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Military Families’ Pay, Housing Awaiting Congress’ Action

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Proposals in the federal defense bills could affect military families’ financial situations. The cost in benefits and compensation of an active duty servicemember has increased over 40% since 2001, according to a June report by the Bipartisan Policy Center, and while the size of the U.S. military force has shrunk by almost 500,000, military personnel spending has remained steady at 30% of the overall Defense Department budget.

The House and Senate have proposed their drafts for the annual defense authorization bill for fiscal 2017.

The Senate’s defense bill, introduced by Sen. John McCain, R-Ariz., in mid-May, includes a 1.6% pay raise, while the House proposed a 2.1% raise. President Barack Obama recommended a 1.6% increase in his fiscal year 2017 budget plan, while the 2.1% increase is in line with projected increases for private sector workers.

Military Times reported that the higher pay increase will cost about $330 million, but the impact on actual families will be limited: about $11 extra a month for an Army specialist after three years of service or $19 for a first lieutenant after two years.

Housing stipends have been falling slowly over the past few years. Currently, servicemembers receive a flat-rate allowance for housing and utilities based on estimated costs in their ZIP code, but the Senate’s defense draft suggests a direct reimbursement.

The Senate’s version of the National Defense Authorization Act included a provision to test privatization at military commissaries. Currently, commissary items are sold at cost with a 5% surcharge. Operating costs are covered by over $1 billion of taxpayer subsidies.

The Defense Department has proposed introducing variable pricing and private labels to reduce the dependence on subsidies, Military Times reported.

The Bipartisan Policy Center has created a task force to look at military personnel reform. Among the issues the task force will examine, Military Times reported, is how much control servicemembers have over their duty assignments.

“Military work force policies were designed for a bygone era of single-income households and standard, 20-year careers,” the report noted. Although both spouses work in more than 60% of U.S. married couples, less than half of active-duty military spouses are also employed.

“This dichotomy places a strain on service members who, because of personnel system requirements, must often choose between remaining in the military and supporting a spouse’s career,” according to the report.

Under the House’s defense draft, new enrollees in Tricare, the military health care plan, would be charged enrollment fees starting in 2018.

The Senate plan calls for two Tricare plans, with a third for beneficiaries who have access to other health care coverage, and proposed charging fines for people who miss appointments, according to the Military Times.

Pharmacy fees would also increase.

The House’s bill, H.R. 4909, was introduced by Rep. Mac Thornberry, R-Texas, in April. It passed the house in May and has been received in the Senate.

— Read 10 Things Veterans Should Know About Retirement Benefits on ThinkAdvisor.


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