oversight

Military Personnel: Preliminary Observations Related to Income, Benefits, and Employer Support for Reservist During Mobilizations

Published by the Government Accountability Office on 2003-03-19.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                            United States General Accounting Office

GAO                         Testimony
                            Before the Subcommittee on Personnel,
                            Committee on Armed Services, U.S.
                            Senate

For Release on Delivery
Expected at 3 p.m. EST
Wednesday, March 19, 2003   MILITARY PERSONNEL
                            Preliminary Observations
                            Related to Income, Benefits,
                            and Employer Support for
                            Reservists During
                            Mobilizations
                            Statement for the Record by Derek B. Stewart, Director,
                            Defense Capabilities and Management




GAO-03-573T
                                               March 19, 2003


                                               MILITARY PERSONNEL

                                               Preliminary Observations Related to
Highlights of GAO-03-573T, a statement         Income, Benefits, and Employer Support
for the record for the Subcommittee on
Personnel, Committee on Armed Services,        for Reservists During Mobilization
U.S. Senate




Since the end of the Cold War,                 The preliminary results of our review indicate that reservists experience widely
there has been a shift in the way              varying degrees of income loss or gain when they are called up for a contingency
reserve forces have been used.                 operation. While income loss data for current operations Noble Eagle and
Previously, reservists were viewed             Enduring Freedom were not available, data for past military operations show
primarily as an expansion force                that 41 percent of drilling unit members reported income loss, while 30 percent
that would supplement active                   reported no change and 29 percent reported an increase in income. This
forces during a major war. Today,              information is based on self-reported survey data for mobilizations or
reservists not only supplement but             deployments of varying lengths of time. As would be expected, the data indicate
also replace active forces in                  that certain groups, such as medical professionals in private practice, tend to
military operations worldwide.                 report much greater income loss than the average estimated for all reservists.
Citing the increased use of the
reserves to support military                   Although reservists called up to support a contingency operation are generally
operations, House Report 107-436               eligible for the same family support and health care benefits as active
accompanying the Fiscal Year 2003              component personnel, reservists and their families face challenges in
National Defense Authorization Act             understanding and accessing their benefits. Among the challenges, reservists
directed GAO to review                         typically live farther from military installations than their active duty
compensation and benefits for                  counterparts, are not part of the day-to-day military culture, and may change
reservists. In response, GAO is                benefit eligibility status many times throughout their career. Some of these
reviewing (1) income protection for            challenges are unique to reservists; others are also experienced by active
reservists called to active duty,              component members but may be magnified for reservists. Outreach to reservists
(2) family support programs, and               and their families is likely to remain a continuing challenge for DOD in the areas
(3) health care access. For this               of family support and health care, and we expect to look at DOD’s outreach
statement, GAO was asked to                    efforts in more detail as we continue our study.
discuss its preliminary
observations. GAO also was asked               Outreach is also a critical component of maintaining and enhancing employers’
to discuss the results of its recently         support for reservists. Although DOD has numerous outreach efforts, we found
completed review concerning                    that a sizeable number of reservists and employers were unsure about their
employer support for reservists.               rights and responsibilities. For example, a 1999 DOD survey found that 31
                                               percent of employers were not aware of laws protecting reservists. Several
                                               factors have hampered DOD’s outreach efforts to both employers and reservists.
                                               However, DOD is taking positive actions in this area, such as moving ahead with
GAO is not making new                          plans to collect employer data from all reserve personnel.
recommendations at this time, but
past reports have contained GAO’s
views on actions that should be
taken to improve reservists’ access
to military health care benefits and
to improve the effectiveness of
outreach programs and other
aspects of reservist-employer
relations. DOD generally
concurred with these
recommendations and has taken
some actions.
www.gao.gov/cgi-bin/getrpt?GAO-03-573T.
To view the full report, including the scope
and methodology, click on the link above.
For more information, contact Derek B.
Stewart at (202) 512-5140 or
stewartd@gao.gov.
Mr. Chairman and Members of the Subcommittee:

We are pleased to have the opportunity to comment on reserve personnel
income, benefits, and employer support. My remarks focus on the more
than 870,000 “selected” reservists1 who generally drill and train part-time
with their military units (referred to in this testimony as drilling unit
members). These reservists may be involuntarily called to federal active
duty under various provisions of law. They may also be placed voluntarily
on active duty for training and other purposes. Since the 1991 Persian Gulf
War, reservists have been mobilized or deployed to a number of
contingency operations, including operations Noble Eagle and Enduring
Freedom and operations in Kosovo, Bosnia, Southwest Asia, and Haiti. As
of early March 2003, 193,270 reservists were supporting current
contingency operations.

