $ Basic Allowance for Housing (BAH)... $ Basic Allowance for Subsistence (BAS) $ Family Separation Allowance (FSA)... $ Flight Pay... $ Foreign Language Proficiency Pay... $ Hazardous Duty Pay... $ Hostile Fire Pay/Imminent Danger Pay $ Medical/Dental Pay... $ Sea Pay/Submarine Pay/Diving Pay... $ Other (Explain)... $ Other (Explain)... $ Federal Income Tax (FITW)... $ Social Security Tax (FICA)... $ State Income Tax For:... $ Local Income Tax For:... $ Allotment To:... $ Allotment To:... $ Allotment To:... $ Allotment To:... $ Combined Federal Campaign... $ Other (Explain)... $ Other (Explain)... $ Other (Explain)... $ Total Military Pay and Allowances:. $ Total Deductions From Military Pay: $ Notes, Comments, Points to Check, Computations, etc. 11

12 Chapter 2. Reserve & National Guard Introduction Categories of Service & Duty Requirements Pay Retirement TRICARE Education Benefits Reserve Component Survivor Benefit Plan (RCSBP) INTRODUCTION. An essential component of the nation s military force is the Reserve and National Guard. The term Reserve Component (RC) refers collectively to the seven individual reserve components of the armed forces: the Army National Guard of the United States, the Army Reserve, the Navy Reserve, the Marine Corps Reserve, the Air National Guard of the United States, the Air Force Reserve, and the Coast Guard Reserve. This chapter will look at the duty requirements, pay, and retirement that are provided to these members. Finally we will examine the health, education and survivor benefits that are available CATEGORIES of SERVICE & DUTY REQUIRE- MENTS. Members of the Guard and Reserve are assigned to one of three categories Ready Reserve, Standby Reserve, or Retired Reserve. a. Ready Reserve. This group consists of three sub categories Selected Reserve, Individual Ready Reserve (IRR), and Inactive National Guard (ING). The Selected Reserve consists of designated guard/reserve units and individuals who are considered essential to wartime mission accomplishment. The president may mobilize up to 200,000 members of the Selected Reserve without declaring a national emergency for a period not to exceed 365 days. Members of the Selected Reserve are generally required to perform one weekend of training each month ( inactive duty for training or IDT, also known colloquially as weekend drill ) and two weeks of training each year ( annual training or AT, sometimes known colloquially as summer camp ) for which they receive pay and benefits. Individual Mobilization Augmentees (IMAs) are members of the Selected Reserve who participate in training activities and are eligible for unit assignment at the time of mobilization. IRR personnel are normally prior service individuals (active or Selected Reserve) who have some remaining period of obligated military service. Usually, they are not affiliated with a unit and generally do not have to satisfy an annual training requirement. ING personnel are normally members assigned to a specific Guard unit who have been excused from training requirements because of legal or contractual requirements. b. Standby Reserve. This group consists of members who have retained their military affiliation but who are excused from active participation because of hardship, 12 critical civilian employment, or other legal requirements. Under certain circumstances members in this category may be involuntarily called to active duty for the duration of a national emergency plus six months. c. Retired Reserve. This group consists primarily of retired members who are drawing retirement pay (over age 60) and those retired members who are not yet eligible for retired pay (under age 60). Eligibility for mobilization is a function of category. Category I retirees are those within their first five years of retirement and are under age 60; Category II retirees are under age 60 but have been retired for more than five years; and, Category III retirees include all remaining retirees PAY. The pay received by members of the reserve and national guard is determined by the type of duty performed active duty or inactive duty training. While on active duty, the member generally receives the normal active duty pay and allowances associated with his or her grade and years of service. While on inactive duty training, members receive drill pay in lieu of normal pay and allowances. Generally, a drill is one four hour period of assembly, training, or military service. Pay for one drill period is equivalent to one day of active duty base pay. Reservists cannot be paid for more than two drills in one calendar day. Reserve units will often drill on a weekend basis performing two drills on Saturday and two drills on Sunday, thereby enabling the reserve member to draw four days of active duty base pay for their weekend service. The table on the next page shows the monthly drill pay while the table on the page after provides an estimate of the annual pay earned by a reservist (assuming attendance at 48 annual drills and two weeks of active duty training). Paygrades O 6 and below received a 1% increase in pay for RETIREMENT. Members must have a minimum of 20 qualifying years of service to be eligible for retirement. A qualifying year of service is any 365 day period during which the member has earned at least 50 service points. Point totals are also important because they are used to calculate retired pay. Excluding points earned while in an active duty status (which includes annual training), reservists may not earn more than 130 points per year. Service points are normally earned in accordance with the following criteria: a. One point for each day of active duty. b. One point for each 4 hour drill period. c. 15 points for each year of service in the Guard or Reserve.

