Report of the Military Compensation and 

Retirement Modernization Commission

Interim Report

June 2014
Military CoMpensation and retireMent Modernization CoMMission

CHAIRMAN

the Honorable Alphonso maldon, Jr. 

COMMISSIONERS

the Honorable larry l. Pressler

the Honorable stephen e. Buyer

the Honorable Dov s. Zakheim

mr. michael r. Higgins

general Peter w. chiarelli, U.s. Army, retired

Admiral edmund P. giambastiani, Jr., U.s. navy, retired

the Honorable J. robert (Bob) Kerrey

the Honorable christopher P. carney

EXECUTIVE DIRECTOR 

mr. robert B. Daigle

DEPUTY DIRECTOR 

mr. Daniel F. Huck

ASSOCIATE DIRECTORS

ms. moira n. Flanders, U.s. navy, retired

mr. christopher t. meyer, U.s. navy, retired

ms. susan schleigh

mr. James w. graybeal, U.s. navy, retired

mr. christopher nuneviller, U.s. Army, retired

GENERAL COUNSEL 

ms. elizabeth Divecchio Berrigan, U.s. Army, retired
Report of the Military Compensation and 

Retirement Modernization Commission

Interim Report

June 2014
Interim Re port of the Military Compensation and Retire ment Moderni zation Commissi on | June 2 014 | Re port Cre dits | Benja min Bryant, Exe cutive Editor and Lea d Writer| Jennifer E. M cKi nney, Managi ng Editor | Thomas J. Zamberlan, Te chni cal and Digital Editor | We ndy J. LaRue, PhD., Writer-E ditor | Christy Samuels, Writer-Editor | Donald J. Cicotte, Writer-E ditor | Carl B. Berry III, Graphi c Designer |

Cover Photo Cre dits | USA photo by SGT Brendan Ma ckie | USN photo by MC2 Class Billy Ho | USMC photo by LCpl Vict or A. Arriaga | USAF photo by SSgt Nathanael Callon | USA photo by SFC John Queen | 
CHAIRMAN’S LETTER

For over a decade, our men and women in uniform have participated in one of the most 

extraordinary chapters of service in the history of our Nation. ...They come from all walks of life 

and all stations; Active, Reserve, and National Guard; serving together to protect our people, 

while giving others a chance to lead a better life. We owe each and every one of them and their 

families a tremendous debt of gratitude for their sacrifice, service, and patriotism. 

Our Nation requires a strong military for our security and for the defense of American values 

and principles abroad. While we have successfully transitioned from a conscripted force to an 

All-Volunteer Force, sustaining this force requires responsive and prudent management, 

especially given the fiscal challenges we face as a Nation.

The President’s Principles for Modernizing the 

Military Compensation and Retirement System, 2013

The Congress created the Military Compensation and Retirement Modernization 

Commission to conduct an independent, comprehensive review of military 

compensation and benefit programs and to make recommendations for their 

modernization. With the President’s principles and the Congress’s mandate as

keystones, the Commission’s primary goal is to ensure the uniformed services can 

maintain the most professional All-Volunteer Force, during both peacetime and 

wartime. The Commission believes that, to do so, any modernization recommendations 

must protect the overall value of the current benefits package and the quality of life of 

the 21st century force—those who serve, those who have served, and the families who 

have supported them. In fact, the Congress stipulated that the Commission’s 

recommendations cannot affect the retirement eligibility date or the amount of 

retirement pay to the detriment of Service members serving, or who have retired, 

before such recommendations are enacted.

During its discovery phase, the Commission benefitted immeasurably from 

engagements with Service members, veterans, retirees, and their family members. 

Additionally, representatives of the uniformed services, Military and Veterans Service 

Organizations, and other subject-matter experts have greatly assisted the Commission 

by facilitating its understanding of the breadth of current military compensation and 

benefit programs. The Commission’s efforts to date have reinforced what it always has 

known: Our people are the strength of our uniformed services. 

The Commission also understands that the uniformed services must have modern and 

relevant compensation tools to continue to recruit and retain the high-quality men and 

women needed to protect and defend our Nation into the future. The Commissioners 

recognize the profound and constant change that has affected our Nation since the 

inception of the All-Volunteer Force. Yet, today’s military compensation and benefit 

programs comprise a series of piecemeal programs. Some of these programs are 

decades old, while others were conceived to address short-term, force-shaping 

requirements. The Commission will review these compensation programs to determine 

if they are designed to keep pace with changes in our society, the uniformed services, 
the preferences of Service members, and the priorities of upcoming generations. 

Similarly, the uniformed services must be empowered with flexible personnel 

management tools to shape the force as security needs change. The Commission 

envisions this modernization as creating substantial opportunities to improve the 

flexibility and overall cost effectiveness of military compensation. 

Accordingly, the Commission’s fundamental objective is to forge integrated and flexible 

compensation and personnel management systems that will continue to be valued by 

Service members. In taking this long-term view, the Commission also recognizes that 

our Nation’s increasingly constrained fiscal environment may continue to put pressure 

on the budgets and compensation systems of the uniformed services. 

To conduct its review and develop recommendations, the Commission has gained a 

thorough understanding of current compensation and benefit programs. This interim 

report documents the Commission’s understanding of the entirety of current military 

compensation and benefit programs; relevant laws, regulations, and policies; 

associated appropriated Federal funding; and historical and contextual background 

for the uniformed services’ compensation and benefit programs across the Federal 

Government. It is the Commission’s hope that this interim report will serve as a 

comprehensive resource tool and compendium for all those with an interest in military 

compensation issues. In cataloging what “is,” this interim report sets the stage for the 

detailed analysis that will fuel the Commission’s recommendations for compensation 

modernization, due to the President and the Congress on February 1, 2015. 

The Commission wishes to thank all who have contributed to this interim report and 

our work to date. Our decision to release an interim report is based, in part, on our 

belief that our Nation will benefit from a common set of information and references to 

help inform the public debate. To all those Service members, retirees, and veterans on 

installations and in communities across the Nation and around the world: We honor 

your service and ask for your continued input and support as we move forward with 

this important endeavor. 

ALPHONSO MALDON, JR.

Chairman
PAGE III

TABLE OF CONTENTS

1. EXECUTIVE SUMMARY................................................................ 1

2. CONTEXT FOR MODERNIZATION ............................................... 5

Changes in the Force..................................................................................... 6

Changes in Our Nation................................................................................ 10

Changes in the Fiscal Environment............................................................. 14

3. PAYS AND RETIREMENT........................................................... 25

3.1. Regular Military Compensation..................................................................... 25

3.1.1. Basic Pay ......................................................................................... 25

3.1.2. Basic Allowance for Subsistence....................................................... 30

3.1.3. Basic Allowance for Housing ............................................................ 33

3.1.4. Federal Income Tax Advantage ......................................................... 36

3.2. Special and Incentive Pays............................................................................ 37

3.2.1. Assignment Pay/Special Duty Pay.................................................... 38

3.2.2. Aviation Officer Incentive Pay and Bonus Authorities ....................... 39

3.2.3. Bonus and Incentive Pay Authorities for Nuclear Officers................. 40

3.2.4. General Bonus Authorities for Officers and Enlisted......................... 40

3.2.5. Hazardous Duty Pay......................................................................... 41

3.2.6. Health Profession Officer Incentive Pay and Bonus Authorities......... 41

3.2.7. Skill Incentive Pay/Proficiency Bonus .............................................. 42

3.3. Special Compensation for Assistance with Activities of Daily Living .............. 42

3.4. Retirement.................................................................................................... 43

3.4.1. Regular (Nondisability) Retirement ................................................... 43

3.4.2. Reserve Retirement........................................................................... 45

3.4.3. Disability Retirement........................................................................ 47

3.4.4. Cost of Living Adjustment ................................................................ 49

3.4.5. Military Retirement Fund ................................................................. 50

3.4.6. Thrift Savings Program..................................................................... 52

3.5. Concurrent Receipt....................................................................................... 56

3.5.1. Concurrent Retirement and Disability Payments .............................. 56

3.5.2. Combat-Related Special Compensation ............................................ 57

3.6. Survivor Benefit Plan.................................................................................... 58

3.6.1. Dependency and Indemnity Compensation Offset............................. 61

3.6.2. Special Survivor Indemnity Allowance .............................................. 61

3.7. Unemployment Compensation...................................................................... 61

3.8. Social Security Compensation ...................................................................... 63

3.9. Financial Literacy in the Military .................................................................. 64
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4. HEALTH BENEFITS ................................................................... 67

