RAO BULLETIN 1 October 2010

THIS BULLETIN CONTAINS THE FOLLOWING ARTICLES

== VA Disclosure Policy ————————– (Praised in NEJoM)

== Tricare Suspicious Calls ———————————– (Surveys)

== Mobilized Reserve 28 SEP 2010 —————– (1875 Increase)

== HUD-VASH [01] ———— (Disability Compensation Income)

== VA Compensation & Pensions [02] — (FY 2011 Increase Hoax)

== VA Blue Water Claims [13] ————- (17,000 Claim Reviews)

== GI Bill [85] —————————————— (FY 2011 Rates)

== VA Contractor Use [03] ——- (Policies Not Uniformly Applied)

== Debt Settlement Companies ——————— (New FTC Rules)

== FEGLI ———————————————— (Pay Out Policy)

== State Veterans Home Program [03] ———– (Gold Star Parents)

== Military Retirement Fund ———————————- (Funding)

== Military Retirement Fund [01] ————- (Unanticipated Needs)

== Tricare 26 [01] ——————————- (Dependent on NDAA)

== Military Tax Relief [02] —————————– (Hearing Held)

== NDAA 2011 [06] ————————————— (More Delay)

== Mojave Desert Veteran Memorial [06] —— (New Legal Action)

== Vietnam Veterans Memorial [08] ** —— (AO Death Inclusion)

== USFSPA & Divorce [15] ** — (Vets Turn to State Legislatures)

== Foreclosure [06] —————————— (Ally Halts Evictions)

== Tax-exempt Status ———————- (IRS Form 990N deadline)

== Health Care Reform [39] ————— (New Fraud Regulations)

== VA Home Loan [22] ———————————– (How to Get)

== USO [01] ————————————— (Ontario CA Center)

== Veterans Relationship Management ——— (New VA Initiative)

== Reserve Benefits [03] ————- (H.R.3787 Veteran Definition)

== CHAMPVA [02] ——————————————— (S.3801)

== DIC Retroactive Award ————————- (SBP Tax Impact)

== Vet Gun Control [03] ————————————- (H.R.2547)

== Vet Toxic Exposure Lejeune [13] ———- (VA Says No Link)Ok.

== POW VA Benefits [05] ———————— (Expanded Policies)

== Vet Jobs [22] ————————————– (Federal Agencies)

== Arlington National Cemetery [15] ——— (Exhumation Results)

== Arlington National Cemetery [16] ———– (Accountability Bill)

== Veterans’ Court [07] ——————- (1st Federal Criminal Case)

== VA Financial Management System ——— (Upgrade Cancelled)

== HVAC [13] —————————————- (6 Bills Approved)

== VA Presumptive VN Vet Diseases [13] —– (Payment Handling)

== VA Presumptive VN Vet Diseases [14] — (Final Rule Published)

== Stop-loss Pay [06] ———————— (21 OCT Deadline Nears)

== Ohio Vet Bonus [01] ———————————– (Non-taxable)

== Vet Insurance Life [08] —————— (VA Corrective Action)

== Vet Insurance Life [09] ** ———– (Prudential Letter to Vets)

Page 2

== Saving Money —————————————- (Shopping Tips)

== Medicare Fraud [49] ——————————- (15-30 Sep 2010)

== Medicad Fraud [22] ——————————– (15-30 Sep 2010)

== State Veteran’s Benefits ———————————– (Delaware)

== Military History ——————————- (The Battle of Britain)

== Military History Anniversaries ———- (October 1-15 Summary)

== Military Trivia 13—————————————– (Number 13)

== Tax Burden for Oregon Retirees —————————— (2009)

== Congressional Alphalist ———————————— (Index M)

== Veteran Legislation Status 28 SEP 2010 ——- (Where we stand)

== Have You Heard? ———————- (Paraprosdokian sentences)

Attachment – House Veteran Legislation

Attachment – Senate Veteran Legislation

Attachment – Delaware State Veteran’s Benefits

Attachment – Q&A for Vietnam Service Connection

Attachment – Blue-Brown Water Claim Ships & Diseases

** Denotes Military Times sourced articles. Anyone who cannot access or open the website provided either because

they do not have a password or the information has been removed from their site can submit a request to

[email protected] for it to be forwarded to them by email.

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VA Disclosure Policy:

The Department of Veterans Affairs (VA) policy on disclosure of adverse

medical events was praised as a ‘valuable resource for all health care institutions’ in an article in a recent issue of the

New England Journal of Medicine. “At VA we strive every day to deliver superior health care,” said Dr. Robert

Petzel, VA’s Under Secretary for Health. “When mistakes occur, we immediately acknowledge them and learn how

we can do better in the future.” Adverse events, such as incomplete cleaning of medical instruments, may affect

significant numbers of patients over time. However, prompt disclosure also presents an opportunity to quickly assess

risk to patients and to learn how to improve health care delivery and processes.

The article, entitled The Disclosure Dilemma, states that although many health care organizations have adopted

policies encouraging disclosure of adverse events to individual patients, these policies seldom address large scale

adverse events. It adds, however, that VA’s own disclosure policy is a notable exception. The authors, including

Denise Dudzinski, Ph.D., an associate professor and Director of Graduate Studies at the Department of Bioethics &

Humanities at the University of Washington School of Medicine in Seattle, go on to say that VA’s policy outlines “a

clear and systematic process” for disclosure decisions regarding large scale adverse events -a process that can

include convening a multidisciplinary advisory board with representation from diverse stakeholder groups and

experts, including ethicists. A co-author of the article is VA employee Mary Beth Foglia, RN, Ph.D., of the

National Center for Ethics in Health Care and affiliate faculty at the Department of Bioethics and Humanities the

University of Washington.