Citing the increased use of the reserves to support military operations,
House Report 107-436 accompanying the Fiscal Year 2003 National
Defense Authorization Act directed us to review compensation and benefit
programs for reservists. Our review is ongoing, but today I would like to
present preliminary observations based on our review in three areas:
(1) income protection for reservists called to active duty, (2) family
support programs, and (3) health care access.2 All three of these issues are
potential areas of concern to a reservist called to active duty for a
contingency operation. We plan to issue a final report on these three
issues later this year. In addition, you have asked us to discuss the results
of our recently completed review concerning employer support for
reservists, another potential area of concern to mobilized or deployed
reservists.3 Finally, Mr. Chairman, while the legislation directed us to
review the retirement system for the reserves, we have not yet begun that
work. As discussed with your offices, we plan to review the reserve



1
 Unless specified, we use the terms “reserves” and “reservists” to refer to the collective
forces of the Air National Guard, Army National Guard, the Army Reserve, the Naval
Reserve, the Marine Corps Reserve, and the Air Force Reserve. We did not include the
Coast Guard Reserve in our review.
2
 We plan to address compensation issues in other reviews. For example, we have an
ongoing review of special and incentive pays for reservists who perform duty in the polar
regions.
3
 U.S. General Accounting Office, Reserve Forces: DOD Actions Needed to Better Manage
Relations between Reservists and Their Employers, GAO-02-608 (Washington, D.C.:
June 13, 2002).



Page 1                                                                         GAO-03-573T
retirement system in the future. While we have not conducted a detailed
review of this issue, I would like to offer some observations.

Before discussing these issues in more detail, I would like to note that one
of the Department of Defense’s (DOD) guiding principles for military
compensation is that servicemembers—both reservists and active
component members—be treated fairly. Military compensation for
reservists is affected by the type of military duty they perform. In
peacetime—when a reservist is on active duty for training or on military
duty not related to a contingency operation—certain thresholds are
imposed at particular points in service before a reservist is eligible to
receive the same compensation as a member serving full-time. For
contingency operations, these same thresholds generally do not apply.
Reservists activated for contingency operations such as Noble Eagle and
Enduring Freedom are generally eligible to receive the same compensation
and benefits as active component personnel. I should also note here that in
a recent report comparing the benefits offered by the military with those
offered in the private sector, we found no significant gaps in the benefits
available to military personnel.4

To date, we have met with and gathered information from DOD officials in
the Office of the Assistant Secretary of Defense for Reserve Affairs, the
Office of Military Compensation, the Office of Family Policy, the National
Guard Bureau, the Army National Guard, the Air National Guard, the Army
Reserve, the Air Force Reserve, the Naval Reserve, the Marine Corps
Reserve, the TRICARE Management Activity, the National Committee for
Employer Support of the Guard and Reserve, and other organizations. We
obtained the results and DOD’s preliminary analysis of the 2000 Survey of
Reserve Component Personnel.5 We reviewed DOD proposals concerning
income loss. We also reviewed DOD’s progress in implementing
recommendations that we made in prior reports.

Let me turn now to the specific issues.



4
 U.S. General Accounting Office, Military Personnel: Active Duty Benefits Reflect
Changing Demographics, but Opportunities Exist to Improve, GAO-02-935 (Washington,
D.C.: Sept. 18, 2002).
5
 The population of interest targeted by the survey consisted of all Selected Reserve
members of the reserve components below flag or general officer rank, with at least
6 months of service when the surveys were first mailed in August 2000. The sample
consisted of 74,487 members. Eligible respondents returned 35,223 completed surveys.



Page 2                                                                    GAO-03-573T
          The preliminary results of our review indicate that reservists experience
Summary   widely varying degrees of income loss or gain when they are called up for
          a contingency operation. While income loss data for current operations
          Noble Eagle and Enduring Freedom were not available, data for past
          military operations show that 41 percent of drilling unit members reported
          income loss, while 30 percent reported no change and 29 percent reported
          an increase in income. This information is based on self-reported survey
          data for mobilizations or deployments of varying lengths of time. DOD’s
          analysis of the data shows that, as would be expected, certain groups,
          such as medical professionals in private practice, tend to report much
          greater income loss than the average estimated for all reservists.

          Although reservists called up to support a contingency operation are
          generally eligible for the same family support and health care benefits as
          active component personnel, reservists and their families face challenges
          in understanding and accessing their benefits. Among the challenges,
          reservists typically live farther from military installations than their active
          duty counterparts, are not part of the day-to-day military culture, and may
          change benefit eligibility status many times throughout their career. Some
          of these challenges are unique to reservists; others are also experienced by
          active component members but may be magnified for reservists. Outreach
          to reservists and their families is likely to remain a continuing challenge
          for DOD in the areas of family support and health care. We will continue to
          look at DOD’s outreach efforts as we complete our study.

          Outreach is also a critical component of maintaining and enhancing
          employers’ support for reservists. Although DOD has numerous outreach
          efforts in this area, we found that a sizeable number of reservists and
          employers were unsure about their rights and responsibilities. For
          example, a 1999 DOD survey found that 31 percent of employers were not
          aware of laws protecting reservists. Our recent work has shown that
          several factors, such as the lack of data on reservists’ employers, have
          hampered DOD’s outreach efforts to both employers and reservists.
          However, DOD is taking positive actions in this area, such as moving
          ahead with plans to collect employer data from all reserve personnel.