4.1. Department of Defense Programs.................................................................. 67

4.1.1. TRICARE Prime ................................................................................ 74

4.1.2. TRICARE Standard........................................................................... 76

4.1.3. TRICARE Extra................................................................................. 78

4.1.4. TRICARE Reserve Select................................................................... 79

4.1.5. TRICARE Retired Reserve ................................................................. 80

4.1.6. TRICARE for Life .............................................................................. 80

4.1.7. TRICARE Young Adult...................................................................... 83

4.1.8. TRICARE Prime Remote.................................................................... 84

4.1.9. TRICARE Prime Overseas ................................................................. 85

4.1.10. US Family Health Plan ................................................................... 86

4.1.11. Dental Benefits............................................................................... 87

4.1.12. Pharmacy Benefits.......................................................................... 89

4.1.13. Other Programs and Benefits ......................................................... 91

4.2. Department of Veterans Affairs Programs ..................................................... 96

4.2.1. Health Benefits...............................................................................101

4.2.2. Disability Benefits ..........................................................................113

4.3. Programs in Other Uniformed Services .......................................................116

4.3.1. U.S. Coast Guard ...........................................................................116

4.3.2. U.S. Public Health Service ..............................................................117

4.3.3. National Oceanic and Atmospheric Administration.........................117

5. QUALITY OF LIFE BENEFITS................................................... 119

5.1. Department of Defense Programs................................................................. 119

5.1.1. Commissaries..................................................................................119

5.1.2. Dependent Elementary and Secondary Education ...........................126

5.1.3. Education Assistance ......................................................................135

5.1.4. Exchanges.......................................................................................136

5.1.5. Family Subsistence Supplemental Allowance ..................................136

5.1.6. Homeowner Assistance Program......................................................136

5.1.7. Military Housing.............................................................................138

5.1.8. Military Lodging .............................................................................148

5.1.9. Morale, Welfare, and Recreation.....................................................155

5.1.10. Service Member and Family Support............................................176

5.1.11. Casualty Assistance .....................................................................193

5.1.12. Space Available Travel..................................................................196

5.1.13. Subsistence Feeding/Essential Dining .........................................198

5.2. Department of Homeland Security (U.S. Coast Guard) Programs ................201

5.2.1. Service Member and Family Support..............................................201

5.2.2. Education Assistance .....................................................................206

5.2.3. Exchanges......................................................................................207

5.2.4. Family Subsistence Supplemental Allowance ................................. 207

5.2.5. Military Housing.............................................................................207

5.2.6. Military Lodging .............................................................................209

5.2.7. Morale, Well-Being, and Recreation................................................209

5.2.8. Subsistence Feeding/Essential Dining ...........................................217
TABLE OF CONTENTS 

PAGE V

5.3. Department of Veterans Affairs Programs ...................................................218

5.3.1. Burial and Memorial Benefits .........................................................218

5.3.2. Education and Training Assistance ................................................223

5.3.3. Home Loan Guaranty .....................................................................223

5.3.4. Life Insurance Programs................................................................. 225

5.3.5. Pension Benefits.............................................................................231

5.3.6. Transition Services.........................................................................234

5.3.7. Veteran Canteen Services...............................................................235

5.4. Department of Education Programs............................................................235

5.4.1. Education Assistance .....................................................................235

5.4.2. Federal Impact Aid .........................................................................236

5.5. Department of Labor Programs...................................................................239

5.5.1. Veterans’ Employment and Training Service ..................................239

5.6. Small Business Administration Programs ...................................................245

5.6.1. Office of Veterans Business Development.......................................245

5.7. Department of Justice Programs................................................................. 247

5.7.1. Education Assistance .....................................................................247

5.8. Cross-Agency Benefits ................................................................................248

5.8.1. Education Assistance .....................................................................248

5.8.2. Exchanges......................................................................................267

5.8.3. Family Subsistence Supplemental Allowance ................................. 279

5.8.4. Transition Assistance .....................................................................281

6. APPROPRIATED COMPENSATION FUNDING .......................... 289

6.1. Overview.....................................................................................................289

6.2. Appropriated Budget Data ..........................................................................291

6.3. Data Sources ..............................................................................................317

6.4. Sources of End Strength Data ....................................................................322

6.5. Military Basic Pay Tables............................................................................324

APPENDIX A: ACRONYM LIST ...................................................... 327

APPENDIX B: COMMISSION OUTREACH...................................... 339
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LIST OF FIGURES

Figure 1. Continuation Rates for Active-Duty Officers and Enlisted, FY 2013 .............. 7

Figure 2. Recruit Quality, 1973-2013 .......................................................................... 8

Figure 3. Women as a Percentage of the Active-Duty Enlisted Force ............................ 9

Figure 4. Use of the National Guard and Reserve Since 1986....................................... 9

Figure 5. Household Computer/Internet Use ............................................................. 11

Figure 6. College Enrollment Rate of High School Graduates ..................................... 12

Figure 7. Fortune 100 Retirement Plans .................................................................... 13

Figure 8. Labor Force Participation Rate of Mothers .................................................. 14

Figure 9. Compensation Breakout by Portfolio and Source ........................................ 15

Figure 10. Military Pay Raises Compared to the Employment Cost Index................... 16

Figure 11. Military Compensation Costs as Share of DoD Topline.............................. 18

Figure 12. Relative Compensation Cost Growth ......................................................... 19

Figure 13. Civilian Unemployment Rate (%) ............................................................... 20

Figure 14. U.S. Fiscal Forecast .................................................................................. 21

Figure 15. Defense Spending and Active-Duty End Strength...................................... 22

Figure 16. Average Number of FY 2013 Eligibles, Enrollees, and Users...................... 73

Figure 17. Annual Family Enrollment Fees (Premiums) ............................................. 76

Figure 18. VA Health Care Funding and Patients....................................................... 99

Figure 19. Veterans Disability Compensation ..........................................................100

Figure 20. Mental Disorders by Disability Percent....................................................101

Figure 21. Trends in Healthcare Enrollees and Outpatient Visits, 

FY 2002–FY 2012....................................................................................107

Figure 22. Commissary Cost to Patron Example ......................................................122

Figure 23. Uniformed Services’ Compensation Funding, FY 2014 ............................289
LISTS OF FIGURES AND TABLES 

PAGE VII

LIST OF TABLES

Table 1. Active and Reserve Component End Strength, FY 2013.................................. 6

Table 2. Budget and End Strength Data .................................................................... 23

Table 3. TRICARE Program and Benefits Timeline: FY 1995–FY 2013 ....................... 70

Table 4. Summary of Special Arrangement Contract Students................................129

Table 5. Summary of FY 2013 DoDEA Funding .......................................................135

Table 6. DoD UH Minimum Configuration and Privacy Standards for 

Assignment – Permanent Party................................................................142

Table 7. Personnel without Dependents Required to Live in Permanent Party UH 

in the United States ................................................................................144

Table 8. Military Lodging Overview...........................................................................152

Table 9. Child Development Program Fee Ranges School Year 2012-2013 

(FY 2013) ................................................................................................167

Table 10. Groups Authorized Unlimited Use of All MWR Programs...........................171

Table 11. Groups Authorized Limited Use of Military MWR Activities - Authorized 

by Installation Commanders ...................................................................172

Table 12. Summary of MWR Categories ...................................................................175

Table 13. Exchange Dividends Contributed By Exchange Systems to Service 

MWR Programs (FY 2012)........................................................................176

Table 14. Minimum Standards for Single Personnel Residing in Unaccompanied 

Personnel Housing ..................................................................................209

Table 15. U.S. Coast Guard Child Care Subsidy Program Benefits - Effective 

January 1, 2014......................................................................................216

Table 16. VA Life Insurance Programs Financial Summary......................................231

Table 17. Cross-Agency Benefit Administration .......................................................248

Table 18. Beneficiary and Financial Summary of VA Education Programs for 

FY 2013 ..................................................................................................262

Table 19. Number of Exchange Main Stores (FY 2012).............................................269

Table 20. NAF Summary of Exchanges (FY 2012) (dollars in millions)......................277