13 d. One point for each 3 credit hours of accredited correspondence study. Eligibility to draw retired pay normally begins at age 60. However, members may begin to draw retired pay earlier based upon active duty service performed after 28 January Specifically, each 90 days of active service performed after 28 January 2008, entitles the member to begin drawing retired pay 3 months prior to age 60. Therefore a member with 360 days of active service would be eligible to draw retired pay at age 59 versus 60. Computation of Retired Pay. The computation of retired pay is determined based upon the member s DIEMS (Date Initially Entered Military Service). Those with a DIEMS before 8 September 1980 use the Final Pay System while those with a DIEMS on or after 8 September 1980 use the High 3 System. Both systems determine the years of service by dividing the total points earned in all years by 360. The result is then multiplied by 2.5% which provides the percentage of base pay that the member will receive at retirement. For example, a member accruing 2,880 points would have a retirement rate percentage of 20% (2,880/360 = 8 years; 2.5% x 8 years = 20%) Monthly Reserve Drill Pay Schedule Listed below are the Reserve rates of Pay for a weekend cycle of four drills Rank Under 2 Years Over 2 Years Over 3 Years Over 4 Years Over 6 Years Over 8 Years Over 10 Years Over 12 Years Over 14 Years Over 16 Years Over 18 Years Over 20 Years Over 22 Years Over 24 Years Over 26 Years Over 28 Years Over 30 Years Commissioned Officers O 10 2,142 2,153 2,198 2,276 2,276 2,390 O 9 1,874 1,901 1,940 2,008 2,008 2,108 O 8 1,326 1,369 1,398 1,406 1,442 1,502 1,516 1,573 1,589 1,639 1,710 1,775 1,819 1,819 1,819 1,819 1,865 O 7 1,102 1,153 1,177 1,196 1,230 1,263 1,302 1,341 1,380 1,503 1,606 1,606 1,606 1,606 1,614 1,614 1,647 O ,011 1,016 1,016 1,074 1,176 1,236 1,296 1,330 1,365 1,432 1,432 1,460 O ,010 1,074 1,104 1,134 1,168 1,168 1,168 1,168 1,168 O O O O Commissioned Officers With Over Four Years of Enlisted or Warrant Officer Service O 3E O 2E O 1E Warrant Officers W ,007 1,043 1,084 1,084 1,138 W ,004 W W W Enlisted Members E E E E E E E E E Note: Monthly drill pay for O 7 through O 10 is limited to Level II of the Federal Executive Schedule. Source: Military Times Media Group 13

14 Rank Under 2 Years 2 Years 3 Years 4 Years 6 Years A Year in the Reserves Years 10 Years Commissioned Officers O 10 33,215 33,377 34,072 35,281 O 9 29,050 29,470 30,074 31,128 O 8 20,555 21,228 21,675 21,800 22,358 23,289 23,506 24,390 24,644 25,406 26,509 27,526 28,204 28,204 28,204 O 7 17,079 17,873 18,240 18,532 19,060 19,583 20,186 20,788 21,392 23,289 24,890 24,890 24,890 24,890 25,018 O 6 12,785 14,046 14,968 14,968 15,025 15,669 15,754 15,754 16,650 18,232 19,162 20,091 20,619 21,154 22,192 O 5 10,659 12,007 12,838 12,995 13,514 13,824 14,506 15,007 15,654 16,644 17,114 17,580 18,108 18,108 18,108 O 4 9,196 10,646 11,356 11,514 12,173 12,881 13,762 14,447 14,923 15,197 15,355 15,355 15,355 15,355 15,355 O 3 8,086 9,166 9,893 10,786 11,303 11,871 12,236 12,840 13,155 13,155 13,155 13,155 13,155 13,155 13,155 O 2 6,986 7,957 9,164 9,473 9,668 9,668 9,668 9,668 9,668 9,668 9,668 9,668 9,668 9,668 9,668 O 1 6,064 6,312 7,630 7,630 7,630 7,630 7,630 7,630 7,630 7,630 7,630 7,630 7,630 7,630 7,630 Commissioned Officers With Over Four Years of Enlisted or Warrant Officer Service O 3E 10,786 11,303 11,871 12,236 12,840 13,349 13,641 14,039 14,039 14,039 14,039 14,039 O 2E 9,473 9,668 9,977 10,496 10,897 11,197 11,197 11,197 11,197 11,197 11,197 11,197 O 1E 7,630 8,147 8,449 8,756 9,059 9,473 9,473 9,473 9,473 9,473 9,473 9,473 Warrant Officers W 5 14,858 15,612 16,173 16,795 W 4 8,356 8,989 9,246 9,500 9,937 10,370 10,808 11,467 12,044 12,594 13,044 13,482 14,127 14,656 15,260 W 3 7,630 7,949 8,275 8,382 8,724 9,396 10,096 10,426 10,807 11,200 11,907 12,384 12,669 12,973 13,386 W 2 6,752 7,391 7,588 7,722 8,161 8,841 9,179 9,510 9,916 10,233 10,521 10,865 11,091 11,270 11,270 W 1 5,927 6,565 6,736 7,099 7,528 8,159 8,454 8,866 9,272 9,592 9,885 10,242 10,242 10,242 10,242 Enlisted Members E 9 10,096 10,324 10,613 10,951 11,294 11,842 12,306 12,793 13,540 E 8 8,264 8,629 8,856 9,127 9,421 9,951 10,220 10,677 10,931 11,555 E 7 5,745 6,270 6,510 6,828 7,077 7,503 7,743 8,170 8,525 8,767 9,025 9,125 9,460 9,640 10,325 E 6 4,969 5,467 5,708 5,943 6,188 6,739 6,953 7,369 7,496 7,588 7,696 7,696 7,696 7,696 7,696 E 5 4,552 4,858 5,093 5,333 5,707 6,099 6,421 6,459 6,459 6,459 6,459 6,459 6,459 6,459 6,459 E 4 4,173 4,387 4,625 4,859 5,066 5,066 5,066 5,066 5,066 5,066 5,066 5,066 5,066 5,066 5,066 E 3 3,768 4,005 4,247 4,247 4,247 4,247 4,247 4,247 4,247 4,247 4,247 4,247 4,247 4,247 4,247 E 2 3,583 3,583 3,583 3,583 3,583 3,583 3,583 3,583 3,583 3,583 3,583 3,583 3,583 3,583 3,583 E 1 3,196 3,196 3,196 3,196 3,196 3,196 3,196 3,196 3,196 3,196 3,196 3,196 3,196 3,196 3,196 Source: Military Times Media Group 12 Years 14 Years 16 Years 18 Years 20 Years 22 Years 24 Years 26 Years The two systems differ in the determination of the base pay amount. In the Final Pay System, the pay computation is based upon the base pay for the grade and length