The VA policy endorses transparency and expresses an obligation to disclose adverse events that cause harm to

patients. Its provisions can include the convening of a multidisciplinary advisory board to review large-scale

adverse events, recommend whether to disclose and provide guidance on the manner of disclosure. The authors of

the article conclude with the following observation, which summarizes VA’s philosophy on the matter: “Disclosure

should be the norm, even when the probability of harm is extremely low. Although risks to the institution are

associated with disclosure, they are outweighed by the institution’s obligation to be transparent and to rectify

unanticipated patient harm.” For additional information, contact the VA Office of Public Affairs at (202) 461-7600.

[Source: VA News Release 29 Sep 2010 ++]

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Tricare Suspicious Calls:

Recently there has been a rash of calls to military personnel from

individuals who claimed to be with DoD and requested information under the guise of it being a Tricare national

survey. If you receive a call that request personal information do not disclose it. Ask the caller basic type questions

to help ensure you determine if the call is legitimate i.e. a call back number, there name and employee number, the

name of the company needing the information, and why they need your personal information. Remember your

personal information is yours and you need to protect it. Following is a Synopsis of one event:

On 15 Sep 2010, an active duty Hurlburt Field (HFLD) Airmen was contacted about a Tricare survey. The member

was asked for personal information such as: Social Security Number, home address, Date of Birth. Additionally, the

caller asked about deployment status and length of deployments. When the Airmen asked why personal information

Tricare already had on file was being asked, the caller immediately hung up. The Airmen attempted to call the

number back, but no one answered. The member saved the phone number (312) 258-4260. An online phone look up

was conducted the number originates from Chicago, Illinois area. Using whocallsme.com showed there is a blog

about the above number and calling others around the United States. The Investigations section called the above

number and an answering machine picked-up and spoke about a Tricare survey. The national and local Tricare

offices were contacted and verified they do conducted surveys; however, they never request the above type personal

information. If you receive a call from anyone about a Tricare and believe it to be false contact your local Tricare

office. The below link is contains some added safeguard

measures:www.tricare.mil/mybenefit/home/Medical/RightsAndResponsibilities/ProtectingPersonalInformation.

[Source: 1 SOSFS/S2I Intelligence Bulletin 10-001 15 Sep 2010 ++]

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Mobilized Reserve 28 SEP 2010:

The Department of Defense announced the current number of

reservists on active duty as of 28 SEP 2010. The net collective result is 1875 more reservists mobilized than last

reported in the 15 SEP 2010 RAO Bulletin. At any given time, services may activate some units and individuals

while deactivating others, making it possible for these figures to either increase or decrease. The total number

currently on active duty from the Army National Guard and Army Reserve is 76,828; Navy Reserve, 6,881; Air

National Guard and Air Force Reserve, 15,469; Marine Corps Reserve, 4,013`; and the Coast Guard Reserve, 709.

This brings the total National Guard and Reserve personnel who have been activated to 103,900 including both units

and individual augmentees. A cumulative roster of all National Guard and Reserve personnel who are currently

activated may be found at http://www.defense.gov/news/d20100928ngr.pdf. [Source: DoD News Release No. 887-

10 dtd 29 SEP 2010 ++]

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HUD-VASH Update 01:

The Indian Veterans Housing Opportunity Act of 2010 (H.R.3553/S.3246),

co-sponsored by Sen. John Thune (R-SD), passed the Senate 27 SEP. The legislation would discontinue the practice

of counting veterans’ disability compensation as income. Because housing assistance provided by the U.S.

Departments of Housing and Urban Development (HUD) and Veterans Affairs (VA) is based on income, the

practice has often pushed disabled Native American veterans above the income threshold for housing assistance, or

actually increased their rent. The bill, which was also sponsored by Sen. Ron Wyden (D-OR) passed the House of

Representatives in April. It is now headed to the president’s desk for signature. [Source: Rapid City Journal article

29 Sep 2010 ++]

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VA Compensation & Pensions Update 02:

There is a hoax circulating the web that VA comp

rates are going up significantly due to recent legislation. What is being sent around is a chopped version of an actual

bill, H.R.4667, which has passed both houses and awaits the President‘s signature. The real bill calls for VA rates to

be increased at same rate as SS is increased. However, the increase in SS is determined by the increase in the

Consumer Price Index (CPI-W) as determined by the Bureau of Labor Statistics in the Department of Labor. By law,

it is the official measure used by SS to calculate the cost-of-living adjustment. If you check SSA‘s website, here is

what they said last year about the COLA. ―Monthly Social Security and Supplemental Security Income (SSI)

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benefits will not automatically increase in 2010 as there was no increase in the CPI-W from the third quarter of 2008

to the third quarter of 2009.‖ That is also the current situation this year. The version on the web has erroneous

rates showing the 100% is going to double, the 10% rate is going up to over $400, and others. The information is

false. If in doubt you can check the text of H.R.4667 at www.thomas.gov. [Source: DAV Memo 29 Sep 2010 ++]

===============================

VA Blue Water Claims Update 13:

Following oversight requests from Senate Veterans’ Affairs

Committee Chairman Daniel K. Akaka (D-HI), the Department of Veterans Affairs has agreed to review the cases of

nearly 17,000 Brown Water and other Vietnam Era veterans who claimed disabilities related to Agent Orange. VA

had previously denied a number of claims without properly determining whether veterans served in Vietnam’s inland

waterways (Brown Water) or otherwise served in locations where veterans may have been exposed to herbicides,

such as Agent Orange. “I commend VA for responding to data showing that many Navy vessels thought to have

stayed at sea actually traveled into the inland waters of Vietnam. As a result, veterans who served on these vessels

are eligible for the same benefits as Vietnam veterans who served on land. I urge veterans and advocates to visit the

Senate Veterans’ Affairs Committee website to determine if evidence of ships in inland waters or service on the

perimeter of Air Force bases in Thailand entitles them or someone they know to health care and benefits,” said

Senator Akaka.