Table 21. APF Summary of Armed Forces Exchanges (FY 2012)...............................278

Table 22. Summary of FSSA Recipients ...................................................................281
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PAGE 1 

1. EXECUTIVE SUMMARY

Established by the Congress in February 2013, the Military Compensation and 

Retirement Modernization Commission is tasked to provide the President of the United 

States and the Congress a package of recommendations to:

 ensure the long-term viability of the All-Volunteer Force by sustaining the 

required human resources of that force during all levels of conflict and 

economic conditions; 

 enable the quality of life for members of the Armed Forces and the other 

uniformed services and their families in a manner that fosters successful 

recruitment, retention, and careers for members of the Armed Forces and 

the other uniformed services; and

 modernize and achieve fiscal sustainability for the compensation and 

retirement systems for the Armed Forces and the other uniformed services 

for the 21st century.1

With these mandates and the President’s principles2 as keystones, the Commission’s 

primary goal is to ensure the uniformed services can maintain the most professional 

All-Volunteer Force, during both peacetime and wartime. The Commission believes 

that, to do so, any modernization recommendations must provide a benefits package 

that is valued by, and protects the quality of life of, the 21st century force—those who 

serve, those who have served, and the families who have supported them. In fact, the 

Congress stipulated that the Commission’s recommendations cannot affect the 

retirement eligibility date or the amount of retirement pay to the detriment of Service 

members serving, or who have retired, before such recommendations are enacted:

(A) CONDITIONS

In developing its recommendations, the Commission shall comply with the 

following conditions with regard to the treatment of retired pay for 

members and retired members of the uniformed services who joined a 

uniformed service before the date of the enactment of an Act to modernize 

the military compensation and retirement systems:

(i) For members of the uniformed services as of such date, who became 

members before the enactment of such an Act, the monthly amount of 

their retired pay may not be less than they would have received under 

the current military compensation and retirement system, nor may the 

date at which they are eligible to receive their military retired pay be 

adjusted to the financial detriment of the member.

(ii) For members of the uniformed services retired as of such date, the 

eligibility for and receipt of their retired pay may not be adjusted 

pursuant to any change made by the enactment of such an Act.

 

1 National Defense Authorization Act for FY 2013, Pub. L. No. 112-239, 126 Stat. 1632, 1787 (2013) (as amended by 

National Defense Authorization Act for FY 2014, Pub. L. No. 113-66, Sec. 1095(b), 127 Stat. 672, 879 (2013)). 2 President Barack Obama, Principles for Modernizing the Military Compensation and Retirement Systems, House 

Document 113-60, accessed April 30, 2014, http://www.gpo.gov/fdsys/pkg/CDOC-113hdoc60/html/CDOC113hdoc60.htm. 
MILITARY COMPENSATION AND RETIREMENT MODERNIZATION COMMISSION

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(B) VOLUNTARY ELECTION EXCEPTION

Nothing in subparagraph (A) prevents a member described in such 

subparagraph from voluntarily electing to be covered under the provisions 

of an Act to modernize the military compensation and retirement systems.3

With these goals in mind, this interim report is designed to establish a common set of 

information and references to help inform the Commission’s work and the public 

debate on military compensation modernization. As documented throughout this 

report, the Commission undertook an extensive review of relevant laws, regulations, 

and policies; associated appropriated Federal funding; and historical and contextual 

background for the uniformed services’ compensation and benefit programs across the 

Federal Government. In addition, the Commission focused on establishing a 

comprehensive understanding of the composition, needs, preferences, and priorities of 

the Service members who are the heart of the modern All-Volunteer Force. The 

Commission found several trends in the Force’s composition with potential

implications for the design of the compensation system, particularly with a backdrop 

of an unprecedented 13 years of war, including:

 a sustained increase in the overall education of Service members, creating a far 

more professional and technologically fluent force;

 a steady rise in the number of women in the uniformed services, growing as an 

overall percentage of Service members in all branches;

 an increase in the number of Service members who are married and/or have 

dependents; and

 a marked rise in the operational use of Reserve and National Guard Service 

members, especially due to declining active-duty force structure and the 

requirements of 13 years of war.

The Commission also examined key changes in American society and culture that may 

have long-term consequences for the design of the military pay and benefits package. 

For example, the digital revolution has fundamentally altered the way Americans act 

in both personal and professional contexts. The Internet has transformed the way 

people acquire goods and services, as well as how they interact in labor markets. 

Other important trends include increasing levels of higher education, an evolving 

workforce composition, and growing worker mobility. A more informed populace now 

takes an increasingly proactive role in the selection and administration of the services, 

benefits, and programs that affect their lives. Because of these trends, issues of 

choice, personalization, and responsiveness, such as choice in the structure and level 

of alternative benefits, are increasingly important within American labor markets, from 

which the military necessarily draws its recruits. 

 

3 National Defense Authorization Act for FY 2013, Pub. L. No. 112-239, 126 Stat. 1632, 1787 (2013) (as amended by 

National Defense Authorization Act for FY 2014, Pub. L. No. 113-66, Sec. 1095(b), 127 Stat. 672, 879 (2013)).
SECTION 1

EXECUTIVE SUMMARY

PAGE 3 

During its discovery phase, the Commission also examined trends in Federal 

appropriated funding for existing compensation and benefit programs. Although the 

Commission found that compensation funding has increased substantially over the 

last two decades, as has been repeatedly reported in the national press,4 these simple 

trends need to be examined in greater detail before any conclusions can be drawn 

regarding fiscal sustainability. Much of this growth is attributed to inflation 

(particularly medical inflation),5 policy-driven increases in compensation to counteract 

recruiting and retention challenges, and personnel funding that supported 13 years of

war. In addition, introduction of several new benefits for Service members and 

veterans contributed to growth in compensation funding. Regardless of the reasons 

behind this growth, military compensation funding has consistently represented 

roughly 30 percent of the DoD budget (with Federal civilian employee compensation 

representing another 15 percent). 

Our Nation’s ongoing fiscal difficulties, however, are expected to put more downward 

pressure on the uniformed services’ budgets and, in turn, their compensation budgets. 

According to long-run forecasts of the Congressional Budget Office, demographic 

changes, rising health-care costs, and national net interest payments will cause 

mandatory and interest payments to increase steadily as a share of the gross domestic 

product during the next 70 years. As a result, it will be successively more difficult for 

the Federal Government to maintain the discretionary budgets of the uniformed 

services without further increasing our national debt. As lower defense spending has 

historically been associated with reductions in the size of the U.S. military, which 

places additional burdens on remaining Service members, compensation and benefits 

may need to adjust to changes in the quality of Service members’ career experiences. 

Accordingly, the Commission believes that a broader discussion of Federal spending 

levels is a necessary element to ensure the viability of the All-Volunteer Force.

In its enabling legislation, the Commission is directed to “examine all laws, policies, 

and practices of the Federal Government that result in any direct payment of 

authorized or appropriated funds” to “current and former members (veteran and 

retired) of the uniformed services, including the reserve components of those services; 

and the spouses, family members, children, survivors, and other persons authorized 

to receive such payments as a result of their connection to the members of the 

uniformed services.”6 The Commission therefore undertook a comprehensive review of 

existing compensation programs to provide all concerned with a full and nuanced 

understanding of the scope, quantity, and funding of current military compensation 

programs. The Commission focused its efforts on three overarching compensation 

categories: 

Pays and Retirement. The Commission reviewed nearly 100 distinct 

compensation benefits administered by DoD and the U.S. Treasury that cover 

military pay, retired pay, survivor benefits, and unemployment compensation. 

 

4 See, e.g., Mackenzie Eaglen and Michael O’Hanlon, “Military Entitlements Are Killing Readiness,” The Wall Street 

Journal, July 25, 2013. Walter Pincus, “Personnel Costs Are a Growing Threat to Defense, Military Leaders Tell 

Congress,” The Washington Post, November 13, 2013. Editorial, “Putting Military Pay on the Table,” The New York 

Times, November 30, 2013. 5 Several operational factors lead military health care to be more costly than comparable civilian health care, including 

military-specific training requirements and frequent relocations of both Service members and medical personnel. 6 National Defense Authorization Act for FY 2013, Pub. L. No. 112-239, 126 Stat. 1632, 1787 (2013) (as amended by 

National Defense Authorization Act for FY 2014, Pub. L. No. 113-66, Sec. 1095(b), 127 Stat. 672, 879 (2013)).
MILITARY COMPENSATION AND RETIREMENT MODERNIZATION COMMISSION

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PAGE 4 

This review included 65 special and incentive pays that DoD is consolidating 

into eight overarching pay categories. Additionally, the Commission reviewed 

the Dependency and Indemnity Compensation program, a Department of 

Veterans Affairs program that affects Survivor Benefit Program payments. These 

pay and retirement programs are funded in a number of ways: fully funded by 

appropriated funds, partially funded (subsidized with Federal dollars), accrual 

funded, or pay-as-you-go programs. The Commission also reviewed programs 

that result in a loss of Federal tax revenue, including tax-exempt allowances.