of service at the time the member reaches retirement age. Under the High 3 system, the pay computation is based upon the average of the highest 36 months of base pay for the grade and length of service. The length of service is impacted by the member s status at the time he or she becomes eligible for retirement. At the 20 year point, members may continue to serve in the Ready Reserve and accrue additional years of qualifying service or they may choose to be discharged. If they choose to be discharged, the member s length of service is computed through the date of discharge. At any time beyond the 20 year point, the member may elect to be transferred to the Retired Reserve. Membership in the Retired Reserve enables the member to continue to accrue creditable years of service for retirement purposes. Regardless of the method of computation, all recipients of retired pay are provided an annual Cost of Living Adjustment (COLA) based upon the change in the Consumer Price Index. Assistance in the retirement application process can be obtained from the organizations on the top of the next page TRICARE. Activated members of the guard and reserve automatically receive free health care while on active duty. In addition, existing legislation authorizes the following coverage for both sponsors and their dependents when the member 14

15 RETIREMENT SERVICES OFFICES (RSO) Army Reserve ORGANIZATION 63rd Regional Support Command Retirement Services Office 230 RT Jones Road Mountain View, CA Phone: st Regional Support Command Retirement Services Office 1525 Marion Avenue Fort Jackson, SC Phone: th Regional Support Command Retirement Services Office 60 South O Street Fort McCoy, WI Phone: th Regional Support Command Retirement Services Office 5231 S. Scott Plaza JBMDL, NJ Phone: AREAS SERVED CA, NV, AZ, NM, TX, OK, AR KY, TN, MS, LA, AL, GA, FL, SC, NC, PR WA, OR, ID, MT, WY, UT, CO, KS, NE, SD, MN, WI, IA, MO, IL, IN, MI, OH VA, VT, RI,PA, NY, NJ, NH, ME, MD, MA, DE, CT, WV is called to active duty for more than 30 days in support of a contingency operation: a. Pre Mobilization. Up to 90 days of TRICARE eligibility for both members and their families prior to the sponsor s activation date. b. During Mobilization. Waiver of TRICARE Standard and Extra deductibles for family members and authorization of TRICARE payment up to 115% of the maximum allowable charge to non participating providers. These features are designed to enhance the continuity of family health care in conjunction with their normal civilian providers. c. Post Mobilization. Prior to release from active duty, members must receive a comprehensive physical exam. After deactivation, both the member and his or her family are provided 180 days of transitional TRICARE coverage. Upon completion of the 180 day transitional period, those members who served at least 90 days will be provided the opportunity to purchase TRICARE Standard coverage on a self only or self and family basis. d. TRICARE Reserve Select (TRS). TRICARE Reserve Select is available to the Selected Reserve members of the Ready Reserve (and their families) who meet the following qualifications: not on active duty orders; not covered under the Transitional Assistance Management Program; or not eligible for or enrolled in the FEHB program. It is a premium based plan with benefits similar to TRICARE Standard and Extra. Monthly premium costs for 2015 are $50.75 (member only) and $ (member and family). Cost-shares and annual deductibles are the same as the charges for Active Duty Family Members (see Chapter 3, Table 3 12). Members of the Selected Reserve and Individual Ready Reserve are eligible to enroll in a dental plan known as the TRICARE Dental Program (TDP), provided they have at least 12 months of service remaining. TRICARE has partnered with the Metropolitan Life Insurance Company (MetLife) for enrollment, claims processing, and customer service for the TRICARE Dental Program. The table below provides a summary of monthly premium costs. Additional information regarding the TRICARE Program can be found in Chapter 3 and online at Plan TRICARE Dental Plan Monthly Premium Cost for Reserve Components Selected Reserve, IRR (Mobilization Only), and Family Members IRR (Non-Mobilization) and Family Members Sponsor Only $11.30 $28.24 Single Premium (one family member, excluding sponsor) Family Premium (more than one family member, excluding sponsor) $28.24 $28.24 $84.71 $84.71 Sponsor and Family $96.01 $ Benefit Period: 1 February January EDUCATION BENEFITS. Members of the Guard and Reserve may be eligible to receive educational benefits under one of three programs: the Post-9/11 GI Bill, the Montgomery GI Bill Selected Reserve (MGIB-SR), or the Reserve Education Assistance Program (REAP). The specific eligibility criteria and benefit amounts vary between programs. Generally, each program provides up to 36 months of education benefits which may be used during the period of service or for a minimum of ten years subsequent to discharge. Participation is generally limited to one program. Consequently, Reserve and Guard members who are eligible for benefits under more then one program must decide which program to utilize. The VA web site ( provides an extensive discussion on program selection and the transition alternatives between programs. The discussion below provides a brief overview of each program. Post-9/11 GI Bill. This education program was established in 2008 for individuals who served on active duty on or after 15

