Active duty service members and reserve forces will get an across-the-board pay raise next January of 2.7 percent – or 2.2 percent. The actual amount still needs to be resolved.
The 2007 military pay raise is just one of several key personnel issues that the House and Senate Armed Services committees handled differently while reshaping the Bush administration’s defense budget request.
The Senate committee supports a 2.2 percent raise, the figure proposed by the administration to match wage growth in the private sector. The House panel wants 2.7 percent. That would be the eighth-straight military raise set a half percentage point above national wage growth. This raise would continue to narrow a perceived pay gap with civilian peers.
Senators opted for the smaller increase in part to avoid having to boost federal civilian pay. It is perceived as no longer possible politically to give the military alone a bigger annual increase, said a Senate aide.
The Senate panel also voted to end a dollar-for-dollar offset in the military Survivor Benefit Plan (SBP) payments that surviving spouses experience when they also qualify for tax-free Dependency and Indemnity Compensation from the Department of Veterans Affairs. And the Senate bill would accelerate the effective date of the so-called survivor paid-up rule to October, rather than in 2008. Under the rule, premiums no longer will be collected from retiree participants who have paid for least 30 years and have reached age 70.
The House bill is silent on the two survivor pay changes.
The separate authorization bills, HR 5122 and S 2507, do agree already in some critical areas, making their enactment later this year almost certain. Both, for example, endorse the administration’s call for a special pay raise next April for warrant officers and for longer-serving enlisted members in grades E-5 through E-7. The targeted raises would be on top of January hikes of 2.2 or 2.7 percent. April increases will be as small as 1.1 percent for E-5s with at least eight years of service. The biggest increase would be 8.3 percent for a warrant officer (W-1) with 20 years or more of service.
Both committees also endorse stretching the military pay chart to give longevity raises every two years from 28 years through 40, affecting pay for certain higher ranks. Flag officers would see an extra 4 to 7 percent from pay table expansion. Basic pay for a warrant (W-5) with 30 years would climb by 13.8 percent. A W-5 with 38 years would see a combined raise by next April of 25.4 percent.
In the health care area, the House committee would raise retail co-pays from $9 to $16 on brand-name drugs on the military formulary and from $3 to $6 on generics. Co-pays for nonformulary drugs would stay at $22.
The Senate bill simply would not interfere with Department of Defense plans to raise retail co-pays to $15 for brand name and to $5 for generic drugs. Therefore, higher co-pays in the retail network are almost certain in the new fiscal year.
To encourage use of mail order, the House committee seeks to end co-pays on most mail order drugs. Current co-pays are $9 for a three-month supply of brand-name formulary drugs and $3 for generic.
In a blow to the pharmacy industry, both bills would require federal pricing rebates on medicines dispensed through the Tricare retail network, a move that could save the government $256 million in 2007 alone. And by January 2008, no employer could offer financial incentives to encourage Tricare-eligible retirees to use it instead of employer health insurance.
To comment, e-mail milupdate@aol.com, write to Military Update, P.O. Box 231111, Centreville, VA, 20120-1111 or visit: www.militaryupdate.com.
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