Health Benefits. The Commission reviewed more than 40 health benefit 

programs administered by DoD, the Department of Veterans Affairs, and the 

Department of Health and Human Services for active-duty Service members; 

members of the Reserve Component; and retirees, veterans, and family 

members of the uniformed services. This review not only assessed the health 

care benefit itself, but also examined the ways the health care benefit is 

delivered. Health benefit programs reviewed range from TRICARE Prime, which 

is paid for entirely by the Government for active-duty Service members and 

eligible dependents,7 to fully-funded programs like TRICARE Young Adult, 

which is paid for by the annual premiums collected from beneficiaries. 

Quality of Life Benefits. The Commission reviewed more than 200 distinct 

programs and benefits administered by eight separate Federal agencies in 

support of military, veteran, retiree, and family member quality of life. The 

Commission found a widely varied, but deeply interdependent, set of programs, 

often tied to key life events, such as marriage, childbirth, divorce, injury, health 

challenges, and deployment. These programs, as a whole, are used throughout 

the entire military lifecycle, from accession through retirement and postseparation, by all military and dependent populations. The Commission 

identified costs in the quality of life area that range from self-sustaining 

programs (fully funded by self-generated nonappropriated funds), such as the 

military Exchange system, to the $10.2 billion of funds appropriated in FY 2013 

for the Post-9/11 GI Bill.

To protect and defend our Nation, the uniformed services must be able to continue to 

recruit and retain high-quality Service members. The Commission recognizes this need 

can be best met by implementing modern and relevant compensation tools and flexible 

personnel management systems. Doing so will also improve the cost effectiveness of 

compensation programs, while continuing to provide benefits that meet the needs of 

those who serve. Toward these ends, this interim report details current benefit 

programs and provides a foundation for the Commission’s recommendations for 

modernization, which are due to the President and the Congress on February 1, 2015.

 

7 TRICARE Prime is primarily subsidized by the Government for eligible retiree annuitants and dependents, who pay 

limited annual fees. 
PAGE 5 

2. CONTEXT FOR

MODERNIZATION

Despite significant demographic, cultural, and economic changes that have occurred 

in the United States since the inception of the modern All-Volunteer Force in 1973, 

many parts of the uniformed services’ compensation package have remained largely 

unchanged for decades. Today’s Force is, in many respects, very different from the one 

for which many pay and benefit programs were developed and implemented. 

Consequently, compensation programs may no longer be structured in ways that costeffectively align with the interests and motivations of today’s current and potential 

Service members. Furthermore, military compensation and personnel management 

systems may not provide the best tools for the uniformed services to meet their 

recruiting and retention goals. While the full breadth of pay and benefit programs are 

documented later in this report, this section serves to highlight key, overarching 

trends within the Force itself and in the broader environment in which the

compensation system operates. These trends provide necessary context and 

understanding, informing the Commission’s continued research into specific 

compensation programs, and the formation of its recommendations for modernized 

military compensation.

A key backdrop for this Commission’s work is the recognition that the current 

compensation system has sustained the All-Volunteer Force through 13 years of 

continual war. In the last 13 years, many Service members faced multiple, lengthy 

deployments, sometimes for more than a year at a time. Service members adapted to 

the challenges of a new style of warfare focused on counter-insurgency operations, 

often in harsh conditions. In addition, families of Service members experienced the 

unique demands of prolonged and often repeated deployments. 

Service members experienced many hardships and challenges during Operation 

ENDURING FREEDOM (Afghanistan) and Operation IRAQI FREEDOM (Iraq). During 

this period, the military compensation system enabled national leaders to meet 

U.S. security needs without having to abandon the concept of an All-Volunteer Force. 

For example, when circumstances persuaded then-Secretary of Defense Robert Gates 

to extend Army deployments to 15 months in 2007, DoD compensated soldiers for the 

extra time, providing an additional $1,000 in tax-free compensation for every month of 

deployment beyond a year. Secretary Gates recognized that although the war had 

stretched the Services, it had by no means broken them, as the Army and Marines

continued to meet their recruiting and retention goals.1

The question facing this Commission therefore is not “Can the compensation system 

be made to work?” but “Can it be made to work better?” Does the system continue to 

provide benefits that are the most valued by Service members? Can it be better aligned 

with Service-member preferences, thereby improving their quality of life? Can we make 

the system more flexible, both for Service members and the uniformed services

 

1 DoD News Briefing with Secretary Gates and General Pace from the Pentagon, Presenters: Secretary of Defense 

Robert Gates and Chairman, Joint Chiefs of Staff Gen. Peter Pace, April 11, 2007.
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responsible for recruiting and retaining highly skilled personnel? Can we provide 

benefits in a more cost-effective manner, thereby reducing the Services’ pressure to 

reduce compensation funding? These questions will guide this Commission’s 

continuing work and the development of its recommendations for modernization to the 

President and the Congress in February 2015. 

CHANGES IN THE FORCE

The modern All-Volunteer Force was born in 1973, following the work of the 

1969 President’s Commission on an All-Volunteer Armed Force. That Commission

concluded that our Nation’s interests would be served better by an all-volunteer force 

than by a combination of volunteers and conscripts. It found that if the system raised 

entry-level pay, expanded its recruiting organization, and improved the conditions of 

service life, the Armed Services could attract enough volunteers to staff active-duty 

strength objectives.2 In 1973, following the Nation’s withdrawal from Vietnam, the last 

conscription authority, enacted in 1971, expired.3 Forty years later, the uniformed 

services have successfully maintained the All-Volunteer Force, which comprised 

1.43 million active-duty and 0.84 million Reserve Component volunteers in FY 2013, 

of which 0.40 million (17 percent) were officers and 1.88 million (83 percent) were 

enlisted personnel.4 

Table 1. Active and Reserve Component End Strength, FY 20135

Army

Marine 

Corps Navy Air Force

Coast 

Guard NOAA

Public 

Health 

Service Total

Active 532,043 195,657 323,951 330,694 40,276 330 6,729 1,429,680

Reserve 198,209 39,642 62,444 70,913 7,994 - 85 379,287

Guard 357,735 - - 105,708 - - - 463,443

Total 1,087,987 235,299 386,395 507,315 48,270 330 6,814 2,272,410

The Services recruit and retain these personnel through a “closed” personnel system 

in which Service members are generally promoted from a pool of more junior members 

already in that system.6 This structure gives rise to a downward sloping active-duty 

“force profile,”7 with larger numbers of junior Service members (see Figure 1). Many of 

these Service members leave after their first obligation period, leading to a sharp 

decline in personnel after four through six years of service. After approximately eight 

years of service, the force profile becomes flatter, with retention and continuation rates 

leveling off in part because Service members begin to feel the “pull” of the current 

 

2 President’s Commission on an All-Volunteer Armed Force, The Report of the President’s Commission on an 

All-Volunteer Armed Force, February 1970, 10, accessed May 12, 2014, 

http://www.rand.org/content/dam/rand/pubs/monographs/MG265/images/webS0243.pdf.

3 Military Selective Service Act, Pub. L. No. 92-129, 85 Stat. 348 (1971), as codified at 50 U.S.C. App. 455 (2014). 4 End Strength Data, presented in Section 6.4 of this report. 5 Ibid. 6 There are some exceptions to this general rule. For example, enlisted personnel who have successfully completed 

semester hours at accredited colleges or universities may enlist at grades above E-1 (see, e.g., Active and Reserve 

Components Enlistment Program, AR 601-210, 15 (2013)). 7 The force profile shows the numbers of personnel (in a service or skill) according to their years of service.
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20-year retirement system.8 After the 20th year, the profile shows another drop, as 

Service members vest in the retirement system, financial incentives to remain decline 

substantially, and the Services’ up-or-out system retains only those personnel selected 

for promotion. 