          Reservists have identified income loss, family burdens, and employer
          support as serious concerns during prior mobilizations and deployments.
          However, it is unclear how the problems reservists experience in these
          areas affect their overall satisfaction with military life and, ultimately, their
          decision to stay in the military or leave.




          Page 3                                                              GAO-03-573T
             Since the end of the Cold War, there has been a shift in the way reserve
Background   forces have been used. Previously, reservists were viewed primarily as an
             expansion force that would supplement active forces during a major war.
             Today, reservists not only supplement but also replace active forces in
             military operations worldwide.6 In fact, DOD has stated that no significant
             operation can be conducted without reserve involvement. As shown in
             figure 1, reserve participation in military operations spiked in fiscal
             years 1991 (Desert Shield and Desert Storm) and 2002 (Noble Eagle and
             Enduring Freedom).




             6
              The average reservist trains 38 or 39 days per year. In addition to this training, some
             reservists provide support for counter-drug operations, domestic emergencies, exercises,
             and established and emerging operations, including those involving either presidential call-
             ups or mobilizations.



             Page 4                                                                        GAO-03-573T
Figure 1: Annual Number of Days Per Capita for Reserve Mobilizations and Support
to the Services and Combatant Commands (Fiscal Years 1986-2002)




Notes: Analysis of Office of the Assistant Secretary of Defense for Reserve Affairs data.

This figure includes the contributions of the Coast Guard Reserve.

Mobilizations are operations using the Presidential Selected Reserve Call-up or mobilization
authorities. Support of the services or combatant commands is mission assistance provided under
voluntary orders and includes both contingency operations and other missions. The figure excludes
days for training as well as support for counter-drug operations, exercises, and domestic
emergencies.

Per capita calculations are derived by dividing the total days of support for these missions by the end
strength of the Selected Reserve. However, force structure within the selected reserves qualifies only
a portion of those available to serve for a particular mission. Despite this, the data highlight trends in
the average number of support days served by reservists.




Page 5                                                                                   GAO-03-573T
                      There have been wide differences in the operational tempos7 of individual
                      reservists in certain units and occupations. Prior to the current
                      mobilization, personnel in the fields of aviation, special forces, security,
                      intelligence, psychological operations, and civil affairs were in high
                      demand, experiencing operational tempos that were two to seven times
                      higher than those of the average reservist. Since September 2001,
                      operational tempos have increased significantly for reservists in all of
                      DOD’s reserve components due to the partial mobilization in effect to
                      support operations Noble Eagle and Enduring Freedom.

                      For each year between fiscal years 1997 and 2002, the reserves on the
                      whole achieved at least 99 percent of their authorized end strength. In 4 of
                      these 6 years, they met at least 100 percent of their enlistment goals.
                      During this time period, enlistment rates fluctuated from component to
                      component. Overall attrition rates have decreased for five of DOD’s six
                      reserve components.8 Between fiscal years 1997 and 2002, only the Army
                      National Guard experienced a slight overall increase in attrition. The
                      attrition data suggest there has not been a consistent relationship between
                      a component’s average attrition rate for a given year and the attrition rate
                      for that component’s high demand capabilities (which include units and
                      occupations). Attrition rates for high demand capabilities were higher than
                      average in some cases but lower for others. Aviation in the Army National
                      Guard, for instance, has had higher than average attrition for 4 of the
                      5 years it was categorized as a high demand capability.


                      Preliminary analysis of income changes reported by reservists who
Reservists Have       mobilized or deployed for past military operations indicates that they
Reported Widely       experienced widely varying degrees of income loss or gain. The source for
                      this analysis is DOD’s 2000 Survey of Reserve Component Personnel,
Varying Degrees of    which predates the mobilization that began in September 2001. The data
Income Loss Or Gain   show that 41 percent of drilling unit members reported income loss during
                      their most recent mobilization or deployment, while 30 percent reported
                      no change and 29 percent reported an increase in income (see table 1).




                      7
                        For this testimony, operational tempo refers to the total days reservists spend
                      participating in normal drills, training, and exercises, as well as domestic and overseas
                      operational missions.
                      8
                       Attrition is the total number of personnel losses from the selected reserves divided by the
                      average selected reserve end strength for the year.



                      Page 6                                                                         GAO-03-573T
Table 1: Drilling Unit Members’ Total Reported Change in Income for Mobilizations
or Deployments Prior to 2001

    Income change                                                           Percentage
    Decreased $50,000 or more                                                       0.9
    Decreased $25,000 to $49,999                                                    1.5
    Decreased $10,000 to $24,999                                                    4.1
    Decreased $5,000 to $9,999                                                      6.0
    Decreased $2,500 to $4,999                                                      8.9
    Decreased $1 to $2,499                                                        19.5
    No change in income                                                              30
    Increased $1 to $2,499                                                        16.6
    Increased $2,500 to $4,999                                                      6.8
    Increased $5,000 or more                                                        5.7
Source: DOD 2000 Reserve Component Survey



Based on the survey data, DOD estimated that the average total income
change for all members (including losses and gains) was almost $1,700 in
losses. This figure should be considered with caution because of the
estimating methodology that was used and because it is unclear what
survey respondents considered as income loss or gain in answering this
question.9 Further, reservists are mobilized or deployed for varying lengths
of time, which can affect their overall income loss or gain. About
31 percent of all reservists who had at least one mobilization or
deployment had been mobilized or deployed for less than 1 month. For the
entire population, members spent an estimated 3.6 months mobilized or
deployed for their most recent mobilization.

