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NDAA Survivor Benefit Plan

In the January 2016 issue of FRA Today, you have an article about the president signing the NDAA. Within the article it shows that it “provides for survivor benefit plan (SBP) benefits to be paid to second spouse when the first divorced spouse is deceased.”

I divorced my first spouse after 18 years (not deceased) in 1977 and remarried my second spouse in 2000. I stopped paying into the plan in 1979 because I was no longer married. I had forgotten that I had SBP when I remarried, and didn’t resume paying premiums into the plan until 2010.

The Defense Finance and Accounting Service (DFAS) Retiree Account Statement shows that my second wife is the beneficiary on record and that the payments would go to her upon my passing. If NDAA shows payments to second spouse only if the first spouse is deceased, why am I still paying into the SBP?

Claire G. Veech

FRA Response: Thanks, Shipmate. You aren’t the only one who was confused by our explanation and we apologize for further muddying the waters.

So let’s start with the basics: SBP is essentially an insurance program. A military retiree pays premiums and upon his* death, half of his covered retired pay will continue to be paid to his surviving spouse.

The circumstances get a bit more confusing if the retiree wishes to remarry after he and the designated beneficiary (i.e. wife) divorce and/or if she predeceases him. Here are a couple scenarios:

1. If a retiree’s current spouse dies before him, he can stop paying SBP premiums, but is not entitled to any sort of refund of the premiums he’s already paid. If he chooses to remarry, he can resume paying premiums after his subsequent marriage has lasted a year or more, and can name his second (or subsequent) spouse as the beneficiary of his SBP benefit.

2. If the couple divorces, the SBP benefits are considered a marital asset and can be included as part of the divorce settlement. But that’s not always the case.

a. If the terms of the divorce declare that the ex-spouse remains the SBP beneficiary, the retiree cannot name a subsequent spouse to receive the benefit. There can be only one declared beneficiary at any given time.

b. If the benefits are not retained by the ex-spouse as part of the divorce decree, the retiree can designate a subsequent spouse as his SBP beneficiary, but only after the subsequent marriage has lasted one year or more.

The recent NDAA language (reference in previous issues of FRA Today) specifically addresses the situation (2a, above) that arises if the ex-spouse is the named beneficiary and dies before the retiree. If that ex-spouse died without relinquishing claim to the benefit, DOD was contending that the benefit simply expired with the ex-spouse, and was not transferrable to the retiree’s subsequent spouse. FRA felt this was unfair and successfully fought to eliminate this policy. As a result, a subsequent beneficiary can be named if the previous beneficiary is no longer living to claim the benefit.

*We fully understand that all retirees are not male, but felt it was easier to explain all the possibilities without making multiple gender distinctions.
Access to Overseas Commissaries and Exchanges

I am a military retiree with over 20 years of service to my country. I currently reside with my wife of 50 years in Switzerland. We still pay our share of taxes to the U.S. and the Swiss IRS. We were thrilled to find out that there are U.S. commissaries and exchanges in Germany, however the German Finance Office and the U.S. Customs Department signed an agreement that only military retirees who live in Germany are allowed to shop at [these facilities]. The retirees must obtain a tax card (pink card) from the German customs office and pay sales tax on their purchases. We have no problem with that; in fact, we would be happy to pay this tax whenever we could buy our favorite peanut butter or barbeque sauce at the commissary.

To change this outdated, unfair and unjust agreement would cost the taxpayer nothing and put additional monies in the German coffers. It would also ensure equal treatment for ALL military retirees, no matter where they reside.

[As a comparison,] Italy does not have this residential restriction. However, as senior citizens, we do not like to drive in Europe, and to take the train to the commissary in Italy would require an overnight stay. We simply can’t afford that.

We hope and pray our representatives in Congress can and will change this unnecessary and unfair agreement with Germany.

George Caldwell

Submissions Send Shipmate Forum letters to Editor, FRA Today, 125 N. West St. Alexandria, VA 22314. E-mail submissions may be sent to Please include “Shipmate Forum” in the subject line. FRA reserves the right to select and edit letters for publication. Letters published in Shipmate Forum reflect the opinions and views of FRA members. They do not necessarily reflect the official position of FRA as a whole. FRA is not responsible for the accuracy of letter content.