Figure 1. Continuation Rates for Active-Duty Officers and

Enlisted, FY 20139

Importantly, representatives of each of the uniformed services communicated to this 

Commission that any modernized package of pays and benefits should enable the

Services to maintain similar active-duty force profiles. In particular, the Services 

expressed their desire to retain (and potentially increase) the flexibility of special and 

incentive pays to enable them to adjust the compensation package to changing 

economic environments and Service requirements; however, the similarity of these 

force profiles across Services (and across time) partially masks several important shifts 

in the nature of the Force during the past 40 years. 

Quality and Education. As shown in Figure 2, the percentage of high-quality activeduty recruits (defined as Armed Forces Qualification Test (AFQT) categories I through 

IIIA)10 increased substantially since the inception of the All-Volunteer Force, from 

58 percent in 1973 to 75 percent in 2013.11 Similarly, the percentage of active-duty 

recruits with high school diplomas rose from 66 percent in 1973 to 98 percent in 

2013. Indeed, the United States maintained its quality benchmarks for active-duty 

recruits (that at least 90 percent of accessions are high school graduates, and that at 

least 60 percent of accessions score within the highest three ranks on the AFQT12) 

each year since 1985.13 Though these increases in recruit quality directly supported 

the rising technological base of the uniformed services, they also suggest that the 

 

8 Paul F. Hogan, “Overview of the Current Personnel and Compensation System,” in Filling the Ranks: Transforming the 

U.S. Military Personnel System, ed. Cindy Williams (Cambridge: MA: Belfer Center for Science and International Affairs, 

John F. Kennedy School of Government, Harvard, 2004), 29-53. 9 Defense Manpower Data Center, as of September 30, 2013. 10 Population Representation in the Military Services Fiscal Year 2011, prepared by CNA for USD(P&R), Appendix D, 

Table D-8. See also Qualitative Distribution of Military Manpower, DoDI 1145.01 (2013). 11 Deputy Director, Accession Policy, OUSD(P&R)/Military Personnel Policy, e-mail to MCRMC, May 14, 2014. 12 Qualitative Distribution of Military Manpower, DoDI 1145.01 (2013). 13 While overall benchmarks were maintained, the Army and Marine Corps had to grant waivers to make recruiting 

goals at the height of Operation IRAQI FREEDOM. “Chairman Waxman Requests Information on Increase in Military 

Personnel Waivers,” Committee on Oversight and Government Reform, accessed April 22, 2014, http://oversightarchive.waxman.house.gov/story.asp?ID=1889. 
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uniformed services’ compensation system must remain sufficiently robust and 

modern, or risk the inability to attract and retain personnel who may find greater 

employment opportunities in the civilian sector. 

Figure 2. Recruit Quality, 1973-201314

Gender. Since 1973, women have represented an increased part of the Force, growing 

as a percentage of Service members among each of the Military Services. As shown in 

Figure 3, women represented 14.5 percent of the active-duty enlisted force in 2013, 

compared with only 2.2 percent when conscription ended in 1973. In 2013, 

16.4 percent of the officer corps was female.15 As shown on page 14, however, women 

with young children participate less in the workforce, suggesting that a number of 

otherwise trained and qualified female Service members leave military service earlier 

than they otherwise might due to a lack of flexible career options. As such, increased 

flexibility for female Service members may improve both retention and costeffectiveness, particularly in skill sets with high training costs. Further, genderspecific military experiences, such as the fact that female Service members cannot be 

deployed while pregnant,16 and changing demographic trends, including the fact that 

by 2012 women represented nearly 33 percent of single Service members with 

dependents,17 all have implications for the design of health benefits, child care, and 

other quality of life benefits for a substantial portion of today’s Service members. 

 

14 Deputy Director, Accession Policy, OUSD(P&R)/Military Personnel Policy, e-mail to MCRMC, May 14, 2014. 15 Defense Manpower Data Center, as of September 30, 2013. 16 Standards of Medical Fitness, AR 40-501 (2011). Guidelines Concerning Pregnancy and Parenthood, OPNAVINST

6000.1C (2014). Marine Corps Policy Concerning Pregnancy and Parenthood, MCO 5000.12E (2004). Air Force 

Guidance Memorandum, Assignments, AFI 36-2110 (2014). Pregnancy in the Coast Guard, COMDTINST 1000.9 

(2011).

17 Department of Defense, 2012 Demographics: Profile of the Military Community, accessed May 12, 2014, 

http://www.militaryonesource.mil/12038/MOS/Reports/2012_Demographics_Report.pdf.
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Figure 3. Women as a Percentage of the Active-Duty Enlisted Force18

Nature of Service. Operational use of the National Guard and Reserves evolved 

substantially during the past 35 years. Originally conceived as a strategic reserve for 

the country in the event of major conflict, the Reserve Component mobilized repeatedly 

during times of conflict, including sustained mobilization during the last 13 years of 

war (see Figure 4). Numerous Guardsman, Reservists, and subject matter experts 

explained to the Commission how current compensation programs do not adequately 

address these operational requirements, specifically noting inflexibilities in health care 

benefits during Guard and Reserve mobilization and demobilization. Modernizing pay 

and benefit programs will provide an opportunity to address such inefficiencies for the 

betterment of Service members and their families, especially if Reserve Component 

operational requirements continue to grow as the active-duty force gets smaller. 

Figure 4. Use of the National Guard and Reserve Since 198619

 

18 Deputy Director, Accession Policy, OUSD(P&R)/Military Personnel Policy, e-mail to MCRMC, May 14, 2014. 19 Reserve Forces Policy Board, Reserve Component Use, Balance, Cost and Savings: A Response to Questions from the 

Secretary of Defense, February 11, 2014 (RFPB Report FY14-02), accessed May 12, 2014, 

http://rfpb.defense.gov/Portals/67/Documents/Final%20Signed%20Report%20without%20Slides.pdf. 
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Marital Status. The number of Service members who are married increased over the 

last 40 years, from 40 percent of the active-duty force at the start of the All-Volunteer 

Force20 to 55 percent in 2013.21 Sixty-eight percent of all active-duty officers were 

married in 2013.22 Of these, 71 percent had dependents and another 11 percent were 

families in which both Service members were in the uniformed services.23 These trends 

have substantial implications for compensation programs that support spouses and 

dependents, especially quality of life and family support programs that provide 

support during frequent deployments of Service members. 

Age. By their nature, the uniformed services have always been a young force, but it is 

worth noting that the Force is much younger than the overall civilian sector. Indeed, 

38 percent of the active-duty force (officers and enlisted) is between the ages of 17 and 

24, while only 13 percent of the civilian workforce falls between the ages of 16 and 

24.24 This can have important implications for the compensation package that will 

best enable the Services to recruit and retain personnel from rising generations.

CHANGES IN OUR NATION

The President and the Congress charged the Commission with developing a 

modernized package of benefits that enables the quality of life of Service members and 

their families. The Commission believes that the key to enhancing quality of life, while 

improving cost-effectiveness of the compensation system, is to align compensation 

programs to the preferences and priorities of Service members who make up the 

modern All-Volunteer Force. These preferences have necessarily been affected by 

dramatic changes in U.S. society and culture during the past 40 years, including the 

digital revolution, increases in levels of higher education, new benefit choices, and 

evolving workforce composition. These changes fundamentally altered how Americans 

function in the labor market and how they acquire goods and services. Designing a 

benefits package that integrates these societal trends to improve the quality of life of 

Service members and to meet the expectations of rising generations represents the 

challenge of military compensation modernization.

The Digital Revolution. Arguably the most profound of America’s societal changes 

since the inception of the All-Volunteer Force is the digital revolution. As shown in 

Figure 5, household use of computers and the Internet rose dramatically during the 

past 30 years. In 1984, only 10 percent of U.S. households used a computer at home. 

By 2012, that number rose to almost 80 percent. Adoption of the Internet in 

U.S. households rose even faster. From being virtually non-existent in the early 1990s, 

the number of U.S. households using the Internet in their homes rose to almost 

75 percent in 2012. 

