Working age military retirees are facing an annual cost-of-living adjustment, or COLA, 1 percent below annual inflation until they reach the age of 62.
The provision, part of the Bipartisan Budget Act of 2013, means that while the full cost of living increase would be restored at age 62, impacted retirees will never get back the money lost before the age of 62 under the new rules.
However, this measure may be reversed as Congress outlines individual appropriation bills, including the one for Veterans Services, in the coming year, according to Congressman Rick Larsen.
“I think at first I do understand folks concerns they have about it, but this is not stand alone vote,” Larsen said. “This is a vote on the larger budget packet. Negotiators decided to utilize this as one of the paid-fors changed with the retiree benefit.”
The military retiree COLA cap is expected to be effective Dec. 15, 2015. Estimated savings to the Department of Defense is approximately $6.3 billion over the first decade the COLA cap is in effect.
“The truth is we’re probably going to have to go back and fix that holding by looking at all benefits,” Larsen said.
A larger task force will be assigned to the issue and public hearings will be held, he said.
Even though Congress might be able to fix this “short term problem,” Larsen said, those with concerns should continue to voice them to the Department of Veterans Affairs and through elected leaders.
Joseph Violante, legislative director of Disabled American Veterans, said lack of any major veterans’ legislation in 2013 should be blamed on a dysfunctional Congress, which passed “very little legislation” at all.
Currently the bill does include a COLA “catch-up” phase where at age 62 there is a one-time adjustment to the retiree’s annual pay base. This will reset the COLA compensation to what it should have been at age 62 without the COLA caps in place. Unfortunately the lost pay prior to age 62 will not be recouped.
There are currently no exemptions for this provision. This includes and is not limited to all of the following groups: existing retirees who will not be age 62 by Dec. 15; currently serving members who plan to serve 20 plus years; approximately 100,000 disabled military retirees; Chapter 61 retired pay or for certain survivors’ benefits; survivors of retirees under age 62.
If the COLA cap for military retirees was in effect now, retirees under the age of 62 would have received a COLA increase of .05 percent instead of the 1.5 percent increase that took effect for 2014.
The COLA caps to military retirees came up quickly during budget negotiations and there was little time for congressional education on the impact or for military associations to form opposition against these cuts. These conversations are happening now and with the implementation date in 2015 there is time to amend the act prior to implementation. Both Defense Secretary Chuck Hagel and Rep. Paul Ryan, chairman of the House Budget Committee, have acknowledged service members retired on medical disability should have been exempt.