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Member Participation is Critical to FRA Success

As you read this issue of FRA Today, Hill staff, legislators and others are working on major changes to the TRICARE benefit program. Health care issues are of paramount concern to the association, since they impact all segments of our membership. FRA is concerned that in this difficult budget climate, tough fiscal choices must be made in the FY 2017 Defense budget — choices in which people programs are often the first to be sacrificed. An obvious cost-cutting target is the shift of more TRICARE health care costs to retirees in lieu of cutting other Pentagon spending programs.

All FRA members are urged to subscribe to NewsBytes, FRA’s weekly electronic newsletter that keeps members up-to-date on legislative issues that directly impact their benefits and pocketbooks (e-mail to subscribe). NewsBytes provides members with accurate and timely information on rapidly changing legislative developments on Capitol Hill. Members should also use the FRA Action Center ( to contact their elected officials on important issues. Usage of the FRA Action Center in 2015 increased by nearly 20 percent over 2014, and FRA congratulates and thanks shipmates who used this free service to send nearly 70,000 advocacy messages to their elected officials in Washington, D.C.

The Action Center provides pre-written messages that shipmates can edit and send to their elected officials in Washington. It offers members the opportunity to instantly participate directly in the legislative process. Grassroots advocacy has a direct influence on the association’s efforts to effectively advance our legislative agenda and to represent the concerns of our members before Congress and appropriate federal agencies. Member participation in the legislative process is critical to our success and complements the efforts of the FRA Legislative Team as we advocate on behalf of the association membership.

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Veterans Issues

House Subcommittee Reviews Consolidation of Non-VA Care

The House Committee on Veterans’ Affairs Subcommittee on Health recently conducted an oversight hearing on the VA mandate to consolidate all of its existing non-VA care programs (currently seven separate programs) under a single Choice Program. Under the Choice consolidation plan VA submitted to Congress last October, veterans’ eligibility for non-VA hospital care and medical services (i.e., care in the community) will continue to be dictated by VA wait times, geographic access to care and availability of VA services. Eligibility for VA emergency care will be expanded, but will require patients to pay a share of the costs for emergency treatment and urgent care.

The hearing examined proposed eligibility guidelines for care under VA’s Choice consolidation plan to determine whether they are sufficient to increase health care access and improve services for veterans.

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VA Secretary Wants to Reform Appeals Process

Bob McDonald, Secretary of the Department of Veterans Affairs (VA), asked Congress for legislation to simplify the claims disability appeal process, which is failing veterans. Secretary McDonald said in a statement to the press that “decades worth of law and policy layered upon each other have become cumbersome and clunky. Most importantly, it is now so antiquated that it no longer serves veterans well, as many find it confusing and are frustrated by the endless process and the associated length of time it can take to get an answer.” McDonald stated that the VA should work to make an appeal process that, on average, takes less than one year to adjudicate an appeal. Currently the appeals process takes an average of three years to reach a final decision.

Over the last three years, the number of cases pending for 125 days or more (the definition of a backlogged claim) has dropped from more than 612,000 to fewer than 80,000. Nevertheless, officials missed their publicly stated goal of reaching zero by the end of 2015.

At the same time, the number of appeals — cases where veterans believe claims processors have misunderstood the severity of their injuries and shortchanged their benefit payouts — has risen by more than 30 percent, to 440,000 cases. FRA believes that average appeal times of more than three years is unacceptable, and that the cost of defending the nation should include timely and adequate treatment and compensation for our wounded warriors.

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HVAC Ranking Member Marks Eighth Anniversary of Wounded Warrior Act

Rep. Corrine Brown (Florida), Ranking Member of the HVAC, recently issued a statement marking the eighth anniversary of the signing of the Wounded Warrior Provisions contained in the National Defense Authorization Act (NDAA) of FY 2008, saying, “I salute the Wounded Warriors Act on its eighth anniversary and our returning heroes who benefit.”