DOD’s preliminary analysis of the survey data show that certain groups
reported greater losses of income on average. Self-employed reservists
reported an average income loss of $6,500. Physicians/registered nurses,
on the whole, reported an average income loss of $9,000.
Physicians/registered nurses in private practice reported an average
income loss of $25,600. Income loss also varied by reserve component and
pay grade group. Average self-reported income loss ranged from $600 for
members of the Air National Guard up to $3,800 for Marine Corps
Reservists. Senior officers reported an average income loss of $5,000



9
 The 2000 survey asked respondents: “Please estimate your (and your spouse’s) total
income change from all sources as a result of your most recent mobilization and
deployment. If you (and your spouse) have continuing losses from a business or
practice, include those in your estimate.”



Page 7                                                                     GAO-03-573T
compared with $700 for junior enlisted members. When asked to rank
income loss among other problems they have experienced during
mobilization or deployment, about half of drilling unit members ranked it
as one of their most serious problems.10 DOD’s preliminary analysis
presents little data on those groups who reported overall income gain.
Two groups who were identified as reporting a gain were clergy and those
who worked for a family business without pay.

Concerns were raised following the 1991 Gulf War that income loss would
adversely affect retention of reservists. According to a 1991 DOD survey of
reservists activated during the Gulf War, economic loss was widespread
across all pay grades and military occupations. In response to
congressional direction,11 DOD in 1996 established the Ready Reserve
Mobilization Income Insurance Program, an optional, self-funded income
insurance program for members of the Ready Reserve ordered
involuntarily to active duty for more than 30 days. Reservists who elected
to enroll could obtain monthly coverage ranging from $500 to $5,000 for up
to 12 months within an 18-month period. Far fewer reservists than DOD
expected enrolled in the program. Many of those who enrolled were
activated for duty in Bosnia and, thus, entitled to almost immediate
benefits from the program. The program was terminated in 1997 after
going bankrupt. We reported in 1997 that private sector insurers were not
interested in underwriting a reserve income mobilization insurance
program due to concerns about actuarial soundness and unpredictability
of the frequency, duration, and size of future call-ups.12 Certain coverage
features would violate many of the principles that private sector insurers
usually require to protect themselves from adverse selection. These
include voluntary coverage and full self-funding by those insured, the
absence of rates that differentiated between participants based on their
likelihood of mobilization, the ability to choose coverage that could result
in full replacement of their lost income rather than those insured bearing
some loss, and the ability to obtain immediate coverage shortly before an
insured event occurred. According to DOD officials, private sector



10
 The survey listed 22 possible problems and asked respondents to choose their top three
most serious problems experienced during mobilization or deployment.
11
 See section 512, National Defense Authorization Act for Fiscal Year 1996 (P.L. 104-106,
Feb. 10, 1996).
12
 U.S. General Accounting Office, Reserve Forces: Observations on the Ready Reserve
Mobilization Income Insurance Program, GAO/T-NSIAD-97-154 (Washington, D.C.:
May 8, 1997).



Page 8                                                                      GAO-03-573T
insurers remain unsupportive of a new reserve income insurance
mobilization program and the amount of federal underwriting required for
the program is prohibitive. The Department has no plans to implement a
new mobilization insurance program.

A 1998 study by RAND found that income loss, while widespread during
the Gulf War, did not have a measurable effect on enlisted retention.13 The
study was cautiously optimistic that mobilizing the reserves under similar
circumstances in the future would not have adverse effects on recruiting
and retention. However, the effects of future mobilizations can depend on
the mission, the length of time reservists are deployed, the degree of
support from employers and family members, and other factors.

Certain federal protections, pay policies, and employer practices can help
to alleviate financial hardship during deployment. For example, the
Soldiers’ and Sailors’ Civil Relief Act caps debt interest rates at 6 percent
annually. Income that servicemembers earn while mobilized in certain
combat zones is tax-free. For certain operations, DOD also authorized
reservists to receive both full housing allowances and per diem for their
entire period of activation. In addition, some employers make up the
difference between civilian and military pay for their mobilized employees.
This practice varies considerably among employers. Servicemembers can
also obtain emergency assistance in the form of interest-free loans or
grants from service aid societies to pay for basic living expenses such as
food or rent during activation. DOD is exploring debt management
alternatives, such as debt restructuring and deferment of principle and
interest payments, as ways to address income loss. The Army has
proposed a new special pay targeting critical health care professionals in
the reserves who are in private practice and are deployed involuntarily
beyond the established rotational schedule.




13
 RAND, The Effect of Mobilization on Retention of Enlisted Reservists After Operation
Desert Shield/Storm, MR-943-OSD (1998). The study did not include officers.