Akaka successfully urged VA to reconsider cases in which claims by Vietnam veterans potentially exposed to

Agent Orange were denied without obtaining relevant military records, such as deck logs. These claims

had been held in abeyance by VA while litigation was pending concerning so-called “Blue Water” veterans and their

exposure to Agent Orange and other herbicides, and were subsequently denied. Akaka discovered that

many of these veterans actually served in so-called “Brown Water” or inland waters of Vietnam, and should have

received the same presumption of service-connection as veterans who had “boots on the ground” in Vietnam. By

law, VA presumes that veterans who served in inland waterways were exposed to Agent Orange or other herbicides.

Any of those veterans who suffer from certain diseases, and their survivors, may qualify for monetary benefits and

health care.

With this review, certain veterans who were previously considered “Blue Water” veterans will have their claims

re-evaluated for evidence of “Brown Water” service, or evidence of service in other locations where VA

acknowledges that herbicides may have been used, such as the perimeter of Air Force bases in Thailand. The Senate

Veterans’ Affairs Committee website provides a list of the ships VA has acknowledged traveled in inland waters, as

well as evidence about other ships that the committee has received. A list of the ships

identified to have traveled in Vietnam’s inland waters by VA is available at

http://veterans.senate.gov/upload/Ships_in_Vietnam.docx. Akaka’s committee staff also has compiled an additional

list of ships with evidence or suggestion of service in Vietnam’s inland waters. That list is available at

http://veterans.senate.gov/upload/Tracking_List_Ships.docx. For a list of the conditions Vietnam veterans are

presumed exposed to, refer to www.publichealth.va.gov/exposures/agentorange/diseases.asp#veterans. In addition,

monetary benefits and care are provided to Vietnam veterans’ offspring with spina bifida, and to children of women

veterans who served in Vietnam who have birth defects. For more information refer to

www.publichealth.va.gov/exposures/agentorange/conditions/birth_defects.asp . Note: The information from all

these websites can be found on the ―Blue-Brown Water Claim Ships & Diseases” attachment to this Bulletin.

[Source: www.VAWatchdog.com Larry Scott article 28 Sep 2010 +]

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GI Bill Update 85:

The VA released the Fiscal Year 2011 Montgomery GI Bill payment rates. This year

the MGIB rates increased by 4 percent to $1,426 a month, making the total value of the older GI Bill program over

$51K (for 36 months) for those who have not started using their benefit. Unlike the the Post-9/11 GI Bill, the MGIB

rates for full-time, three quarter, half, and less then half-time are relatively straight forward. A student veteran

carrying a full load (normally 12 semester hour units) earns the full monthly payment rate of $1,426 while the

halftime-time student would get half that amount ($713). The VA also released the FY2011 payment rates for the

Montgomery GI Bill for Selected Reserve (MGIB-SR), Reserve Education Assistance Program (REAP) and

Survivors‘ and Dependents‘ Education Assistance Program (DEA). These new payment rates do not go into effect

Page 5

until Oct. 1, 2010. This means that vets using the MGIB can expect to see the increase in their October payment (the

November 2010 check). Follow these links to find the payment rates for each program:



www.military.com/education/content/gi-bill/active-duty-gi-bill-payment-rates.html Montgomery GI Bill



www.military.com/education/content/gi-bill/selected-reserve-gi-bill-payment-rates.htm Montgomery GI

Bill — Selected Reserve



www.military.com/education/content/gi-bill/reserve-education-assistance-program-reap.html Reserve

Education Assistance Program



www.military.com/education/content/money-for-school/spouse-family/dependents-educational-assistance-

dea.html Survivors‘ and Dependents‘ Education Assistance

[Source: Veterans Report Terry Howell article 27 Sep 2010 ++]

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VA Contractor Use Update 03:

The House Veterans‘ Affairs Health Subcommittee, led by

Chairman Michael Michaud (D-ME), held a hearing to provide oversight of the contracting and procurement

practices by the Veterans Health Administration (VHA) at the Department of Veterans Affairs (VA). The hearing

specifically focused on existing deficiencies and explored potential remedies in order to improve practices so they

are fair, fiscally responsible, and effective. ―Recent reports on VA‘s contracting activities identified the need for

increased transparency and increased fiscal responsibility, while highlighting inadequate competition and lack of

accountability and oversight,‖ said Chairman Michaud. ―Past hearings have brought to light the difficulties that

many private companies face in contracting with the VA. As a result of these deficiencies in VHA‘s procurement

practices, veterans may not have access to the latest innovations or the appropriate equipment when receiving health

care.‖ The Committee received the testimonies of private companies that contract with the VA and those that are

seeking to contract with the VA, which highlighted the perceived strengths and weaknesses of the Department‘s

acquisition and procurement processes. Witnesses expressed concerns over unfairly award contracts, overly complex

contracts, and lack of competition during the bidding process. Some businesses face more extreme challenges.