16 September 11, Benefit eligibility is determined by the total amount of aggregate active duty service incurred after 10 September Chapter 6 provides a table which outlines the available benefits based on the amount of active service. Those with remaining benefits under other education programs may make an irrevocable election to utilize their remaining benefits under the Post-9/11 GI Bill. Montgomery GI Bill (MGIB) Selected Reserve. The MGIB SR program provides education benefits to members of the Reserve and Guard. Basic eligibility criteria include a six year obligation and completion of initial active duty training (IADT). The table below outlines the current benefit rates payable under the MGIB SR program. Basic Monthly Rates MGIB SR Type of Training Full Time Three Quarter Time One Half Time Institutional $367 $274 $182 Apprenticeship & On-the-Job Training Cooperative Correspondence Flight Training First 6 months: $ Second 6 months: $ Remainder of program: $ Reserve Educational Assistance Program (REAP). This program provides educational benefits to members of the Guard and Reserve who are called to active duty in support of a war or national emergency for a period of at least 90 days. The active duty service period is effective retroactively to 11 September Unlike the Active Duty MGIB program, service members do not have to contribute $1,200 to participate in the REAP program. The Department of Defense and the Department of Homeland Security determine who is eligible for this program. The Department of Veterans Affairs administers the program and pays the benefits. The table below provides the current monthly benefit rates. Type of Training Institutional: Full Time Three Quarter One Half Apprenticeship & On Job Training: First 6 Months Second 6 Months Remainder $367 (Full time only) 55% of approved charges 60% of approved charges Basic Monthly Rates REAP Active Service over 90 days but less than one year $ $ Active Service over 1 year but less than 2 years $1, $ Active Service over 2 years $1, , , NOTE: Active Service must be for a consecutive time period RESERVE COMPONENT SURVIVOR BENEFIT PLAN (RCSBP). The RCSBP is an annuity program designed to provide a degree of financial security for survivors of reserve personnel. The plan has several valuable features including government subsidization of program costs, payment of lifetime benefits and inflation protection through annual cost of living adjustments. Additionally, the member s RCSBP is paid from pretax dollars which means that the monthly premium payments reduce the retiree s taxable income. Reserve members become eligible for retired pay after completing 20 years of service and they begin to draw retired pay at 60 years of age. The period of time between the date of retirement and 60 years of age is referred to as the gray area. Members who die while in the gray area do not receive retired pay nor do their spouses receive RCSBP. To ensure that spouses have an opportunity to receive RCSBP, the member receives a Notice of Eligibility (NOE) for Retired Pay at the 20 year point of service. The NOE requires the member to choose between three options regarding participation in RCSBP: Option A: Deferred Decision By choosing this option the member is postponing the decision regarding participation in RCSBP until he/she applies for and begins to draw retired pay. The disadvantage of this option is that if the member dies before age 60, the spouse will not receive RCSBP benefits. Spousal concurrence is required. Option B: Deferred Annuity If the member dies after age 60,the spouse will immediately receive annuity benefits. If the member dies before age 60, the spouse will receive annuity benefits at the time the member would have been 60. Spousal concurrence is required. Option C: Immediate Annuity This option immediately provides annuity benefits regardless of whether the member dies before or after age 60. If the member fails to elect an option on a timely basis, legal requirements dictate that Option C be automatically selected. The amount of the RCSBP coverage, called the base amount, is selected by the member and can range from $300 up to a maximum of 55% of the member s retired pay. The law requires written spouse concurrence on any RCSBP election that provides less than full and immediate coverage (Option C at 55%). The cost of the RCSBP program is a function of the option selected. For Option A, the cost is 6.5% of the annuity base amount. If the annuity base amount is $1,000, the monthly cost will be $65. The cost of Options B & C include both the 6.5% associated with Option A plus an additional fee of 2-4%. The purpose of the additional fee is to offset the cost of coverage provided to the member during the gray area period when the member is not receiving retired pay. Additional information on the RCSBP program is provided in Chapter 5. 16