Page 9                                                                   GAO-03-573T
                       Reservists who have been activated for previous contingency operations
Reservists and Their   have expressed concerns about the additional burdens placed on their
Families Face          families while they are gone. More than half of all reservists are married
                       and about half have children or other legal dependents. According to the
Challenges in          2000 survey, among the most serious problems reservists said they
Understanding and      experienced when mobilized or deployed are the burden placed on their
                       spouse and problems created for their children.
Accessing Family
Support Services       The 1991 Gulf War was a milestone event that highlighted the importance
                       of reserve family readiness. Lessons learned showed that families of
                       activated reservists, like their active duty counterparts, may need
                       assistance preparing wills, obtaining power of attorney, establishing
                       emergency funds, and making child care arrangements. They may also
                       need information on benefits and entitlements, military support services,
                       and information on their reemployment rights. DOD has recognized that
                       family attitudes affect reserve member readiness, satisfaction with reserve
                       participation, and retention. Military members who are preoccupied with
                       family issues during deployments may not perform well on the job, which
                       in turn, negatively affects the mission. Research has shown that families of
                       reservists who use family support services and who are provided
                       information from the military cope better during activations. Under a
                       1994 DOD policy, the military services must “ensure National Guard and
                       Reserve members and their families are prepared and adequately served
                       by their services’ family care systems and organizations for the
                       contingencies and stresses incident to military service.”

                       Although activated reservists and their family members are eligible for the
                       same family support services as their active duty counterparts, they may
                       lack knowledge about or access to certain services. The 2000 DOD survey
                       suggests that more than half of all reservists either believe that family
                       support services are not available to them or do not know whether such
                       services are available. Table 2 shows drilling unit members’ responses on
                       the availability of selected programs and services.




                       Page 10                                                         GAO-03-573T
Table 2: Reservists’ Views on Availability of Selected Family Support Programs or
Services

 Percentage of drilling unit members
                                               Available off
                                            installation, on
                                             installation or
 Program/service                                        both   Not available   Don’t know
 Services for families during                             25              13           62
 separation
 Crisis referral services                                15              17             68
 Financial                                               22              16             61
 counseling/management
 education
 Family support centers                                  35              14             51
Source: DOD 2000 Reserve Component Survey

Note: Rows may not add to 100 percent due to rounding.


According to DOD officials, operations Noble Eagle and Enduring
Freedom have highlighted the fact that not all reserve families are
prepared for potential mobilization and deployment. They told us that
since many families never thought their military members would be
mobilized, families had not become involved in their family readiness
networks. DOD has found that the degree to which reservists are aware of
family support programs and benefits varies according to component, unit
programs, command emphasis, reserve status, and the willingness of the
individual member to receive or seek out information. Results from the
2000 DOD survey show that about one-fourth of drilling unit members said
their arrangements for their dependents were not realistically workable
for deployments lasting longer than 30 days. Furthermore, about 4 of every
10 drilling unit members thought it was unlikely or very unlikely that they
would be mobilized or deployed in the next 5 years. Again, this survey
predates the events of September 11, 2001, and the ensuing mobilization.

Among the key challenges in providing family support are the long
distances that many reservists live from installations that offer family
support services, the difficulty in persuading reservists to share
information with their families, the unwillingness of some reservists and
their families to take the responsibility to access available information,
conflicting priorities during drill weekends that limit the time spent on
family support, and a heavy reliance on volunteers to act as liaisons
between families and units. In 2000, about 40 percent of drilling unit
members lived 50 miles or farther from their home units.



Page 11                                                                        GAO-03-573T
                       DOD has recognized the need for improved outreach and awareness. For
                       example, the Department has published benefit guides for reservists and
                       family members and has enhanced information posted on its Web sites.
                       DOD published a “Guide to Reserve Family Member Benefits” that informs
                       family members about military benefits and entitlements and a family
                       readiness “tool kit” to enhance communication about pre-deployment and
                       mobilization information among commanders, servicemembers, family
                       members, and family program managers. Each reserve component also
                       established family program representatives to provide information and
                       referral services, with volunteers at the unit level providing additional
                       assistance. The U.S. Marine Corps began offering an employee assistance
                       program in December 2002 to improve access to family support services
                       for Marine Corps servicemembers and their families who reside far from
                       installations. Through this program, servicemembers and their families can
                       obtain information and referrals on a number of family issues, including
                       parenting; preparing for and returning from deployment; basic tax
                       planning; legal issues; and stress. Notwithstanding these efforts, we
                       believe, based on our review to date, that outreach to reservists and their
                       families will likely remain a continuing challenge for DOD.


                       Reservists who are mobilized for a contingency operation are confronted
Challenges in          with health care choices and circumstances that are more complex than
Accessing DOD          those faced by active component personnel. Reservists’ decisions are
                       affected by a variety of factors—whether they or their spouses have
Health Care Benefits   civilian health coverage, the amount of support civilian employers would
Are Magnified for      be willing to provide with health care premiums, and where they and their
                       dependents live. If dependents of reservists encounter increased future
Reservists             difficulties in maintaining their civilian health insurance due to problems
                       associated with longer mobilizations and absence from civilian
                       employment, they may rely on DOD for their health care benefits to a
                       greater degree than they do today.

