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First Command Reports: TRICARE reform proposals fueling anxiety in military families

The First Command Financial Behaviors Index® reveals that eight out of ten career service member families are worried about proposed changes to military healthcare system

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FORT WORTH, Texas – Proposals to reform the military's TRICARE healthcare system are fueling uncertainty and worry in America’s career service member families.

Results of a First Command Financial Behaviors Index® survey reveal that three out of four 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 anxious about recently proposed changes to TRICARE. Anxiety levels were similar for President Obama’s recent reform proposal and last year’s recommendations from the Military Compensation and Retirement Modernization Commission (76 percent and 73 percent, respectively).

The original version of the President’s FY 2016 budget proposal included several changes to TRICARE. Although these proposals did not make it into the final 2016 National Defense Authorization Act, they are expected to resurface in the coming months as part of a renewed congressional push to overhaul the system. The proposals include:

  • Consolidating TRICARE Prime, Standard and Extra into one plan.
  • Increasing some fees and deductibles for dependents and retirees under age 65.
  • Making modest out-of-pocket cost increases for TRICARE for Life beneficiaries.

Why so much anxiety? Cost concerns are clearly a big component. When survey respondents were asked how much above what they currently pay would they be willing to pay for the President’s proposed changes, more than one in four (29 percent) said they were not willing to pay anything extra. Respondents who were willing to pay more sorted out as:

  • 30 percent willing to pay an additional 1 percent to 5 percent,
  • 27 percent willing to pay an additional 6 percent to 10 percent,
  • 13 percent willing to pay an additional 11 percent to 15 percent and
  • 2 percent willing to pay more than 15 percent.

Response rates were similar for the Commission’s recommendations.

“Our career military families strongly value their healthcare benefits, so it’s no surprise to see that many of them resist possible changes that might negatively impact their finances,” said Scott Spiker, CEO of First Command Financial Services, Inc. “The cost of healthcare has been one of their biggest financial concerns. They’ve already seen changes to TRICARE pharmacy fees and policies as a way to cut personnel costs as part of sequestration and defense downsizing. Now with a renewed congressional push to overhaul the system, they fear shouldering additional costs.”

One of the biggest sequestration-related concerns expressed by military families is increased responsibility for healthcare costs, which was selected by 34 percent of March survey respondents.  This level of concern was exceeded only by worries over reductions in annual pay increases (40 percent) and retirement benefits (37 percent).

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

  • Basic pay (ranked No. 1 by 36 percent of respondents)
  • Retirement pay (18 percent)
  • Dependent healthcare benefits (13 percent)
  • Healthcare benefits for Medicare-eligible retirees (10 percent)
  • Healthcare benefits for retirees under 65 years of age (7 percent)

“Changes to TRICARE are genuine concerns for our service member families,” Spiker said. “They are already dealing with another year of reduced pay raises, housing allowances and other benefit cuts. The latest worry has been the overhaul of the military retirement system. TRICARE may well become the big reform push for 2016. We can expect to see their anxiety continue to grow in the months ahead.”

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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