17 Chapter 3. TRICARE Overview of TRICARE Active Duty Members and Dependents Retirees and Dependents TRICARE For Life (TFL) TRICARE Young Adult Pharmacy Benefits DEERS Treatment Priorities at Military Facilities Dental Care TRICARE Telephone Numbers TRICARE Regions and Contacts TRICARE Cost Table Medicare/TFL Cost Share Table OVERVIEW OF TRICARE. TRICARE is a regionally based health care program that employs Managed Care Support Contractors (MCSC) to coordinate medical services at both military and civilian treatment facilities (see the TRI- CARE Regions and Contacts table on page 22). The program offers three main options for health care support: TRICARE Prime, TRICARE Extra, and TRICARE Standard TRICARE Prime. This is a Health Maintenance Organization (HMO) option that is similar to many programs offered by civilian employers across the U.S. In addition to treating you when you are ill, this option focuses on keeping you healthy through preventive care and services such as periodic physical exams, mammograms, and prostate screenings. In order to participate, you must be enrolled in the TRICARE Prime option. Enrollment is for one year and, depending upon eligibility status, you may be required to pay an annual enrollment fee (see TRICARE Cost Table on page 23). While the Prime option does not have an annual deductible, it may require the payment of cost sharing fees for prescription drugs, civilian doctor visits, and other services. An enrollee will either choose or be assigned a Primary Care Manager (PCM) who will provide most of the required care. If speciality care is needed, the PCM will refer you to a Health Care Finder (HCF) who will make the necessary arrangements for specialized care. This option effectively places you in a health care network with no annual deductibles. You are responsible for any excess costs. The advantages of Prime are reduced paper work and potentially lower total costs. The disadvantage is less freedom in choosing your servicing physician. TRICARE Prime also offers a Point of Service (POS) option which allows enrollees to receive non-emergency health care services from any TRICARE authorized provider in or out of network without requesting a referral from their PCM or Health Care Finder. When TRICARE Prime enrollees choose the POS option, all requirements applicable to TRI- CARE Standard apply. POS claims are subject to outpatient deductibles ($300 per person and $600 per family) and 50% cost-shares of TRICARE allowable charge for outpatient and inpatient claims. The 50% cost share continues to be applied even after the catastrophic cap has been met. TRICARE Extra. This TRICARE option requires no enrollment rather it provides health care on a visit by visit basis. While there are no annual enrollment fees, there are annual deductibles and the out of pocket cost sharing fees are higher than under the Prime option. The advantage of the Extra option is the freedom to choose your servicing physician. The Prime option locks you into a physician network, while the Extra option allows you to either choose within the TRICARE network (and realize certain cost savings with less paperwork) or go outside the network (with reduced cost support). The disadvantage of the Extra option is potentially higher annual costs relative to TRICARE Prime. TRICARE Standard. This option is similar to Extra in that it requires no enrollment fees, provides health care on a visit by visit basis, contains annual deductibles, and requires the payment of certain cost sharing fees. The advantage of Standard is that it pays a share of the cost of covered health care services from any authorized provider who is not in the TRICARE network. Consequently, this option provides the widest choice of providers. The disadvantage of the Standard option is potentially higher costs relative to the other options. Is TRICARE Prime the Right Plan For You? If you are an active duty service member or an activated Guard or Reserve member, you must enroll in TRICARE Prime. All other eligible beneficiaries have the option to enroll in Prime or use TRICARE Standard and Extra. TRICARE Prime offers fewer out-of-pocket costs than TRICARE Standard and Extra, but less freedom of choice for providers as you must select a provider from the network. So, you should look at your options closely. The Prime option places you into an HMO network. Therefore, it allows you to more accurately predict your health care costs, which is a real advantage if your family situation requires frequent use of health care facilities. Also the system cuts down on paperwork and is prepared to support your requirements on a 24 hour, seven days a week basis. On the other hand, if you have other health care insurance that serves as your primary coverage, Prime may not be your best 17