                       When activated for a contingency operation, reservists and their
                       dependents are eligible for health care benefits under TRICARE, DOD’s
                       managed health care program. TRICARE offers beneficiaries three health
                       care options: Prime, Standard, and Extra. TRICARE Prime is similar to a
                       private HMO plan and does not require enrollment fees or co-payments.
                       TRICARE Standard, a fee-for-service program, and TRICARE Extra, a
                       preferred provider option, require co-payments and annual deductibles.
                       None of these three options require reservists to pay a premium. Benefits
                       under TRICARE are provided at more than 500 military treatment facilities
                       worldwide, through a network of TRICARE-authorized civilian providers,

                       Page 12                                                         GAO-03-573T
or through non-network physicians who will accept TRICARE
reimbursement rates.

Reservists who are activated for 30 days or less are entitled to receive
medical care for injuries and illnesses incurred while on duty. Reservists
who are placed on active duty orders for 31 days or more are
automatically enrolled in TRICARE Prime and receive most care at a
military treatment facility. Family members of reservists who are activated
for 31 days or more may obtain coverage under TRICARE Prime, Standard,
or Extra.14 Family members who participate in Prime obtain care at either
a military treatment facility or through a network provider. Under
Standard or Extra, beneficiaries must use either a network provider or a
non-network physician who will accept TRICARE rates.

Upon release from active duty that extended for at least 30 days, reservists
and their dependents are entitled to continue their TRICARE benefits for
60 days or 120 days, depending on the members’ cumulative active duty
service time. Reservists and their dependents may also elect to purchase
extended health care coverage for a period of at least 18, but no more than
36, months under the Continued Health Care Benefit Program.

Despite the availability of DOD health care benefits with no associated
premium, many reserve family members elect to maintain their civilian
health care insurance during mobilizations. In September 2002, we
reported that, according to DOD’s 2000 survey, nearly 80 percent of
reservists reported having health care coverage when they were not on
active duty. Of reservists with civilian coverage, about 90 percent
maintained it during their mobilization.15 Reservists we interviewed often
told us that they maintained this coverage to better ensure continuity of
health benefits and care for their dependents. Many reservists who did
drop their civilian insurance and whose dependents did use TRICARE



14
  Until last week, family members of reservists generally became eligible for Prime when
the reservist was activated for 179 days or more. Legislation passed in December
(P.L. 107-314, Sec. 702) made family members of reservists activated for more than 30 days
eligible for the Prime benefit if they reside more than 50 miles, or an hour’s driving time,
from a military treatment facility. Last week, the Defense Department altered TRICARE
policy such that all family members of reservists activated for more than 30 days are
eligible for the Prime benefit.
15
  U.S. General Accounting Office, Defense Health Care: Most Reservists Have Civilian
Health Coverage but More Assistance Is Needed When TRICARE Is Used, GAO-02-829
(Washington, D.C.: Sept. 6, 2002).



Page 13                                                                       GAO-03-573T
reported difficulties moving into and out of the system, finding a TRICARE
provider, establishing eligibility, understanding TRICARE benefits, and
knowing where to go for assistance when questions and problems arose.
While reserve and active component beneficiaries report similar
difficulties using the TRICARE system, these difficulties are magnified for
reservists and their dependents. For example, 75 percent of reservists live
more than 50 miles from military treatment facilities, compared with
5 percent of active component families. As a result, access to care at
military treatment facilities becomes more challenging for dependents of
reservists than their active component counterparts.

Unlike active component members, reservists may also transition into and
out of TRICARE several times throughout a career. These transitions
create additional challenges in ensuring continuity of care, reestablishing
eligibility in TRICARE, and familiarizing or re-familiarizing themselves
with the TRICARE system. Reservists are also not part of the day-to-day
military culture and, according to DOD officials, generally have less
incentive to become familiar with TRICARE because it becomes important
to them and their families only if they are mobilized. Furthermore, when
reservists are first mobilized, they must accomplish many tasks in a
compressed period. For example, they must prepare for an extended
absence from home, make arrangements to be away from their civilian
employment, obtain military examinations, and ensure their families are
properly registered in the Defense Enrollment Eligibility Reporting System
(DOD’s database system maintaining benefit eligibility status). It is not
surprising that many reservists, when placed under condensed time frames
and high stress conditions, experience difficulties when transitioning to
TRICARE.

We recommended in September 2002 that DOD (1) ensure that reservists,
as part of their ongoing readiness training, receive information and
training on health care coverage available to them and their dependents
when mobilized and (2) provide TRICARE assistance during mobilizations
targeted to the needs of reservists and their dependents. DOD has added
information targeted at reservists to its TRICARE Web site and last month,
in response to our recommendation, developed a TRICARE reserve
communications plan aimed at outreach and education of reservists and
their families.

