Pay and Benefits Watch: DoD retirees wary of FEHBP

Only about 2,000 military retirees have enrolled in the Federal Employees Health Benefits Program since a pilot project opened up to them last autumn, and members of Congress want to know why.

At a hearing Wednesday of the House Government Reform Subcommittee on the Civil Service, members of Congress asked the Defense Department and the Office of Personnel Management, as well as associations representing military retirees, to explain the low enrollment level in the pilot project, which is permitted by law to have up to 66,000 participants.

For starters, the pilot was originally open to retirees in only eight geographic areas. The Defense Department has since added two additional areas. The legislation establishing the pilot allows only 10 geographic regions to participate.

Another problem is that military retirees are wary of joining the FEHBP pilot because it expires in two years. Several members of Congress are pushing for a legislative change that would guarantee any retiree who joined the program would get permanent coverage under FEHBP.

Finally, the marketing and educational materials provided to potential enrollees was unattractive and uninformative, according to associations representing military retirees. Several military retirees who wrote to the subcommittee echoed the associations' sentiments. Rep. Joe Scarborough, R-Fla., chairman of the subcommittee, said the poor information effort suggested resistance at the Defense Department to the demonstration project.

Rear Admiral Thomas F. Carrato, a Public Health Service officer who serves as director of Military Health Systems Operations at DoD, said the department was committed to making the project work and noted that DoD spent $4 million on marketing efforts. That means the department spent $1,700 on marketing for each person who agreed to sign up.

There are about 1.4 million military retirees who could participate in the FEHBP if it were available to them, according to Rep. Jim Moran, D-Va., a staunch supporter of extending FEHBP to military retirees.

The main problem with extending the program nationwide is the cost, estimated by the Congressional Budget Office to be $9 billion a year at first. The military retiree pool is kept separate from civilian employees and retirees, so military retiree involvement in the program does not affect civilians' premiums.

Scarborough asked Carrato to predict how many retirees would enroll in the pilot in the coming year. Last year at a subcommittee hearing, Carrato quoted CBO projections that 85 percent of eligible retirees would sign up. Because only about 4 percent actually signed up, Carrato refrained from offering a prediction this year.

The Pension Corrections Waiting Game

House and Senate staffers are still trying to work out compromises between different bills the House and Senate passed last year to deal with as many as 18,000 federal employees whose agencies placed them in the wrong pension program.

Legislative staff in the House are preparing compromise legislation and are hoping to present a proposal to the Senate soon. Affected employees have been waiting for years for Congress to correct the errors, which resulted from confusion over the transition from the Civil Service Retirement System to the Federal Employees Retirement System in the mid-1980s.

Back Pay Update

With as many as 100,000 current and former federal employees due back pay under a court-ordered settlement, many folks are keeping an eye on negotiations between the National Treasury Employees Union, which represents the employees in the case, and the Justice Department and Office of Personnel Management.

The negotiations are now focusing on the technical issues of determining how much each employee is owed and how the payouts will be handled. "The parties continue to work diligently to resolve all the issues that must be resolved before a proposed settlement can be submitted to the court," NTEU said in its most recent update on the case.

For more information on the case, see NTEU's "special rates" litigation Web page, at

Dual Compensation Limit Lifted

The Office of Personnel Management Wednesday issued interim regulations for the repeal of reductions in military retirees' annuities when they get civilian federal jobs. The repeal took effect on Oct. 1, 1999, so military retirees who are now working as federal civilians have been exempt from the reductions since then.

The interim regulations make changes to various OPM rules and guides that were used to make sure retirees' pay was docked under the old rule. The finance centers that handle payroll for each of the government's uniformed services are responsible for making sure retirees are paid properly. Here's a list of the finance centers, in case retirees have questions about their own situations.

Uniformed Service Finance Centers
Branch of Service Finance Center
Army, Air Force, Navy, or Marine Corps Defense Finance and Accounting Service
FCE Department
Cleveland Center (DFAS-CL/RO)
PO Box 99191
Cleveland, OH 44199-1126
Coast Guard or National Oceanic and Atmospheric Administration Commanding Officer (RAS)
U.S. Coast Guard
Human Resource Services and Information Center
444 SE Quincy Street
Topeka, KS 66683-3591
Public Health Service Compensation Branch
U.S. Public Health Service
Parklawn Building
5600 Fishers Lane
Rockville, MD 20857
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