In February 2007, a series of Washington Post articles about conditions at Walter Reed Army Medical Center highlighted the challenges our veterans face, and this law was designed to address and fix these issues. Specifically, the provisions in the 2008 NDAA expanded the Combat-Related Special Compensation (CRSC) benefit for Chapter 61 retirees and authorized the concurrent receipt of military retired pay and disability compensation for individual unemployable (IU) veterans who are rated at less than 100 percent (retroactively to January 1, 2005). Other major provisions improved diagnosis and treatment of traumatic brain injury (TBI) and post-traumatic stress injuries (PTSI) and created a joint Department of Defense (DoD)/VA committee to work on creating a seamless transition. In retrospect, the Wounded Warrior Provisions made major improvements, but many provisions still remain a work in progress. In Rep. Brown’s statement, she pledges to continue to work with DoD and VA to make sure our wounded heroes get the best medical care available.

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HVAC Reviews Cost and Benefit of VBMS and Claims Backlog

The House Veterans’ Affairs Committee (HVAC) held an oversight hearing to review the VA’s efforts to eliminate its backlog of disability benefits compensation claims as well the cost overruns of the VA’s implementation of the Veterans Benefits Management System (VBMS), a digital claims processing system for claims adjudication. Total costs for the new “paperless” system used to process veterans’ disability claims, which VA officials assert has been key to reducing the claims backlog, are nearly double the initial estimates. The VA, has continued to make improvements to the system’s software, but it still doesn’t know how much the system will end up costing.

The VA has spent more than $1 billion developing and maintaining VBMS since 2009. The agency has requested an additional $290 million this year for continued changes to the system, which was initially projected to cost $579 million.

For years, VA leaders have promised to eliminate the department’s backlog of disability compensation claims that are pending for more than 125 days. They quietly announced late last year, however, that this goal will never be achieved. The VA now argues that some claims are so complex that they will never be adjudicated in 125 days. Further, the VA has changed the definition of a backlogged claim to exclude a claim that is being appealed.

The longstanding backlog of disability claims at the agency is down from a high of more than 600,000 in 2013 to about 80,000 currently, the lowest in VA’s history. FRA applauds this reduction, but remains skeptical about the accuracy of VA data and views the remaining backlog as a violation of the nation’s solemn commitment to properly care for disabled veterans. The committee’s justifiable concerns about cost overruns are legitimate, but the VA must find a way to provide timely treatment and compensation to those who’ve honorably served and sacrificed.

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Senators Urge VA Secretary to Help Agent Orange Blue Water Veterans

FRA is disappointed, but not surprised, in the Department of Veterans Affairs’ (VA) recent ruling on its definition of inland waterways for the purposes of determining presumed exposure to Agent Orange (AO) for Vietnam veterans. The statement was released in response to a federal court order for the VA to reevaluate its policy of denying Agent Orange-related benefits to Navy sailors who served on ships off the coast of Vietnam during the conflict.

FRA asserts that the VA policy limiting presumption to those with “boots on the ground” is too restrictive — a position supported by other veterans’ service organizations and echoed in a recent letter from 14 senators to VA Secretary Bob McDonald, asking him to use his statutory authority to provide service-connected presumption of AO exposure for these so-called “Blue Water” veterans.

Despite these efforts, the VA’s recent ruling still denies benefits to those who served offshore. Many of these veterans are experiencing health problems related to AO exposure, but continue to be unjustly denied disability compensation for their illnesses.

The announcement has been received with frustration and an overall loss of confidence in the VA’s commitment to veterans. FRA National Executive Director Thomas Snee said, “To state with such confidence that the toxin, Agent Orange, could not cross from inland waterways and harbors into the open seas is a rejection of the laws of nature; as if some imaginary line drawn across the mouth of a river or bay had the ability to stop ocean currents from flowing.” The ruling also dismisses scientific studies that have determined the distillation process used aboard these off-shore vessels to generate potable water from sea water actually amplified the negative effect of AO by a factor of 10.

FRA remains committed to securing benefits for this segment of the veteran community and will continue its efforts to seek a legislative reversal to the current policy that discriminates against Blue Water veterans who have health problems commonly associated with herbicide exposure. Shipmates are strongly urged to use the FRA Action Center ( to ask their legislators to support “Blue Water Navy Vietnam Veterans Act” (H.R. 969/S. 681).