The TRICARE Web site is a robust source of information on DOD’s health
care benefits. The Web site contains information on all TRICARE
programs, TRICARE eligibility requirements, briefing and brochure
information, location of military treatment facilities, toll free assistance

Page 14                                                          GAO-03-573T
numbers, network provider locations and other general network
information, beneficiary assistance counselor information, and enrollment
information. There is also a section of the Web site devoted specifically to
reservists, with information and answers to questions that reservists are
likely to have. Results from DOD’s 2000 survey show that about 9 of every
10 reservists have access to the Internet.

The TRICARE reserve communications plan’s main goals are to educate
reservists and their family members on health care and dental benefits
available to them and to engage key communicators in the active and
reserve components. The plan identifies a number of tactics for improving
how health care information is delivered to reservists and their families.
Materials are delivered through direct mailing campaigns, fact sheets,
brochures, working groups, and briefings to leadership officials who will
brief reservists and to reservists themselves. The plan identifies target
audiences and key personnel for information delivery and receipt. The
plan identifies methods of measurement which will assist in identifying the
degree information is being requested and received. We plan to look at the
TRICARE reserve communications plan in more detail as we continue our
study.

Under DOD authorities in the National Defense Authorization Acts for
2000 and 2001, DOD instituted several demonstration programs to provide
financial assistance to reservists and family members. For example, DOD
instituted the TRICARE Reserve Component Family Member
Demonstration Project to reduce TRICARE costs and assist dependents of
reservists in maintaining relationships with their current health care
providers. Participants are limited to family members of reservists
mobilized for operations Noble Eagle and Enduring Freedom. The
demonstration project eliminates the TRICARE deductible and the
requirement that dependents obtain statements saying that inpatient care
is not available at a military treatment facility before they can obtain
nonemergency treatment from a civilian hospital. In addition, DOD may
pay a non-network physician up to 15 percent more than the current
TRICARE rate. As we continue our study, we plan to review the results of
the demonstration project and its impact on improving health care for
reservists’ family members.




Page 15                                                         GAO-03-573T
                       Most reservists have civilian jobs. The 2000 survey shows that 75 percent
DOD Actions Needed     of drilling unit members worked full-time in a civilian job.16 Of those with
to Better Manage       civilian jobs, 30 percent of reservists worked for government at the
                       federal, state, or local level; 63 percent worked for a private sector firm;
Relations Between      and 7 percent were self-employed or worked without pay in their family
Reservists and Their   business or farm. The 2000 survey shows that one of the most serious
                       problems reported by reservists in previous mobilizations and
Employers              deployments was hostility from their supervisor. It should be noted,
                       however, that many employers changed company policies or added
                       benefits for deployed reservists after September 11, 2001. In a small
                       nonprojectable sample of employers, we found that more than half
                       provided health care benefits and over 40 percent provided pay benefits
                       that are not required by the Uniformed Services Employment and
                       Reemployment Rights Act of 1994.17

                       Maintaining employers’ continued support for their reservist employees
                       will be critical if DOD is to retain experienced reservists in these times of
                       longer and more frequent deployments. DOD has activities aimed at
                       maintaining and enhancing employers’ support for reservists. The National
                       Committee for Employer Support of the Guard and Reserve serves as
                       DOD’s focal point in managing the department’s relations with reservists
                       and their civilian employers. Two specific functions of this organization
                       are to (1) educate reservists and employers concerning their rights and
                       responsibilities and (2) mediate disputes that may arise between reservists
                       and their employers.

                       Although DOD has numerous outreach efforts, we have found that a
                       sizeable number of reservists and employers were unsure about their
                       rights and responsibilities. For example, a 1999 DOD survey found that
                       31 percent of employers were not aware of laws protecting reservists. In a
                       recent report, we listed several factors that have hampered DOD’s
                       outreach efforts to both employers and reservists.18 DOD has lacked
                       complete information on who reservists’ employers are; it does not know
                       the full extent of problems that arise between employers and reservists;
                       and it has no assurance that its outreach activities are being implemented
                       consistently. We recommended that DOD take a number of actions to



                       16
                            This figure does not include reservists who work as civilian military technicians.
                       17
                            Pub. L. 103-353 (Oct. 13, 1994), 38 U.S.C. secs. 4301-4333.
                       18
                            GAO-02-608.



                       Page 16                                                                          GAO-03-573T
improve the effectiveness of outreach programs and other aspects of
reservist-employer relations.

DOD concurred with most of these recommendations and has taken some
actions. Most notably, DOD is moving ahead with plans to collect
employer data from all of its reserve personnel. The data, if collected as
planned, should help DOD inform all employers of their rights and
obligations, identify employers for recognition, and implement proactive
public affairs campaigns. However, DOD has not been as responsive to our
recommendation that the services improve their compliance with DOD’s
goal of issuing orders 30 days in advance of deployments so that reservists
can notify their employees promptly. While our recommendation
acknowledged that it will not be possible to achieve the 30-day goal in all
cases, our recommendation was directed at mature, ongoing contingency
mobilization requirements, such as the requirements that have existed in
Bosnia since 1995. We believe that DOD needs to return to its 30-day goal
following the current crisis or it will risk losing employer support for its
reserve forces.