18 choice because Prime will only pay after your other insurance has made its payment for your civilian care. Retirees and their dependents who are enrolled in Prime pay enrollment fees and they may transfer their Prime enrollment from one region to another without paying additional enrollment fees. However, the annual fee is nonrefundable. Consequently, retirees who are relocating to a new area should consider quarterly payments if the relocation will be to an area that does not provide TRICARE Prime. Also, since Prime is a managed care, regionally administered program, it may not be the best option for retirees who travel frequently. It should be noted however, that Prime will pay for emergency services provided outside of the retiree s normal TRICARE service area. If you are concerned about selecting your own physician, you may not want to be restricted to using only those providers who are members of the Prime network in this case, the Prime POS, Extra, or Standard options may be a better choice. What is Covered? The TRICARE program is designed to provide both inpatient and outpatient support for health care that is considered medically necessary and non experimental. However, there are a number of special rules and limits, so if you have any doubt concerning specific coverage, it is best to contact your Health Benefits Advisor at the nearest Military Treatment Facility or your TRICARE contractor (see TRI- CARE Regions and Contacts on page 22). You can also go to to get a general list of what is covered. What is Not Covered? In general, TRICARE excludes services and supplies that are not medically or psychologically necessary for the diagnosis or treatment of a covered illness (including mental disorder), injury, or for the diagnosis and treatment of pregnancy or well-child care. Additionally, all services and supplies (including inpatient institutional costs) related to a non-covered condition or treatment, or provided by an unauthorized provider, are excluded. Pre-existing Conditions. There are no pre-existing condition limitations for enrollment in TRICARE Prime or for participation in the TRICARE Extra or Standard options. Catastrophic Cap. The purpose of a catastrophic cap is to limit the out of pocket costs incurred by TRICARE participants during a fiscal year. The cap includes TRICARE Prime enrollment fees, deductibles, inpatient care, outpatient care, and prescription cost shares and co-pays. For active duty families the current cap is $1,000, while the cap for retirees and their families is $3,000. The specific rules governing the costs that are included/excluded from the cap are complicated. Additional information can be obtained from your local Medical Treatment Facility or at ACTIVE DUTY MEMBERS AND DEPENDENTS. Active duty members must enroll in one of the TRICARE Prime options depending on where they live. Dependents of active duty members may also enroll in TRICARE Prime without paying an annual enrollment fee. Dependents of active duty personnel who do not enroll in TRICARE Prime may choose to participate in TRICARE through either the Standard or Extra options. See the TRICARE Cost Table on page 23 for fees and co-payment requirements RETIREES AND DEPENDENTS. In order to participate in the TRICARE Prime program, retirees and their dependents must specifically enroll in the Prime option. For 2015 the annual enrollment fee is $ for retirees and $ for retirees and their family members. Retirees and their dependents who do not enroll in TRICARE Prime, may choose to participate in TRICARE through either the Standard or Extra options. See the TRICARE Cost Table on page 23 for additional fees, deductibles, and co payment requirements. Retirees and their dependents living more than 40 miles from a military treatment facility are not eligible to participate in Tricare Prime. However, they may apply and be allowed to participate in the program if they agree to waive their drive time standards to receive primary and speciality care under the Prime option TRICARE FOR LIFE (TFL). The objective of the TFL program is to continue TRICARE support for Medicare eligible military retirees, their spouses, and other qualifying dependents age 65 and older. This program is an entitlement program which does not require annual authorization by Congress. It does not affect retirees under age 65 (with the exception of those who are Medicare eligible due to disability). Enrollment. There are no TRICARE For Life enrollment costs or fees. Enrollment in the program is automatic, however to guarantee TFL eligibility, retirees must: a. Ensure that their status and the status of their family members is current in DEERS (see paragraph 3 7); b. Enroll in Medicare Part B which has a monthly charge (see Chapter 12 for more information); and, c. Ensure that their Military ID card is current. Payment. The TFL program functions as a supplement to Medicare. TFL allows Medicare to make the initial coverage determination for health care benefits and TFL serves as a secondary payer to Medicare. Basic payment guidelines are discussed below. See the Medicare/TFL Cost Share Table on page 24 for additional payment information. a. For medical services or supplies that are covered by both Medicare and TFL, Medicare will pay first and TFL will pay the Medicare cost share and the Medicare deductible. b. For services and supplies that are covered by Medicare but not TFL (i.e., chiropractic services), Medicare will pay its normal amount and TFL will pay nothing. In this case you are responsible for the Medicare deductible and cost share. c. For services and supplies that are covered by TFL but not Medicare (i.e., overseas care, skilled nursing coverage over 100 days), Medicare will pay nothing. TFL will 18