 

20 “Population Representation in the Military Services Fiscal Year 2011,” prepared by CNA for USD(P&R), Appendix D,

Table D-14. 21 Defense Manpower Data Center, as of September 30, 2013. 22 Ibid. 23 Ibid. 24 Ibid. See also U.S. Bureau of Labor Statistics, Labor Force Statistics from the Current Population Survey, Table 3 - 

Employment status of the civilian noninstitutional population by age, sex, and race, accessed May 15, 2014, 

http://www.bls.gov/cps/cpsaat03.htm. 
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Figure 5. Household Computer/Internet Use25

The Internet prompted a major revolution in how Americans access goods and 

services. Today, rather than going to brick-and-mortar stores to purchase computers, 

furniture, even groceries, consumers can simply access the Internet, browse a 

selection of websites offering these products, make a purchase online, and have the 

goods delivered to their residences. Employees can now receive payment via direct 

electronic transfer into a bank account, rather than receiving a paper check to be 

cashed at the local bank. The Internet has also affected health care delivery. Electronic 

health record systems can track an individual’s health care across different providers. 

Patients can e-mail questions directly to their providers and set up appointments 

online. They can refill their prescription drugs online and have prescriptions mailed 

directly to their homes, without ever having to visit a traditional pharmacy.

The Internet also had a dramatic impact on labor markets. The ease of searching 

online for job postings across the world facilitated increased worker mobility; and the

connectivity of the Internet enables increased telework and flexible work hours. This 

flexibility changed people’s expectations of their employment, both in terms of 

compensation and environment. 

Higher Education. Shifts in education levels also have the potential to be significant 

factors in recruitment and retention. The number of college graduates in the labor 

market increased over time,26 as has the financial incentive to attend college (see 

Figure 6). A recent study by the Pew Research Center found that the pay premium 

advantage from obtaining a college degree over a high school diploma increased from 

24 percent in 1965, to 63 percent in 2013.27 Historically, the military has been seen as 

 

25 U.S. Census Bureau, Table 2: Households with a Computer and Internet Use 1984-2012, accessed May 15, 2014, 

http://www.census.gov/hhes/computer/publications/2012.html.

26 The share of high school graduates that enroll in college has risen from less than 50 percent in 1973 to almost 

70 percent in 2013. “College Enrollment Rate of Recent High School Graduates Age 16-24, October 1959-2009,” 

Bureau of Labor Statistics, accessed May 15, 2014, http://www.bls.gov/opub/ted/2010/ted_20100428_data.htm. See 

also “Archived News Releases,” Bureau of Labor Statistics, accessed May 15, 2014, 

http://www.bls.gov/schedule/archives/all_nr.htm#HSGEC. 27 Pew Research Center, The Rising Cost of Not Going to College, accessed May 15, 2014, 

http://www.pewsocialtrends.org/2014/02/11/the-rising-cost-of-not-going-to-college/. 
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a lucrative alternative to college for new high school graduates. Trends toward 

increased college participation and completion (and increases in the financial incentive

for young adults to do so) may pose risks to the ability of the uniformed services to 

recruit the highest quality candidates out of high school. 

Figure 6. College Enrollment Rate of High School Graduates28

The spiraling growth in technology and technology-related employment also increased

private-sector demand for high-quality workers, particularly those with college 

degrees. As the Services value college education (including the attainment of 

associate’s and bachelor’s degrees, often at Government expense) when considering 

promotion and advancement, more educated Service members increase in value both 

to the Services and the private sector, with implications for mid-career retention. 

Because of corresponding trends in military requirements toward increasing technical 

skill and experience, increased private-sector opportunity for those with a college 

education may serve to increase the cost and difficulty of competing for, and retaining, 

employees with advanced or specialized knowledge and skill sets.

Benefit Choices. There has been a substantial rise in the number of choices offered to 

employees to accommodate their specific preferences and circumstances. An example 

of this trend is the introduction of cafeteria-style benefits plans,29 as well as the steady 

increase in the use of defined contribution retirement plans in the private sector (see 

Figure 7). These retirement plans provide flexibility in employee investment choices, 

and allow for improved portability for employees.30 Although the applicability of such 

retirement plans to the uniformed services, which are subject to many unique 

requirements that differ from the civilian sector (such as a closed personnel system 

and the rigors of wartime deployments), requires additional research, the trend toward 

 

28 “College enrollment rate of recent high school graduates age 16 to 24, October 1959-2009,” U.S. Bureau of Labor 

Statistics, accessed May 15, 2015, http://www.bls.gov/opub/ted/2010/ted_20100428_data.htm. Supplemented with 

2010-2013 data from “Archived News Releases,” U.S. Bureau of Labor Statistics, accessed May 15, 2014, 

http://www.bls.gov/schedule/archives/all_nr.htm#HSGEC. 29 The legal rules establishing cafeteria plans are set forth in 26 U.S.C. § 125. For a discussion of how employee 

benefits have evolved to include more employee choice, including cafeteria plans, see Chapters XIII and XIV in 

Employee Benefit Research Institute, Business, Work, and Benefits: Adjusting to Change, accessed May 14, 2014,

http://www.ebri.org/publications/books/index.cfm?fa=bwba. 30 See Internal Revenue Code, 26 U.S.C. § 401. See also Internal Revenue Code, 26 U.S.C. §§ 411 and 414.
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greater flexibility and choice in the broader society has implications for the costeffective design of the military compensation system.

Figure 7. Fortune 100 Retirement Plans31

Health care represents another area in which increased access to information and a 

rise in education levels has resulted in growing choice and responsiveness. Numerous 

changes in laws, regulations, and guidelines influenced changes in the practice of 

medicine. The implementations of health insurance exchanges and marketplaces have 

increased choices and customization in health care benefits, while advances in science

and technology increasingly personalize the practice of medicine. Telemedicine and 

web-based reporting is becoming commonplace, advances in diagnostic and imaging 

techniques have made the early detection of disease and early intervention a reality, 

and trends in personalized medicine have sharpened the health care industry’s focus 

on the patient as an individual.32 Patient-centric care, wellness, and prevention are 

now hallmarks of practicing and funding medicine. 

Women in the Workforce. Women joined the labor force at an extremely rapid pace 

during the past 50 years. The participation rate of women in the labor force, which 

was 34 percent in 1950, increased to 60 percent by 2000,33 while their share of the 

labor force grew from 30 percent in 1950 to almost 47 percent in 2000.34 However, as 

shown in Figure 8, women’s careers are more likely to include periods of time out of 

the labor force to raise children. In the private sector, both women and men are 

increasingly likely to have the option to craft nonstandard working arrangements, 

such as teleworking and flexible work schedules. According to the Current Population 

Survey, the percentage of full-time wage and salary workers with flexible schedules 

 

31 Data from Towers Watson, accessed May 14, 2015, 

http://www.towerswatson.com/en/Insights/Newsletters/Americas/Insider/2013/retirement-plans-offered-by-2013-

Fortune-100, see Figure 1a. Fortune 100 retirement plan sponsorship, 1985-2013. 32 RAND Health, How Are Residency Programs Preparing Our 21st Century Internists?, accessed May 14, 2014, 

http://www.rand.org/content/dam/rand/pubs/working_papers/2009/RAND_WR686.sum.pdf. 33 Mitra Toosi, “A Century of Change: The U.S. Labor Force, 1950-2050,” Bureau of Labor Statistics, Monthly Labor 

Review (May 2002), accessed May 14, 2014, http://www.bls.gov/opub/mlr/2002/05/art2full.pdf. 34 Ibid.
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increased from 12 percent in 1985, to 28 percent in 2004.35 A modernized 

compensation package for the uniformed services should adapt to these trends, 

perhaps by increasing flexibility in compensation and personnel management systems, 

as well as offering alternatives to the traditional career path, both of which would 

potentially affect the current force profile.

Figure 8. Labor Force Participation Rate of Mothers36

According to the U.S. Bureau of Labor Statistics, “changes in both growth rates of the 

population and labor force participation rates have created a steadily growing labor 

force that, compared with 1950, is today older, more diversified, more technically 

skilled, and increasingly made up of women.”37 These trends are expected to continue 

in the future, “as the same forces that have influenced the size and composition of the 

U.S. labor force over the past 50 years are expected to shape the future of the 

workforce as well.”38 In response, many employers are finding it advantageous to allow 

employees to tailor their working conditions, hours of work, place of work, and 

benefits to suit their individual needs. These changes suggest a growing preference for

flexibility and choice in benefits by American workers, which should be considered 

during the process of modernizing the compensation programs of the uniformed 

services. 