I would like to take a moment, Mr. Chairman, to address the issue of
reservists who are students. Almost one-fourth of drilling unit members
responding to DOD’s 2000 survey said they were currently in school. While
DOD has an active program to address problems that arise between
reservists and their civilian employers, there is no federal statute to
protect students. Student members of the reserves are not guaranteed
refunds of tuition and fees paid for the term they cannot complete, and
there is no federal statute for partial course credit or the right to return to
the college or university upon completion of active service. Based on our
recent work, we recommended that DOD add students as a target
population to the mission and responsibilities of the National Committee
for Employer Support of the Guard and Reserve, study in depth the
problems related to deployments that student reservists have experienced,
and determine what actions the National Committee for Employer Support
of the Guard and Reserve might take to help students and their
educational institutions. We feel DOD is giving this issue an appropriate
amount of attention given its resources. Employer Support of the Guard
and Reserve volunteers are directing students to available resources and
the Office of the Assistant Secretary of Defense for Reserve Affairs has
added student information and hyperlinks to its official Web site. One
available resource, for example, is the Servicemembers Opportunity




Page 17                                                           GAO-03-573T
                     Colleges, which has volunteered to mediate any disputes that arise
                     between reservists and their schools.19 In addition, 12 states have enacted
                     laws or policies to protect student reservists since our report was issued
                     last June, making a current total of 15 states with such laws or polices.


                     The current reserve retirement system dates back to 1948 with the
Observations on      enactment of the Army and Air Force Vitalization and Retirement
Reserve Retirement   Equalization Act.20 The act established age 60 as the age at which reserve
                     retirees could start drawing their retirement pay. At the time the act was
Age                  passed, age 60 was the minimum age at which federal civil service
                     employees could voluntarily retire. Active component retirees start
                     drawing their retirement pay immediately upon retirement.

                     Several proposals have been made to change the reserve retirement
                     eligibility age. In 1988, the 6th Quadrennial Review of Military
                     Compensation concluded that the retirement system should be changed to
                     improve retention of mid-career personnel and encourage reservists who
                     lack promotion potential or critical skills to voluntarily leave after 20 years
                     of service. The study recommended a two-tier system that gives reserve
                     retirees the option of electing to receive a reduced annuity immediately
                     upon retirement or waiting until age 62 to begin receiving retirement pay.
                     Recent legislative proposals have called for lowering the retirement pay
                     eligibility age from 60 to 55, establishing a graduated annuity, or
                     establishing an immediate annuity similar to that in the active duty military
                     retirement system.

                     Mr. Chairman, I would like to make two observations about reforming the
                     reserve retirement system.

                     First, equity between reservists and active duty personnel is one
                     consideration in assessing competing retirement systems, but it is not the
                     only one. Other important considerations are the impact of the retirement
                     system on the age and experience distribution of the force, its ability to
                     promote flexibility in personnel management decisions and to facilitate



                     19
                       The Servicemembers Opportunity Colleges is a consortium of national higher education
                     associations and more than 1,500 colleges. The organization helps to coordinate
                     postsecondary educational opportunities for servicemembers through voluntary programs
                     that are funded by the military services.
                     20
                          June 29, 1948, ch. 708, 62 stat. 1081.



                     Page 18                                                                  GAO-03-573T
           integration between the active and reserve components, and the cost.
           Changes to the retirement system could prove to be costly. Last year, the
           Congressional Budget Office estimated that lowering the retirement pay
           eligibility age from age 60 to 55 would cost $26.6 billion over 10 years.

           Second, DOD currently lacks critical data needed to assess alternatives to
           the existing retirement system. According to a 2001 study conducted for
           the 9th Quadrennial Review of Military Compensation,21 DOD should
           (1) assess whether the current skill, experience, and age composition of
           the reserves is desirable and, if not, what it should look like now and in the
           future and (2) develop an accession and retention model to evaluate how
           successful varying combinations of compensation and personnel
           management reforms would be in moving the reserves toward that
           preferred composition. DOD has contracted with RAND and the Logistics
           Management Institute to study military retirement. RAND will review
           alternative military retirement systems recommended by past studies,
           develop a model of active and reserve retirement and retention, analyze
           their likely effects on the retirement benefits that individuals can expect to
           receive, and identify and analyze the obstacles and issues pertaining to the
           successful implementation and therefore the viability of these alternatives.
           The Logistics Management Institute will assess alternative retirement
           systems with a focus on portability, vesting, and equity. These studies are
           looking at seven alternatives to the reserve retirement system. Preliminary
           results from these studies are expected later this year. As discussed with
           your offices, we plan to review the reserve retirement system in the future.


           Contacts and Acknowledgments

           For future questions about this statement, please contact Derek B. Stewart
           at (202) 512-5140 (e-mail address: stewartd@gao.gov) or Brenda S. Farrell
           at (202) 512-3604 (e-mail address: farrellb@gao.gov). Individuals making
           key contributions to this statement include Christopher E. Ferencik,
           Michael Ferren, Thomas W. Gosling, Chelsa L. Kenney, Krislin M. Nalwalk,
           and Timothy Wilson.




           21
                RAND, Reforming the Reserve Retirement System, PM-1278-NDRI (Dec. 2001).



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