19 become the primary payer and you are responsible for the applicable TRICARE deductible and cost shares. d. For services and supplies not covered by TFL or Medicare, you are responsible for the entire cost. e. If you have other private insurance and the service or supply is covered under Medicare and TFL, Medicare pays first, the private insurance will pay second, and TFL will pay last. As its name implies, a TFL supplement will pay after TFL. TFL Claims. Claims processing and customer service for TFL participants is handled by: Wisconsin Physicians Service (WPS), TRICARE For Life, P.O. Box 7890, Madison, WI Beneficiaries can contact WPS at or visit the WPS online resource center at www. TRICARE4u.com. Long Term Care. As a general rule, long term care involves situations where individuals require assistance with their non-medical personal care needs. Normally people who are unable to perform at least two activities of daily living (i.e., eating, dressing, bathing, etc.) are considered to be in a long term care status. Long term care is not a covered benefit under either Medicare or TFL. Consequently, the costs of long term care must be borne by either the beneficiary or through private insurance. The federal government has a long term care insurance program managed by the Office of Personnel Management. Information on this program is available at or by calling In addition, many commercial insurance carriers also offer long term care coverage TRICARE YOUNG ADULT. The TRICARE Young Adult (TYA) program allows qualified adult children to purchase TRICARE coverage after eligibility for regular TRICARE coverage ends at age 21 (or 23 if enrolled in college). Eligible enrollees must be unmarried, adult children under age 26 of active or retired service members. Adult children of non-activated or retired Guard and Reserve members who participate in the TRICARE program are also eligible. The program covers inpatient and outpatient medical care and pharmacy benefits. However, dental care is not covered. Premiums are on a calendar year basis. For 2015 the Prime option costs $208 per month and the Standard option costs $181 per month PHARMACY BENEFITS. The TRICARE pharmacy program offers four ways to have prescriptions filled: a. Military Pharmacy. Prescriptions may be filled (up to a 90 day supply for most medications) at a military pharmacy free of charge. Beneficiaries should contact their local military pharmacy for specific details about filling and refilling prescriptions at its pharmacy. b. Home Delivery. A 90 day supply of most prescriptions (either generic or brand name) is available on a prepaid, cost share basis. Through this program, you mail your written prescriptions along with the appropriate co-pay and the medications will be sent directly to you. Prescriptions may be refilled by mail, phone, or online. Information on how to use home delivery can be obtained from the following sources: ; or, 3. c. Network Pharmacy. You can obtain a 30 day supply of most prescription medications on a cost share basis through a civilian pharmacy in the TRICARE network. Information on participating civilian pharmacies can be obtained at the Express Scripts website or by calling This approach allows you to quickly obtain medication that you must start taking immediately. However, for long term medications, the military pharmacy or home delivery approaches are more cost effective. d. Non Network Pharmacy. This is the most expensive option. You usually have to pay the full amount first and then file a claim for reimbursement. The reimbursement form is called the Patient s Request for Medical Payment, Form The form is available at any Military Treatment Facility (MTF) or at The table below outlines your cost under each of the pharmacy programs. Place of Service Military Pharmacy (up to 90 day supply) Home Delivery (up to 90 day supply) Network Pharmacy (up to 30 day supply) Non-Network Pharmacy (up to 30 day supply) Your Pharmacy Cost Generic Drugs Brand Name Drugs Non Formulatory Drugs $0 $0 N/A $0 $16 $46 $8 $20 $47 PRIME: 50% after POS fees. ALL OTHERS: $20 or 20% of total drug cost (whichever is greater). PRIME: 50% after POS fees. ALL OTHERS $47 or 20% of total drug cost (whichever is greater). Medicare Prescription Drug Program. Medicare offers a drug insurance program that is designed to reduce the out of pocket costs associated with prescription drug treatments (see Chapter 12). Since TRICARE beneficiaries already have a comprehensive pharmacy benefit, there is generally no added value in purchasing a Medicare drug prescription plan. 19

