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Key developments in the world of federal employee benefits: health, pay, and much more.

More TRICARE Hikes Are in the Offing


It looks like military retirees covered by TRICARE will end up paying a little more for their prescription drugs, but not as much as the Obama administration would like.

Sen. Jack Reed, D-R.I., offered an amendment to the fiscal 2013 Defense authorization bill Wednesday that would modestly increase TRICARE co-payments for name-brand and nonformulary drugs next year, according to a Nov. 28 report in Army Times. It also would cap pharmacy co-pays beginning in 2014 so that such fees are in line with the annual retiree cost-of-living adjustment. The costs associated with the fee increases would be offset by a pilot program requiring TRICARE for Life recipients to obtain maintenance drug refills through the mail.

Reed’s amendment, which is similar to a provision in the House-passed version of the fiscal 2013 Defense authorization, would result in co-pays of $17 for brand-name drugs at retail pharmacies and $44 for nonformulary drugs, according to Army Times. Co-pays for 90-day prescriptions obtained through the mail would increase to $13 for brand-name drugs and $44 for nonformulary medication under Reed’s amendment.

President Obama has proposed higher increases for drug co-payments at pharmacies and through the mail. Under the administration’s proposal, TRICARE beneficiaries would pay $26 for a brand-name prescription at the pharmacy and through the mail for a 90-day supply; the White House has proposed a $51 co-pay for a three-month supply of nonformulary drugs received through the mail.

TRICARE beneficiaries would retain the $5 monthly co-pay for generic drugs obtained at a retail pharmacy under every scenario.

Lawmakers from both parties typically have been loath to raise health care costs for TRICARE retirees. So far, both chambers have rejected the administration’s more aggressive proposals to increase the fees and other costs beneficiaries pay for their health care. But the issue isn’t going anywhere as the Defense Department continues to look for ways to rein in spending on pay and benefits, which now account for about one-third of the Pentagon’s budget. It’s highly likely that Obama’s fiscal 2014 budget blueprint will include recommendations to increase the amount military retirees contribute to TRICARE.

TSP Hardship Withdrawals

Federal employees affected by Superstorm Sandy are taking advantage of a policy allowing them to withdraw emergency funds from their Thrift Savings Plan accounts to pay for losses.

Tom Emswiler, director of benefits at the Federal Retirement Thrift Investment Board, said Tuesday that the agency already has received 17 hardship withdrawal applications from TSP enrollees. The board announced the option late last week.

Workers who live in covered disaster areas in Connecticut, New Jersey, New York and Rhode Island, or who have relatives affected by the storm, can withdraw money from their TSP investments to pay for losses. Applicants must be current federal employees and apply by Jan. 25, 2013, to be eligible for the Sandy withdrawal option.

While TSP typically prohibits employees who use the financial hardship provision from making contributions in the six-month period after withdrawal, it will make an exception for those who take out money because of Sandy.

Standard financial hardship withdrawals are only for employees who have “an immediate and significant financial need that necessitates a distribution” as a result of negative monthly cash flows, medical expenses, legal expenses for separation or divorce, or personal casualty loss. The funds are subject to federal income tax and an additional 10 percent early withdrawal penalty tax if the employee is younger than 59.5 years old.

COLA for Vets

Obama signed into law Tuesday a 1.7 percent cost-of-living adjustment for veterans and their survivors next year. The COLA affects vets’ disability benefits. About 4 million veterans and survivors will receive the compensation benefits in fiscal 2013.

Kellie Lunney covers federal pay and benefits issues, the budget process and financial management. After starting her career in journalism at Government Executive in 2000, she returned in 2008 after four years at sister publication National Journal writing profiles of influential Washingtonians. In 2006, she received a fellowship at the Ohio State University through the Kiplinger Public Affairs in Journalism program, where she worked on a project that looked at rebuilding affordable housing in Mississippi after Hurricane Katrina. She has appeared on C-SPAN’s Washington Journal, NPR and Feature Story News, where she participated in a weekly radio roundtable on the 2008 presidential campaign. In the late 1990s, she worked at the Housing and Urban Development Department as a career employee. She is a graduate of Colgate University.

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