Mark T. Munroe, Senior Vice President of Sales and Marketing for Mobile Medical Corporation testified that ―the

last thing our company ever expected would be the need to sue the U.S. Government for actions taken during a

procurement process.‖

Contractors suggested the VA strengthen communication lines with contractors by appointing a single contact

person for each contractor and sharing important information in a consistent manner with a specific point person.

Moreover, they pressed for a simplification of contracts that should to be awarded to one company per industry.

Belinda Finn of the VA‘s Office of the Inspector General discussed findings from late 2009 that ―identified systemic

issues such as poor acquisition planning, problematic contract award processes, poorly written contracts, and

inadequate contract monitoring that impacted VA‘s efforts to effectively and economically deliver goods and

services to VA facilities.‖ She continued that procurement problems led to ―inadequate competition for contracts,

the misuse of funds, and a general lack of assurance that VA procurements achieved fair and reasonable prices or

were in the best interest of the Government. We attributed many of these systemic procurement problems to VA‘s

decentralized organizational structure for procurement activities, inadequate oversight and accountability, and

inaccurate and incomplete procurement data. Our work since we testified in December continues to identify

systemic weaknesses in procurement practices that negatively impact VA‘s ability to obtain quality goods and

services in a timely manner at fair and reasonable prices.‖

Bob Filner (D-CA), Chair of the House Committee on Veterans‘ Affairs, said, ―This Committee is committed to

providing necessary resources to VA – but those resources are intended for veterans. I am beyond frustrated with

the continued lack of due diligence regarding firms that do business with the VA, lack of a clearinghouse for

contracting data which results in hidden and invisible contracts, and lack of consequences for abusive firms. For the

most part, I support the policy guidelines currently in place, yet clear evidence remains that they are not uniformly

applied in the field. VA officials must work with local providers and facility directors to ensure adherence to policy

and return accountability to those that fail to ensure patient safety and those that refuse to end waste, fraud, and

abuse in the VA‘s contracting process.‖ [Source: Imperial Valley News article 27 Sep 2010 ++]

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Debt Settlement Companies:

Ads from debt settlement companies claiming they can help you pay

off your credit card balances for pennies on the doll are everywhere these days. Debt settlement involves negotiating

with credit card companies and other creditors to lower the principal amount you owe, then paying it off in a single

lump sum. This is different than credit counseling, which typically involves negotiating a lower interest rate and

payments, then paying off the debt in full over time. Unfortunately too many debt settlement companies are bad

apples. These promise things they have no intention of delivering, charge too much to do too little, and utterly

vaporize your credit history. Last summer the FTC finally stepped up to the plate and put out new rules for debt

settlement companies that will cost them money and probably save hapless consumers from abuse. And now those

rules are starting to go into effect. As of 26 SEP the rules require them to tell the truth. They:



Require debt relief companies to make specific disclosures to consumers;



Prohibit them from making misrepresentations; and



Extend the telemarketing sales rule to cover calls consumers make to these firms in response to debt relief

advertising.

What this means in plain English is that debt settlement companies can‘t overstate the success of their programs.

They are also required to disclose potential negative side effects of a debt settlement. For example, many debt

settlement companies have in the past assured consumers that settling a debt wouldn‘t negatively impact their credit

score. This is complete hogwash. Paying less on a debt than is owed will nearly always lower your credit score. It

could also cause an income tax issue. Starting 27 OCT another new FTC rule requires them not to charge you

anything until they do something. While telling the truth may prove difficult for some debt settlement companies,

it‘s this new rule that‘s really going to hurt. Because rather than charge up-front for their services like they typically

do now, they‘ll have to wait until at least one of the following occurs:



The debt relief service successfully renegotiates, settles, reduces, or otherwise changes the terms of at least

one of the consumer‘s debts;



There is a written settlement agreement, debt management plan, or other agreement between the consumer

and the creditor, and the consumer has agreed to it; and



The consumer has made at least one payment to the creditor as a result of the agreement negotiated by the

debt relief provider.

In other words, until the debt settlement company actually performs, they don‘t get paid. Another rule that will

go into effect on 27 OCT requires them to keep all customer funds in a segregated, insured account. These rules

don‘t apply to all companies, just the for-profits. And don‘t think that just because there are new rules that prohibit

wrong-doing that it won‘t occur anyway. After all, we‘re talking about companies that, at least in some cases,

employ commissioned salespeople who take complete advantage of the broke, innocent, and desperate – not

normally the type to follow rules. Bottom line if you‘re in debt trouble, it would be prudent to avoid debt settlement

companies. Instead, talk to a credit counseling organization, or a bankruptcy lawyer. Consumer Credit Counseling

Service agencies, as well as some others, belong to an organization called NFCC, or the National Foundation of

Credit Counselors. Another national organization that represents credit counseling agencies is the Association of

Independent Credit Counseling Agencies, or AICCCA. You can find NFCC members near you via their Find a

Counselor Now page at www.nfcc.org/FirstStep/firststep_01.cfm. You can find AICCCA members near you by

using their state by state lists at http://aiccca.org/find.cfm. [Source: Money Talks News Stacy Johnson article 24 Sep

2010 ++]

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FEGLI:

On 22 SEP Rep. Gerry Connolly (D-VA) introduced H.R.6175 which would require participants in

the Federal Employees Group Life Insurance (FEGL) program to opt out of receiving lump-sum benefit payouts; the

current default payment option is a retained-asset account, where insurance benefits are deposited and from which

beneficiaries can withdraw funds using what appear to be checks. The Federal Deposit Insurance Corporation does

not protect funds in retained-asset accounts and a financial institution must cash the checks. The account

management firm controls the money until beneficiaries‘ cash out the accounts in full. Concerns about whether

beneficiaries and their families are aware of the payout options are behind Connolly’s push for an opt-out default.

