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Military Families Fear End Of Low-Cost Healthcare, First Command Reports

The First Command Financial Behaviors Index® reveals two thirds of middle-class military families worry that they may have to start paying for medical services that they currently receive at no cost

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FORT WORTH, Texas — America’s career servicemembers are increasingly worried that the era of low-cost healthcare for military families may be coming to an end.

The latest results of the First Command Financial Behaviors Index® reveal that 65 percent of middle-class military families (commissioned officers and senior NCOs in pay grades E-6 and above with household incomes of at least $50,000) are concerned that the military's TRICARE healthcare system may start charging fees for services that they currently receive at no cost. This concern comes on the heels of the passage in December of the National Defense Authorization Act, which includes changes to TRICARE pharmacy fees and policies as a way to cut personnel costs as part of sequestration and defense downsizing. The Military Compensation and Retirement Modernization Commission's recent recommendations include significant changes in health care benefits.

During the past year servicemembers have grown increasingly concerned over sequestration-driven changes to their healthcare benefits. The Index reveals that 40 percent of January survey respondents expect to shoulder increased responsibility for healthcare costs. That’s up from just 23 percent at the start of 2014, and it represents the highest monthly total since the question was added to the survey in fall 2012.

Increased responsibility for healthcare costs is one of the biggest sequestration-related concerns expressed by military families, exceeded only by concerns over a reduction in retirement benefits (41 percent) and tied with reductions in annual pay increases (40 percent).

Healthcare is a significant form of compensation for many military families. When January survey respondents were asked to rate the importance various benefits, three of their top seven were related to healthcare:

  • Basic pay (ranked No. 1 by 30 percent of respondents)
  • Retirement pay (16 percent)
  • Healthcare benefits for retirees under 65 years of age (14 percent)
  • Education (10 percent)
  • Dependent healthcare benefits (8 percent)
  • Healthcare benefits for Medicare-eligible retirees (8 percent)
  • Allowances for housing and subsistence (8 percent)

“Our men and women in uniform strongly value their healthcare benefits, so it’s no surprise to see that a growing number of them fear that sequestration will mean shouldering more of these costs,” said Scott Spiker, CEO of First Command Financial Services, Inc. “These are real concerns. The modest change in pharmacy fees we saw in the National Defense Authorization Act is yet another indication that seemingly everything is on the table. Servicemembers are dealing with a second year of reduced pay raises. Their housing allowances are being reduced. Force reductions, reduced promotion rates, possible cuts to retirement benefits -- military budget cuts are a reality. Four out of five military families say they expect to be financially impacted by these cuts.”

Active-duty families have been responding to budget cuts through a variety of belt-tightening behaviors. The Index reveals they are:

  • Saving more (54 percent)
  • Cutting back on everyday spending (49 percent)
  • Decreasing the aggressiveness of investments (24 percent)
  • Starting to work with a financial planner (14 percent)
  • Moving investments to cash (12 percent)

“Working with a financial planner can be a particularly effective strategy for getting squared away in your finances,” Spiker said. “Families who work with a financial coach save more than their do-it-yourself colleagues, and they also report feeling better about their finances. We anticipate increasing demand for financial planning assistance from military families as they strive to deal with the uncertainties of sequestration and long-term defense downsizing.”

About First Command Financial Behaviors Index®

Compiled by Sentient Decision Science, Inc., the First Command Financial Behaviors Index® assesses trends among the American public’s financial behaviors, attitudes and intentions through a monthly survey of approximately 530 U.S. consumers aged 25 to 70 with annual household incomes of at least $50,000. Results are reported quarterly. The margin of error is +/- 4.3 percent with a 95 percent level of confidence. Financial Behaviors Index

About Sentient Decision Science, Inc.

Sentient Decision Science was commissioned by First Command to compile the Financial Behaviors Index®. SDS is a behavioral science and consumer psychology consulting firm with special vertical expertise within the financial services industry. SDS specializes in advanced research methods and statistical analysis of behavioral and attitudinal data.

About First Command

First Command Financial Services and its subsidiaries, including First Command Bank and First Command Financial Planning, assist American families in their efforts to build wealth, reduce debt and pursue their lifetime financial goals and dreams—focusing on consumer behavior as the first and most powerful determinant of results. Through knowledgeable advice and coaching of the financial behaviors conducive to success, First Command Financial Advisors have built trustworthy, lasting relationships with hundreds of thousands of client families since 1958.


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