20 3 7. DEERS. DEERS is an acronym for the Defense Enrollment Eligibility Reporting System. The system is a computerized data bank maintained by the DoD. Its purpose is to serve as the official record of eligibility for individuals receiving uniformed service benefits. Active and retired members are listed automatically, but sponsors must initially report their dependents and any subsequent changes to dependent status (for example: newborn children, divorce or remarriage by a sponsor, marriage of a dependent, etc.). This is particularly important because if an ineligible family member improperly receives medical care, the government is required by law to seek reimbursement for the care provided. Registration in DEERS is absolutely critical to maintaining your official record of eligibility for health care treatment under TRICARE. If you are not registered under DEERS, contact your nearest military installation or the DEERS telephone center at You may also update your information online at The following categories of individuals qualify as dependents for health care purposes: a. Spouses and unmarried children under the age of 21; b. Spouses and unmarried children under the age of 21 of reservists who are ordered to active duty for more than 30 consecutive days (coverage is only available during the reservist s active duty tour); c. Unmarried children over 21 who have a severe mental or physical handicap and rely on their parents for at least one half of their support; d. Unmarried children under the age of 23 who are full time students at an accredited college and rely on their parents for over one half of their support; e. Widows and widowers of active and retired members who have not remarried; f. Spouses, widows, and eligible family members of Medal of Honor recipients; and, g. Former spouses of active or retired members, provided they were married for at least 20 years during a sponsor s period of credible service, have not remarried, and are not covered by an existing employer sponsored health plan TREATMENT PRIORITIES AT MILITARY FA- CILITIES. Current DoD policy has established the following priorities for health care service at Military Treatment Facilities (MTF): 1. Active duty service members. 2. Active duty family members who are enrolled in TRI- CARE Prime (for the purpose of determining access priority, survivors of military sponsors who died on active duty and are enrolled in TRICARE Prime are included in this priority group). 3. Retirees, their family members, and survivors who are enrolled in TRICARE Prime. 4. Family members of active duty service members who are not enrolled in TRICARE Prime (for the purpose of determining access priority, survivors of military sponsors who died on active duty who are not enrolled in TRICARE Prime are in this priority group). 5. Retirees, their family members, and survivors who are not enrolled in TRICARE Prime. 6. All other eligible persons (including retirees and family members not enrolled in TRICARE Prime) DENTAL CARE. Complete dental care is provided to all active duty members. However, dental care is generally not authorized for either retirees or the dependents of active duty or retired members at military facilities within the United States. Routine treatment may be available at overseas locations and emergency dental care is authorized worldwide. Dental care may also be authorized in certain situations when it is considered to be a necessary part of a medical or surgical treatment program. Active Duty Dependents. The TRICARE Dental Program (TDP) is a voluntary, high quality, cost-effective dental care plan for eligible family members of all active duty uniformed services personnel. The plan pays the entire cost of diagnostic, emergency, and preventive services, with the exception of sealants. The table on the next page provides a summary of coverages for various types of services. The plan provides an annual maximum coverage of $1,300 per patient for all dental care except orthodontics. For orthodontic services, there is a maximum lifetime benefit of $1,750. The annual period for purposes of determining maximum coverage runs from 1 May through 30 April. Since the plan is subsidized by the government (DoD pays a portion of the cost), the monthly premiums are relatively low. The 2015 monthly premiums are $11.30 for one family member or $33.88 for two or more family members. The program is operated by Metropolitan Life. Enrollment can be accomplished on line at tricare or by contacting MetLife: MetLife TRICARE Dental Program, Enrollment and Billing Services, P. O. Box 14185, Lexington, KY or Retirees and Their Dependents. Retirees and their dependents are eligible for care under the TRICARE Retiree Dental Plan (TRDP), which is operated by Delta Dental of California. This plan includes more than 150,000 participating dentists in the Delta Dental Select and Delta Dental PPO networks. If the enrollee visits a Delta Dental Select or Delta Dental PPO dentist, all claims will be submitted for the enrollee. If an enrollee visits a dentist outside of the Delta network, the same coverage percentages and benefit levels apply, however, the enrollee must pay the dentist and then submit a claim to Delta for reimbursement. The enrollee is responsible for paying the difference between the TRDP-allowed amount and the dentist s bill. Information on network dentists in your area can be obtained toll free at or by visiting the TRDP website at 20