Page 7

“We’re all busy, and insurance companies aren’t motivated to inform [participants] because they get to make money

off of that,” he said. “As long as everyone is fully informed and has choices and can make decisions about

investments, that’s a fairer way to proceed.” National Treasury Employees Union President Colleen Kelley said she

supports having lump-sum payments as the default option under FEGLI. “For those beneficiaries who prefer another

payment option, such as a [total control account], an active election will allow one,” Kelley said in a statement.

“However, we believe (your) approach with a lump-sum default is the more prudent practice in this federal program,

while still affording transparency and choice for the federal workforce family.”

Rep. Edolphus Towns (D-NY) in August expressed concern that Prudential Financial, which manages accounts

for the Servicemembers Group Life Insurance program and the Veterans’ Group Life Insurance program, has failed

to inform participants’ families about the procedures for receiving benefits. A Prudential spokesman said the

company would cooperate fully with Towns’ request for information, and the Veterans Affairs Department this

month announced improvements to its financial counseling process to clarify benefit payment options. Connolly said

his legislation might be considered in Congress’ lame duck session, but added he will continue to push the issue.

[Source: GovExec.com Emily Long article 24 Sep 2010 ++]

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State Veterans Home Program Update 03:

Rep. Mac Thornberry‘s (R-TX-13) bill H.R.4505

to help Gold Star Parents gain access to state-run veterans homes awaits President Obama‘s signature. The bill

legislates away red tape that has kept the parents out of state veterans homes unless every single one of their

children has died in military service. ―It‘s the right thing to do,‖ Thornberry, a Republican from Clarendon, said. ―It

shouldn‘t have had to take an act of Congress to do it, but it has.‖ Thornberry said he‘s grateful that even this

dysfunctional Congress can make a relatively small but important correction allowing for better care of Gold Star

Parents. The measure changes the wording in federal regulations to allow a Gold Star Parent‘s admission to a state

veterans home if the parent has lost at least one child in active military service. Texas Land Commissioner Jerry

Patterson, who oversees the state‘s veteran‘s homes, said he‘s proud to finally be able to welcome every Gold Star

parent who needs the care into those homes. ―Their sacrifice has certainly earned them a place in a home where

honor lives,‖ Patterson said. In Texas alone veterans‘ homes in Amarillo, Big Spring, Bonham, El Paso, Floresville,

Temple and McAllen provide skilled nursing, rehabilitation, dementia and Alzheimer‘s, end-of-life and other types

of care to more than 1,000 veterans. Overall the United States and Puerto Rico have 137 state veterans‘ homes

providing care to about 28,500 veterans and dependents, Thornberry has said. The Senate version of the legislation

was passed unanimously 20 SEP. The House approved the bill unanimously 30 JUN. Obama is expected to sign the

bill. The Veterans Administration determined Thornberry‘s bill would not mean additional costs for the federal

agency. Gold Star Parents admitted to state homes would rely on private insurance and Medicaid. Groups

supporting the legislation include the American Legion, Veterans of Foreign Wars of the United States, Iraq and

Afghanistan Veterans of America, Vietnam Veterans of America, and the National Association of State Veterans

Homes. [Source: San Angelo Standard times Trish Choate article 24 sep 2010 ++]

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Military Retirement Fund:

For many years, the Defense Department funded military retirement on

a “pay-as-you-go” basis, estimating how much money was needed to write checks for current retirees and adding

that amount to the budget. This system worked well as far as paying retirees went, but it did not hold policymakers

fiscally responsible for today’s decisions affecting the size of the future retirement bill, e.g., increasing the force size.

To promote better management, in 1984, Congress directed a switch to an accrual method of funding retirement.

Under this procedure, each year the services transfer into a fund the amount necessary to pay for future retirements.

The amount transferred is a percentage of the service’s basic pay. Thus, if a service implements policies that affect

the future value of retirement benefits, it sees the budgetary consequences of that decision immediately in the form

of an increase in the amount transferred to the retirement fund. Analysis by Arroyo Center researchers William Hix

and William Taylor, reported in A Policymaker’s Guide to Accrual Funding of Military Retirement, suggests that the

current procedures do not fully capture the intent of the legislation and that changes could eventually save the Army

as much as $5-6 billion annually.

Page 8

When Congress established the retirement fund, it shifted responsibility for service rendered before 1 OCT 84, to

the Department of the Treasury; DoD has responsibility to fund service rendered after that date. At the time of the

transfer, Treasury accepted an unfunded liability estimated at $529 billion, which was to amortize over 60 years.