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Retiree Issues

TRICARE OTC Program Becomes Permanent

TRICARE’s over-the-counter (OTC) drug coverage is here to stay. Formerly a demonstration program, the OTC benefit became a permanent part of the TRICARE pharmacy benefit on February 1, 2016. Under the program, OTC drug coverage still requires a prescription from a doctor and beneficiaries must pay the usual generic copays for covered OTC drugs.

February 1 bought changes to the drugs available under the OTC benefit. The allergy medications Cetirizine and Loratadine were previously covered, but now the versions containing pseudoephedrine will also be covered. However, Prilosec OTC is no longer covered; the generic version, Omeprazole, is still covered, as is the prescription version of Prilosec. Female beneficiaries can still get Levonorgestrel (also known as Plan B), an emergency contraceptive used to prevent pregnancy, without a copay or prescription at a network or military pharmacy; there are no age restrictions or costs for the contraceptive.

If you have questions about whether or not one of your drugs is covered, you can call the TRICARE pharmacy contractor, Express Scripts, at 1-877-363-1303.

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TRICARE Standard Newsletter Available

A 12-page newsletter for TRICARE Standard beneficiaries is available online. The newsletter includes articles on submitting claims, costs, limited out-of-pocket costs under the Autism Care Demonstration, updating DEERS during a life change, a change to your pharmacy benefit, filling compound drug prescriptions, shingles and pneumococcal vaccines, clinical preventive services and vaccines, TRICARE Young Adult program premiums for 2016, the Nurse Advice Line, understanding emergency vs. urgent care, provider choice under TRICARE Standard and TRICARE Extra, prior authorizations, the Notice of Privacy Practices, reporting other health insurance, the Military/Veterans Crisis Line, and TRICARE benefit updates.

To read this newsletter, go to:

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DoD Authorizes SBP Funds for Special Needs Trusts

The FY 2015 National Defense Authorization Act (NDAA) gives military members and retirees the option to direct Survivor Benefit Plan (SBP) payments to a special needs trust (SNT) for permanently disabled children. An SNT is a legal instrument designed to manage money that was set aside for assisting a disabled person. Once created, an SNT is irrevocable. On December 31, 2015, the DoD finally issued guidance to the Department of Finance and Accounting Services (DFAS) on how to implement SBP payments to a legally established SNT.

Affected military members and retirees will need a lawyer to create an SNT and to verify that the SNT is in compliance with state and federal law. Prior to this change, DFAS required payments to go only to a “representative payee” to accept payments on behalf of the adult child. Allowing SBP annuities to be deposited into an SNT allows permanently disabled military children to still qualify for certain state and federal assistance programs that require means testing. Before enactment of the recent law, military children suffered financial penalties not imposed on similarly disabled non-military children who could have assets placed in a trust for them. If a retiree has already died, his surviving spouse or the child’s guardian can also elect to make the change. FRA supported this provision as it went through the legislative process.

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Your Taxes and the Affordable Care Act

It’s tax season and certain requirements of the Affordable Care Act (Obamacare) must be met. In January 2016, the Defense Finance and Accounting Service (DFAS) and the Pay and Personnel Center (PPC) began providing IRS Forms 1095 (C and/or B, depending on your status as a military member, military retiree, or annuitant). Like other tax and pay statements, the new forms will be available in your myPay account. For those who did not opt in for electronic delivery, and for those who fall under the Coast Guard Pay and Personnel Center, these forms will be in the mail. The information will be necessary when you prepare to file your 2015 federal income tax return. Important information includes:

• TRICARE and other federally-provided healthcare plans meet the minimum essential coverage requirement of the Affordable Care Act.

• Military members: In September, the Defense Manpower Data Center DMDC sent a notification letter to members if their SSN or a family member’s SSN needed to be updated in DEERS. It is important to follow the instructions in the letter to ensure information is correctly reported to the IRS.

• You will receive an IRS Form 1095-B or 1095-C for all healthcare plans in which you are enrolled.

• The IRS 1095 series forms include information already provided to the Internal Revenue Service.

If you have any questions or haven’t received your 1095 form, please contact your respective points of contact:

Defense Finance and Accounting Service; Toll Free: 1-888-332-7411.

