Financial experts are telling the Pentagon that the reformed military retirement plan would shortchange career service members, especially those in the enlisted ranks, according to a report this week from Military Times.  While National Guard members continue to wait for details on how the reforms will affect them, the plan is getting close scrutiny before it goes into effect in 2018.

The American Academy of Actuaries is taking a look at the plan’s lump-sum payout and how the amount will be determined.  The complexity of determining how much an individual service member would receive increases the chances that choosing a lump-sum payment would cost the individual a great deal of money compared to accepting monthly retirement checks.

The problem is what’s called the discount rate, which considers money to have more value today than tomorrow and would be set by the Pentagon.  The Pentagon has an incentive to choose a discount rate that would pay less, saving money for the Defense Department.

In a letter, William Hallmark, an official with the academy, told the Pentagon, “We encourage the department to carefully consider the extent to which the discount rate should reflect a service member’s financial sophistication and immediate financial need, or whether the discount rate should be independent of these considerations.”

He warned that troops would not understand what they could lose by taking the lump-sum payout rather than accepting monthly checks.

EANGUS supported the retirement reforms because they extended benefits to more troops, specifically National Guard members.  EANGUS also supports providing information to military members so they can make a decision that is best for them.

— Active-duty-families: Tricare Select will be available at no cost to active-duty family members provided they use MTFs or network providers. Tricare Choice will also be available at no cost to active-duty family members if they use an MTF, but will add modest copays ranging from $15 for in-network primary care to $50 for in-network emergency care. All active-duty family members would incur a 20-percent copay for using non-network providers regardless of plan.

— Retirees under age 65: The current family rate for those enrolled in Tricare Prime is essentially $565. Under the new Tricare Select, the annual enrollment fee would rise 24 percent to $700. Under Tricare Choice, the family enrollment rate would be $900, whereas the exiting Tricare Standard/Extra programs have no enrollment fee. Regardless of plan, retirees would incur no copay if using an MTF. For network care, Select enrollees would incur copays ranging from $20 for primary care to $75 for emergency care, and Choice enrollees would see copays of $25 for primary care and $90 for emergency care. Both plans would see 25 percent copays for non-network care.

— Retirees 65 and older: Retirees in the rank of O-6 and below would pay 0.25 percent of their gross retired pay to enroll in Tricare for Life, which acts as a secondary insurance to Medicare Part B. The quarter-percent enrollment fee would gradually increase to 1 percent by FY 2020. Flag officers, or those in the ranks of O-7 and above, would pay a $100 enrollment fee in FY 2017, which would gradually increase to $400 in FY 2020.

— Retiree pharmacy copays: The Pentagon is again pushing the use of Tricare’s mail-order pharmacy, since provides a three-month supply of medications for the same cost or less of a one-month refill from a network pharmacy. More about the home delivery program here: http://www.tricare.mil/CoveredServices/Pharmacy/FillPrescriptions/HomeDelivery.aspx.