Annually the services transfer an amount equal to a percentage of their basic pay accounts for the active and reserve

components. The percentage differs by component, but it is identical within components for all services. In FY95,

fund transfers equaled 33.5% of the active duty basic pay and 9.7% of the selected reserves. The Board of Actuaries

annually calculates the liability for the pre-1984 service, adjusted for changes in assumptions and experience, and

transfers an amount equal to one year’s amortized payment. The money in the fund is invested in nonnegotiable

government securities, and it draws interest. Transfers into the fund and its investment transactions qualify as intra-

governmental transfers (even though they represent an outlay to DoD) and thus have no effect on the deficit. Only

payments to retirees from the fund represent outlays to the federal government. The fund’s liability is not static, and

three things can cause what are called actuarial gains and losses:



Funding assumptions can change: To determine how much money DoD has to transfer to the fund, a

Board of Actuaries reviews assumptions about economic and noneconomic factors at the beginning of each

year. Economic factors include assumptions about pay raises, cost of living allowance (COLA) increases,

and interest rates. An assumed pay raise means that the future liability of the fund will increase because

retirees will draw more money. Therefore, the amount transferred into the fund has to increase to account

for this future liability. An assumption that the interest rate will increase has the opposite effect. The fund

earns interest on nonnegotiable government securities. So if interest rates go up, the fund will earn more

interest, thus the amount transferred can be less. The so-called noneconomic assumptions include such

things as the rates of retirement and the longevity of retirees. If, for example, higher retirement rates or

lower death rates are assumed, funding requirements increase.



Benefits can change: Benefit changes also affect the size of the contribution. For example, Congress

slipped the 1994 and 1995 COLA increases from` JAN to later in the year. These delays reduced the

actuarial value of the retirement benefit and, hence, the funding required.



Experience can differ from assumptions: As mentioned, the actuaries review certain economic assumptions

at the beginning of the year. Frequently, these differ from what actually happens during the year. For

example, if the pay raises or COLAs approved differ from the assumptions, the fund earns more interest

than anticipated, or fewer people retire than anticipated, the funding requirements change. Right now only

Treasury benefits from any decreases in fund liability. The Treasury would make annual payments to fund

this amount amortized over 50 years. If the liability of the fund goes down because it earns more interest or

for some other reason, the size of the Treasury payment goes down. The assumptions made by the Board of

Actuaries have turned out to be conservative; over its life, the fund has never had an actuarial loss. All the

net changes in liability have been downward. These decreases can be substantial. In FY95, for example, the

liability was reduced by $48 billion. The Treasury amortized this amount over 30 years, and reduced its

annual payment by that amortized amount. Over the first 10 years of the fund’s life, the average annual gain

has been almost $30 billion, and the annual Treasury payment has shrunk from $25 billion to $11.5 billion.

Another area of interest pertains to service retirement practices. The intention of the annual transfer from the

services is to fund the future retirement liability of the individuals represented in those accounts. This procedure

assumes that all services retire people at an identical rate. But they do not. A service’s level of seniority directly

affects the number of people it retires. The higher the level of seniority, the more retirees. For both the officer and

the enlisted forces, the Air Force maintains the most seniority, the Marine Corps the least. Accrual percentages

computed with service-specific personnel policies would differ significantly by service. Current policies cause the

budgets of the Army, Navy, and Marine Corps to carry several hundred millions of dollars a year of the cost of Air

Force personnel policies. Hence, in its retirement budget the Air Force appears several hundred million dollars a

year cheaper than its actual cost; the other services appear more expensive. [Source: RAND research brief ‗A

Policymaker’s Guide to Accrual Funding of Military Retirement‘ 1997 ++]

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Military Retirement Fund Update 01:

Wartime demands for personnel, and record retention

rates due in part to a dismal job market, have left the services with an older, more experienced force — and a

surprise $1-billion-a-year pop in retirement costs. The Department of Defense‘s Board of Actuaries in late July

overhauled the assumptions used to calculate what the services must budget for annually to cover future retirement

obligations to the current force. It acted on analyses from the Dod Office of the Actuary which, for the first time,

weighed the effects on retirement costs of Post-9/11 developments including nine years of sustained operations, a

deep economic recession and growth in military entitlements of retirees and survivors. The result is an $800 million

jump in accrual retirement costs the Army, Navy, Air Force and Marine Corps have to pay starting 2012 because

more service members are staying until retirement. Some of that cost too is a projected 40% increase in disability

retirements, the result of a crackdown on the low-balling of disability awards by service through stricter compliance

with rating practices of the Department of Veterans Affairs. Another $200 million in added yearly retirement costs is

attributed to retirees living longer. Death rates are falling — and sharply.

―The improvement that military retirees are seeing in their own mortality is just phenomenal,‖ said Peter Rossi,

one of DoD actuaries that worked on revising projected retirement costs. Retiree deaths are ―decreasing at such a

rapid rate — faster than the American public, faster than anyone else — we are seeing a 2-plus percent a year

change for active, reserve. It‘s everybody.‖ Deaths for non-disabled retirees in 2008-2009 were 8% lower than found

for non-disabled retirees in 2004-2005. For retired reservists, data showed a 4% drop. No cause has been identified,

Rossi added. ―Maybe military folks are just in better shape.‖ The changes in actuarial assumptions reportedly

surprised Under Secretary of Defense Robert Hale, the DoD comptroller, who already was under considerable

pressure to curb the services‘ soaring personnel costs. ―The comptroller was not pleased,‖ said one official. ―He now

had to go out and find [$1 billion] when Defense Secretary [Robert] Gates is telling him he needs to save money.