CHANGES IN THE FISCAL ENVIRONMENT

As the Commission develops its recommendations to modernize the compensation 

package of the uniformed services, it has also been tasked to evaluate the fiscal 

sustainability of those programs. Toward that end, Section 6 of this report contains an 

 

35 U.S. Bureau of Labor Statistics, Workers on Flexible and Shift Schedules, accessed May 14, 2014, 

http://www.bls.gov/news.release/pdf/flex.pdf.

36 “Labor Force Participation of Mothers by Age of Own Child, March 1976-2012,” U.S. Department of Labor, accessed 

May 14, 2014, http://www.dol.gov/wb/stats/LForce_rate_mothers_child_76_12_txt.htm. 37 Mitra Toosi, “A Century of Change: The U.S. Labor Force, 1950-2050,” Bureau of Labor Statistics, Monthly Labor 

Review (May 2002), accessed May 14, 2014, http://www.bls.gov/opub/mlr/2002/05/art2full.pdf. 38 Ibid.
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accounting of all appropriated dollars that support the uniformed services’ 

compensation programs.39 

Compensation Funding. Though the data in Section 6 of this report show an 

increase in compensation funding (partially illustrated in Figure 9) during the past 

16 years,40 as has been reported repeatedly in the press,41 such simple trends do not 

adequately explain funding growth, particularly during 13 years of sustained war. 

Indeed, the Commission identified myriad reasons behind the growth in compensation

funding. 

Figure 9. Compensation Breakout by Portfolio and Source42

First, comparisons of relative growth rates are highly dependent on when the 

comparisons are begun. As shown in Figure 10, after 1998, military basic pay raises 

were generally higher than the Employment Cost Index (ECI), which measures 

employment cost growth in the national economy, as evidenced by the shrinking gap 

between the military pay raise and ECI lines. In fact, the Congress authorized military 

pay raises higher than ECI every year between 2000 and 2010.43 Beginning the 

comparison in 1976, however, shows the post-1998 pay raises to be a reaction to 

military pay raises that were lower than ECI from 1982 through 1998. Indeed, 

policymakers made a concerted effort around the turn of the 21st century to increase 

compensation for Service members to counteract recruiting and retention challenges 

during the 1990s. 

 

39 Section 6 of this report contains detailed budget data beginning in 1998, which is the first year for which budget 

data was publicly available from the Office of the Undersecretary of Defense (Comptroller).

40 As noted in Footnote 39, detailed compensation data is only publicly available from the Office of the Undersecretary 

of Defense (Comptroller) since 1998.

41 Mackenzie Eaglen and Michael O’Hanlon, “Military Entitlements Are Killing Readiness,” The Wall Street Journal, July 

25, 2013. Walter Pincus, “Personnel Costs Are a Growing Threat to Defense, Military Leaders Tell Congress,” The 

Washington Post, November 13, 2013. Editorial, “Putting Military Pay on the Table,” The New York Times, November 30, 

2013.

42 Appropriated Budget Data, presented in Section 6.2 of this report. 43 Result obtained using National Defense Authorization Acts FY 2000–FY 2010, ECI data from U.S. Bureau of Labor 

Statistics, and 37 U.S.C. § 1009.
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Figure 10. Military Pay Raises Compared to the Employment Cost Index44

Second, compensation funding naturally increases with general inflation, which grew 

by 43 percent between FY 1998 and FY 2013.45 Moreover, health care and education 

prices rose by 76 percent and 129 percent, respectively, during the same period.46 

Third, several new benefits and programs provided to Service members and veterans 

during this time period required new funding, rather than increasing funding of 

existing programs. Examples include: 

 TRICARE For Life, which provided health care benefits to Medicare-eligible 

military retirees, enacted in 200147 

 Concurrent Receipt, which allowed some disabled veterans to receive both DoD 

and Department of Veterans Affairs compensation without any offset between 

them, enacted in 200448 

 

44 ECI data were acquired from IHS Economic and Country Risk, which provides historical data from the Bureau of 

Labor Statistics. (IHS compiles data from disparate sources across BLS into one place.) Pay raise data from Office of 

the Undersecretary of Defense (Comptroller), National Defense Budget Estimates for FY 2015, 71, accessed June 6, 

2014, http://comptroller.defense.gov/Portals/45/Documents/defbudget/fy2015/FY15_Green_Book.pdf. 45 Data were obtained from Bureau of Labor Statistics, http://www.bls.gov (clicking on “data tools” to get to 

http:bls.gov/data/, then doing several multiscreen data searches to obtain the relevant Consumer Price Indices: CPI-U, 

CPI-U Medical, CPI-U Education, etc.). 46 Ibid. 47 Floyd D. Spence National Defense Authorization Act for FY 2001, Pub. L. No. 106-398, § 712, 114 Stat. 1654, 

1654A-176 (2000). 48 National Defense Authorization Act for FY 2004, Pub. L. No. 108-136, § 641, 117 Stat. 1392, 1511-1516 (2003) 

(effective January 1, 2004).

$0

$10

$20

$30

$40

$50

$60

1976 1980 1984 1988 1992 1996 2000 2004 2008 2012

Then-Year Dollars ($000s)

ECI

Military Pay Raise
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 Basic Allowance for Housing, which increased to cover 100 percent of median 

housing rental costs, from approximately 85 percent coverage in 200549

 Reform of the Survivor Benefit Plan, which eliminated the Social Security offset 

in FY 2005.50

 The Post-9/11 GI Bill, which substantially expanded educational benefits to 

Service members and their families, enacted in 200851 

Finally, some of the increase in compensation funding results from the cost of war, 

including increases in military manpower. Increases in health care funding provided 

critical care for Service members—including funding for the treatment of many 

war-related injuries such as post-traumatic stress disorder and traumatic brain 

injury. Funding also increased for many veteran and family support programs52. 

Fiscal Sustainability. Simple trends of compensation funding do not indicate whether 

current pays and benefits are sustainable. Indeed, as shown in Figure 11, military 

compensation as a share of the DoD budget has declined since the inception of the 

All-Volunteer Force, representing roughly 29 percent of the budget since FY 2001

(except during the height of Operation IRAQI FREEDOM). During the same time, pay 

and benefits for DoD civilians represented another 11 percent of the budget.

 

49 National Defense Authorization Act for FY 1998, Pub. L. No. 105-85, § 603, 111 Stat. 1629, 1775-1783 (1997) 

amended law so that BAH was the difference between costs for adequate housing in the area and 15 percent of national 

median housing costs. This came close to 20 percent out-of-pocket costs. The Floyd D. Spence National Defense 

Authorization Act for FY 2001, Pub. L. No. 106-398, § 605(a), 114 Stat. 1654, 1654A-147-1654A-148 (2000) removed 

the 15 percent language, effectively making a member’s out-of-pocket costs 0, while section 605(e) allowed for a 

transition period to last until January 1, 2005, meaning that a member’s out-of-pocket costs were 0 by January 1, 

2005.

50 Formerly, the Survivor Benefit Plan annuity was reduced from 55 to 35 percent by Social Security once a beneficiary 

reached age 63 and was eligible to receive Social Security benefits. The National Defense Authorization Act of Fiscal 

Year 2005 established a phase out of that policy, which increased the SBP percentage as follows: 45 percent in 

April 2006, 50 percent in April 2007, and 55 percent in 2008. See Patrick Mackin, Richard Parodi, and David Purcell,

Report of the Eleventh Quadrennial Review of Military Compensation, Supporting Research Papers, Chapter 12: Review of 

Survivor Benefits, accessed June 1, 2014, http://militarypay.defense.gov/REPORTS/QRMC/11th_QRMC_Supporting_

Research_Papers_%28932pp%29_Linked.pdf. 51 Post-9/11 Veterans Educational Assistance Act of 2008, Pub. L. 110-252, Title V, 122 Stat. 2323, 2357-2386 (2008) 

(effective August 1, 2009). 52 Increased spending was observed in data collected by MCRMC. See Data Sources, presented in Section 6.3 of this 

report. 
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Figure 11. Military Compensation Costs as Share of DoD Topline53

The fact that military compensation costs consistently represent roughly one-third of 

the DoD budget, however, does not provide evidence of fiscal sustainability. Rather, it 

shows that various civilian and military leaders have, over time, reached similar 

decisions regarding the ratios of personnel, readiness, and modernization funding. 