U. S. Coast Guard Pay and Personnel Center; Toll Free: 1-800-772-8724.

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Active Duty/Reserve Issues

Another Small Pay Increase for Military in FY 2017 Budget

The Administration’s FY 2017 budget request includes an annual active duty pay increase of only 1.6 percent. This will be the fourth year in a row that the military pay increase has been set at 0.5 percent below the Employment Cost Index (ECI). The ECI increase for FY 2017 is 2.1 percent.

Pay and allowances have remained the top retention consideration for active duty military personnel since the beginning of the All-Volunteer Force, and FRA strongly supports a pay increase that is at least equal to the ECI. In 1999, it was determined that there was a 13.5-percent gap between military and private sector pay, and Congress made a commitment at that time to gradually close that gap. FRA believes that Congress should hold fast to that commitment. The gap was reduced to 2.4 percent, but it is now widening again. Adequate pay increases are needed to, at least in part, offset the extraordinary demands and sacrifices expected in a military career.

According to Politico, the FY 2017 Defense budget will shrink to 2.5 percent of Gross Domestic Product (GDP). FRA advocates for a Defense budget that is at least five percent of the GDP to ensure adequate funding for both personnel and weapons programs.

Coast Guard Authorization Passes House and Senate

The House recently passed the Coast Guard Authorization Bill (H.R. 4188) for FY 2016 and FY 2017. The bill, sponsored by Rep. Duncan Hunter (California), now goes to the White House to be signed into law. It includes:

• Authorizing 43,000 personnel end strength;

• Eliminating the Senior Enlisted Continuation Boards;

• Requiring the president to submit a Coast Guard manpower requirement plan to Congress;

• Authorizing a Coast Guard annual capital investment plan;

• Limiting the Department of Homeland Security (DHS) Secretary’s authority to close Coast Guard facilities;

• Establishing a master’s degree in maritime operations offered by the Coast Guard;

• Requiring the Coast Guard to offer a training course for flag officers and other employees on the workings of Congress at least once per year; and

• Mandating that maternity leave will be similar to Navy regulations.

FRA supports annual authorization legislation for the Coast Guard to enable Congress to provide adequate oversight over the 11 Coast Guard statutory missions. Coast Guard parity with DoD personnel programs also remains a high priority for the association.

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CBO Report: Bigger Deficits

The Congressional Budget Office (CBO) recently released a spending baseline report indicating that if current laws generally remain unchanged, the federal deficits for FY 2016 – FY 2026 are expected to increase. CBO is the principal source of independent analysis of spending, taxation and budgeting for legislators, and it estimates that the FY 2016 deficit will be $544 billion, which is $105 billion more than the FY 2015 deficit. The annual deficit has been falling since topping at a staggering $1.4 trillion during the financial crisis in 2009, and it was down to $439 billion in fiscal 2015.

A larger deficit makes it more difficult to expand concurrent receipt, repeal the SBP/DIC offset, provide a larger-than-requested active duty pay increase, oppose a TRICARE fee increase and implement other improvements for which FRA advocates.

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Stateside Commissary Benefit Reviewed by HASC-MP

FRA staff recently attended a House Armed Services Subcommittee on Military Personnel (HASC-MP) hearing on the value of the stateside commissary benefit and efforts to reform it. FRA signed on to a statement from The Military Coalition (TMC) that cited the stateside commissary benefit as an important benefit for active duty personnel and retirees.

DoD is consistently looking for ways to trim its budge; reduction and/or elimination of the stateside commissary benefit has been a prime target in the past. Some proposals being considered include increasing prices and cutting store hours. FRA advocates that active duty and retiree families who regularly shop at the commissary save as much as 30 percent over civilian grocery stores. However, the Armed Forces Marketing Council claimed that a five-percent increase in prices could cause a 20-percent reduction in commissary traffic. Subcommittee Chairman Rep. Joe Heck (Nevada) stated that the commissary program is a valued part of the benefit package for active duty personnel and retirees, and it contributes to their overall quality of life. The subcommittee is committed to maintaining the benefit while seeking to reduce its dependence on appropriations. FRA wants to ensure adequate funding for the Defense Commissary Agency and opposes consolidation with or closure of military exchanges.

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The FRA Legislative Team is National Executive Director Tom Snee, Director of Legislative Programs John Davis, Assistant Director of Legislative Programs Stephen Tassin and National Veterans Service Officer Chris Slawinski.

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