That was a contentious issue for a while.‖

The retention rate of careerist is so high that in the 2012 budget to be delivered to Congress next February, the

services will assume that 19% of all new entrants serve for 20 years, long enough to qualify for retirement. That‘s a

―huge‖ change from the 17% previously assumed, said Rossi. Specifically, the probability of newly commissioned

officers reaching retirement will climb to 49% from 47. For new enlistees, the assumed retirement rate will be raised

to 17% from 15. It forces the services overall to set aside $20 billion in their 2012 budgets to cover active duty

retirement costs, an unplanned for 5% jump. Another $2.8 billion will have to be set aside for Guard and Reserve

retirement but that‘s unchanged. Rossi said the Office of the Actuary has not reconsidered assumptions for Guard

and Reserve retirement but it soon will. Another way to look at the effect of the new assumptions on retirement costs

is by individual member costs. For fiscal 2011 the services will set aside $32.70 for future retired pay for every $100

paid in basic pay. That proportion will climb to $34.30 for every $100 in basis pay in fiscal 2012. So if a service

member draws $50,000 in basic pay, his or her service will have to pony up $17,150 that year for future retired pay,

or $800 more than was needed a year earlier.

For many years, the military ignored future retirement obligations, budgeting only to cover payments due each

year to current retirees and survivors. That pay-as-you-go method created a huge unfunded liability. Critics also said

the services had no incentive to control retirement costs. In 1984 Congress ordered DoD to switch to ―accrual

accounting‖ for retirement accounts. The Treasury Department was given responsibility for the unfunded liability

and established a military retirement trust fund. The services began to pay into that fund whatever amount was

needed to cover retirement costs for the current active, Guard and Reserve forces. So retirement obligations today

are paid from two pots. Treasury pays roughly $50 billion a year to cover annuities of current retirees and survivors.

The services pay more than $20 billion a year in accrual payments. The board of actuaries assumed at its July

meeting that military retirees, social security recipients, federal civilian retirees, disabled veterans and survivors will

have to wait until at least January 2012 before they see their next cost-of-living adjustment or COLA. That

prediction looks even more solid now, to the regret of retirees. No COLA last year eased the unfunded liability of

the military retirement system by $22.3 billion. But it gave no relief to service budgets because Treasury‘s pays

COLAs of current retirees. Rossi said that over time retirees can expect COLAs to deliver an annual average boost

of 3%. [Source: Kitsap Sun Tom Philpott article 24 Sep 2010 ++]

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Tricare 26 Update 01:

The Patient Protection and Affordable Care Act (PPACA) required civilian

health plans that provide medical coverage to children to make that coverage available until the child turns 26 years

of age. This particular provision of the health reform law became effective 23 SEP. However, The PPACA did not

give DoD the authority to offer this benefit through Tricare. There are provisions in the Senate and House versions

of the pending National Defense Authorization Act for fiscal year 2011, S. 3454 & H.R. 5136 (respectively), that

would extend dependent medical coverage up to age 26 under a premium-based program. The Tricare Management

Authority told the National Association or Uniformed Services they are prepared to implement changes when

enacted.

Tricare already meets or exceeds most of the other new health care provisions which took effect 23 SEP under

PPACA. The Act provides new or expanded options and consumer protections for those with private health

insurance coverage. Most provisions under PPACA, such as restrictions on annual limits, lifetime maximums, ―high

user‖ cancellations, denial of coverage for pre-existing conditions, have not been a concern for the active duty

military and retiree families under Tricare. Because Tricare is an entitlement provided for by law, Tricare‘s coverage

has no lifetime cap. Under the basic entitlement, Tricare costs are determined by legislation and in general, active

duty families and military retirees pay low, or no, annual or monthly fees, unlike coverage under most commercial

health insurance plan. There is no cost for medical care for active duty service members. [Source: NAUS Weekly

Update 24 Sep 2010 ++]

===============================

Military Tax Relief Update 02:

On 22 SEP, witnesses from The Military Coalition (TMC) testified

before the Senate Finance Committee concerning needed improvements in tax law affecting service personnel and

their families and survivors. This is first time the Coalition has been asked to address the Finance Committee which

is encouragiong for possible TMC input in future hearings. Committee Chairman Max Baucus (D-MT) opened the

hearing stating, “This committee will take a hard look at how we can improve tax and fiscal policy to make life

better for our military and their families…we did much in 2008…but I know that there’s more to do.” The Committee

heard from witnesses representing the Montana National Guard, a small business owner from Iowa who actively

recruits veterans, and the Coalition concerning tax changes needed for reservists and survivors. The hearing focused

on tax credits to incentivize employers to hire and retain drilling Guard and Reserve personnel in the face of

increased deployment requirements, improving tax deductions for drill-related travel expenses for Guard and

Reserve members, and protecting Survivor Benefit plan annuities for children from inadvertent penalties under the

Alternative Minimum Tax (AMT). The Coalition proposed making permanent the temporary tax credit, enacted in

2008, for small businesses that pay a wage differential to reservists who are called to active service. All the

witnesses expressed concern that out-of-pocket expenses reservists incur in traveling to their training duty stations

can be deducted from their income taxes only if the drilling duty station is more than 100 miles from home, vs. the

50-mile standard used for other federal purposes. TMC members had previously met with Sen. John Kerry’s (D-MA)

staff to seek support for a legislative fix, and were pleased when Kerry and Sen. Blanche Lincoln (D-AR)

announced at the hearing that they had just introduced S.3819 to reduce the mileage requirement to 50 miles. Baucus

called the proposal “a no-brainer”, and also expressed strong interest in the Coalition’s proposal to exempt surviving

military children’s SBP annuities from AMT penalties. [Source: MOAA Leg Up 24 Sep 2010 ++]

===============================

NDAA 2011 Update 06:

It’s looking virtually certain that the Senate will delay action on the FY2011

Defense Authorization Bill until after the elections, which will make for a very raucous November and December on

Capitol Hill. The Senate briefly brought the bill up for consideration this week, but leadership withdrew it from the

table after debate reached an impasse over potential amendments on the “don’t-ask-don’t-tell” issue and allowing

illegal immigrants to gain citizenship by joining the military. Because action on the defense bill typically consumes

a week of debate with over 300-plus amendments, Senate leaders pulled it from the floor to focus on other essential

legislation – i.e., approving temporary funding to avoid a government shutdown on 1 OCT, the start of FY2011.

Congress will leave Washington to hit the campaign trail within the next two weeks, but will face some very tough

slogging when it returns for a “lame duck” session after the November 2nd election. In what’s likely to be a short

and bitterly debated session, legislators will be faced with:



Finishing the Defense Authorization Bill

Page 11



Preventing a 23.5% cut in Medicare and Tricare payments to doctors from going into effect on Dec. 1, as

required under current law



Approving funds for government operations beyond December



Initiatives to extend part or all of the Bush-era tax cuts



Announcement of the recommendations of the President’s Commission on Fiscal Responsibility and

Reform on Dec. 1

[Source: MOAA Leg Up 25 Sep 2010 ++]

===============================

Mojave Desert Veteran Memorial Update 06:

A Texas-based nonprofit filed a motion in

federal court 21 SEP requesting it intervene in the ongoing legal battle over a steel cross erected in the Mojave

National Preserve as a memorial to war veterans. The Liberty Institute, a nonprofit dedicated to protecting

Constitutional freedoms, filed the motion in U.S. District Court in Riverside on behalf of the Veterans of Foreign

Wars Department of California and VFW Post 385 in Barstow. It argues that the VFW has a vested interest in the

legal proceedings and should be included in the existing lawsuit that has been challenged repeatedly over the last 10

years. The VFW installed the approximately 7-foot-tall Latin cross, crafted from concrete-filled welded steel pipe, at

Sunrise Rock, about 12 miles south of the 15 Freeway and east of Cima Road, in 1934 as a tribute to soldiers who

fought and died in World War I. It has existed there in some form or another ever since. Since then:



In 2000, the land on which the cross sits was incorporated into the Mojave National Preserve by executive

order from the President. In 2001, the American Civil Liberties Union sued the National Parks Service on

behalf of Frank Buono, a former assistant superintendent for the Mojave National Preserve. The ACLU

contended that it was improper to display a sectarian symbol on public land.



In 2004, Congress authorized the transfer of the one-acre of public land the cross sits on back to the VFW

in exchange for five acres of land elsewhere.



In April, a divided U.S. Supreme Court ruled that a lower court erred when it invalidated the land transfer,



In May, the cross was stolen, which prompted a federal investigation.



In June, a coalition of veterans sent a letter to President Barack Obama asking him to help restore the

memorial.

ACLU attorney Peter Eliasberg called the timing of the VFW’s action as improper. “Usually you intervene when

it’s timely. They’ve had that interest for somewhat between six to eight years,” Eliasberg said. He said the VFW

made the same effort about a year ago, and the U.S. Supreme Court denied their motion. “The issue isn’t just

whether you have an interest, but if you do it in an orderly fashion,” Eliasberg said. “If their interest is the fact

they’re going to be the recipients of this land, they knew that in 2004.” Ted Cruz, an attorney for the VFW, said the

VFW has a legal right to be included in the legal process, regardless of when they decided to engage. He said if the

Congressional statute is allowed to go into force, the actual property at the center of the litigation will be owned by

the VFW. “It’s their land by act of Congress, and intervention exists to allow parties to defend their interests,” said

Cruz. “At the end of the day, it’s their land if the statute is allowed to go into effect.” James Rowoldt, state

adjutant/quartermaster of the VFW Department of California, in a news release said, “This is our land, our memorial

and we want it back,” said . “To deny the veterans a chance to defend our own is to continue to dishonor those for

whom the memorial stands.” The motion has been scheduled to be heard by the court on 25 OCT. The ACLU plans

on filing a response to the motion before then, Cruz said.

The U.S. House of Representatives passed a resolution 28 SEP condemning the theft of the Mojave Cross

memorial and urging federal officials to allow veterans groups to replace it. Congressmen Jerry Lewis (R-CA-41)

along with a number of other representatives jointly proposed the legislative action shortly after the cross was stolen.

The resolution calls on the Interior and Justice departments to expedite the completion of a land transfer that would

give the VFW ownership of the Sunrise Rock site so it can replace the memorial, in exchange for other land within

the Mojave National Preserve. ―Legislation was approved by Congress and signed into law that would resolve this

problem by removing the land from government ownership, and it is time to complete this process that has gone on

for more than a decade now,‖ Lewis said. ―It is time to give our veterans groups the ability to replace this important

Page 12

memorial to those who gave their lives to defend our nation and freedoms.‖ [Source: A San Jose Mercury News Joe

Nelson article 22 Sep 2010 ++]

===============================

Vietnam Veterans Memorial Update 08:

At a recent defense forum, a soldier raised a question

about whether the names of Agent Orange victims will be allowed to be placed on the wall in light of a Veterans

Affairs Department policy change that greatly expands the presumption of service connection for several health

conditions linked to Agent Orange exposure…

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s . Those who are unable to do so or who cannot access it because they do not have a password or it has been

removed from their website can obtain the information directly via email request to [email protected].

==============================

USFSPA & Divorce Update 15:

Unable to get traction on the federal front, some military retirees

and veterans seeking to stop state courts from requiring veterans to share disability compensation with ex-spouses

are turning to state legislatures…