Indeed, Figure 11 indicates that active-duty end strength declined during the same 

period that the compensation share of the budget was roughly constant, implying 

differing groups of DoD leadership reduced force structure to maintain the share of 

the budget that funded military compensation.

To analyze the issue of fiscal sustainability more broadly, the Commission is 

examining sustainability by comparing compensation growth to changes in other key 

financial indices. For example, the Commission considers the growth rate in Gross 

Domestic Product (GDP) to be the maximum rate at which compensation funding, 

holding force size constant, can grow while representing the same share of national 

income. Alternatively, the ECI provides a measure of employment cost growth in the 

broader economy. Figure 12 shows military compensation costs, unadjusted for the 

reasons for cost growth described above, relative to changes in GDP and ECI. 

 

53 The share of the DoD budget for 1998–2014 was calculated with MCRMC data in Section 6 of this report. During 

this period, the share of the budget representing military compensation costs averaged 5 percent above the share of the 

budget represented by the MILPERS appropriation. To estimate compensation costs before 1998, MCRMC added 

5 percent to MILPERS share of DoD topline for 1973–1997.
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Figure 12. Relative Compensation Cost Growth54

Civilian Unemployment. The civilian employment climate is among the primary 

drivers of personnel recruiting and retention behavior.55 As Figure 13 shows, 

unemployment vacillated considerably during the All-Volunteer Force era, causing 

major swings in the Services’ ability to recruit and retain personnel. When civilian 

unemployment is high, military employment becomes more attractive due to its high 

job security. Similarly, when unemployment is low, civilian employment opportunities 

are more plentiful, making military recruiting and retention more difficult56 and 

adding to the pressure to expand compensation programs. Accordingly, the 

unemployment rate is a key component of the effectiveness and sustainability of 

military compensation programs over short time periods.

 

54 See Data Sources, presented in Section 6.3 of this report. The chart excludes an index for unfunded liability 

payments into the Military Retirement Fund or the Medicare-Eligible Retiree Health Care Fund. Normal cost payments 

into these funds, which reflect the future retirement compensation costs of currently serving Service members, are 

included in the chart indexes. 55 The Act of December 16, 1967, Pub. L. No. 90-207, § 8(a), 81 Stat. 649, 649–50 (1967) first links basic pay to 

General Schedule of civilian employees.

56 Department of Defense, Report of the Eleventh Quadrennial Review of Military Compensation, Supporting Research 

Paper Files, Chapter 2: The Effect of the Civilian Economy on Recruiting and Retention, accessed May 14, 2014, 

http://militarypay.defense.gov/REPORTS/QRMC/11th_QRMC_Supporting_Research_Papers_%28932pp%29_

linked.pdf. 
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Figure 13. Civilian Unemployment Rate (%)57

Indeed, the United States recently suffered through a major recession, pushing the 

civilian unemployment rate to 10 percent, as seen in Figure 13. During this time, the 

Services found recruiting and retention much easier and were able to substantially 

boost the quality of recruits.58 As our Nation recovers from the recession, competition 

for recruits in the civilian labor market will once again rise as non-military 

employment opportunities become more available. Thus, recruiting and retention is 

expected to become more difficult in the near future due to this external factor, 

independent of any recommendation of the Military Compensation and Retirement 

Modernization Commission.

Broader Federal Spending. Compensation pressures are also expected to increase 

because the U.S. budget is projected to put more downward pressure on uniform 

services’ budgets. Figure 14 shows the Congressional Budget Office’s (CBO’s) long-run 

forecast of the U.S. budget, converting government spending and revenue into shares 

of GDP to facilitate comparison across time. Government revenue, indicated by the 

black line, sets the amount that the government can spend before having to issue debt 

(i.e., deficit spend). This figure has averaged 17.3 percent of GDP during 1973–2013, 

and CBO forecasts it will slowly grow toward 20 percent of GDP during the next 

several decades. 

 

57 “Seasonally Adjusted Unemployment Rate,” U.S. Bureau of Labor Statistics, Series LNS14000000, accessed May 15, 

2015, http://www.bls.gov/data/. 58 “DoD News Briefing with Bill Carr from the Pentagon,” Department of Defense, accessed May 14, 2014, 

http://www.defense.gov/Transcripts/Transcript.aspx?TranscriptID=4497. See also Figure 2 of this report.
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Figure 14. U.S. Fiscal Forecast59

Government spending, however, is projected to grow at a higher rate. Government 

spending is divided into three primary categories: mandatory, discretionary, and net 

interest on the national debt. Mandatory spending60 (e.g., Medicare, Medicaid, and 

Social Security) steadily increased over time, consuming an average of 8.5 percent of 

GDP from 1973-77, but increasing to 13.1 percent from 2009-13. CBO forecasts that, 

due to rising health care costs and demographic changes, mandatory spending will 

steadily increase as a share of GDP during the next 70 years. Meanwhile, net interest 

payments are projected to increase rapidly due to the size of the national debt and the 

expectation that interest rates will rise toward their historical averages. According to 

CBO, net interest may represent 3-4 percent of GDP within the next 10 years, and 

continue to increase, surpassing 10 percent of GDP within the next 60 years.

Discretionary spending comprises all other government spending, including most 

spending for the uniformed services. Discretionary spending fell slowly as a share of 

GDP, averaging 9.6 percent during the 1980s. It hit a low of 6.0 percent in 1999, and 

lately averaged approximately 8.3 percent. Given that mandatory and net interest 

spending are forecast to consume greater shares of government revenue (indeed, CBO 

forecasts they will completely consume government revenue by 2030), it will be 

successively more difficult to maintain current levels of discretionary spending without 

rapidly increasing the U.S. debt. 

In turn, it is important to note that lower defense spending has historically been 

associated with reductions in the size of the U.S. military (as shown in Figure 15). 

Rising compensation funding coupled with downward fiscal pressure on defense 

spending may force additional reductions in uniformed service personnel in the future. 

 

59 Congressional Budget Office, The 2013 Long-Term Budget Outlook, September 17, 2013, accessed May 14, 2014, 

http://www.cbo.gov/sites/default/files/cbofiles/attachments/44521-LTBO2013_0.pdf. 60 Mandatory spending refers to spending enacted by previously established law, not annual appropriation bills. Most 

mandatory spending is on benefit programs where the eligibility and rules have been prescribed by law. Discretionary 

spending is not automatically renewed every year and is dependent on appropriation bills to be enacted.
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This may have additional implications on the quality of Service members’ career 

experiences, and therefore put additional pressure on compensation programs. 

Figure 15. Defense Spending and Active-Duty End Strength61

The Budget of the United States Government, FY 2015 (PB15) already forecasts

additional reductions in DoD’s share of GDP and in end strength by FY 2019 (see 

Table 2). In the PB15 request, DoD projects a base budget request of $559 billion in 

FY 2019,62 compared to a base budget of $496 billion in FY 2013. Even though DoD’s 

FY 2019 plan is $23 billion higher than the FY 2019 amount set forth in the Budget 

Control Act of 2011 (BCA),

63 it would only be 2.6 percent of the projected GDP for 

FY 2019,64 compared to 3.0 percent of GDP for DoD’s budget in FY 2013. During the 

same period, DoD projects reducing active-duty end strength by 81,000 and the 

Reserve Component by another 33,000—a reduction of 6 percent and 4 percent,

respectively.65 

 

61 Sources: Office of the Under Secretary of Defense (Comptroller), National Defense Budget Estimates for FY 2015 

(Green Book), accessed May 14, 2014, 

http://comptroller.defense.gov/Portals/45/Documents/defbudget/fy2015/FY15_Green_Book.pdf. Office of 

Management and Budget, PB 2015, Historical Tables, Table 3.1 – Outlays by Superfunction and Function: 1940-2019, 

Table 10.1 – Gross Domestic Product and Deflators Used in the Historical Tables: 1940-2019 62 Executive Office of the President, Budget of the United States Government, Fiscal Year 2015, 203, accessed May 14, 

2014, http://www.whitehouse.gov/sites/default/files/omb/budget/fy2015/assets/budget.pdf. 63 Congressional Budget Office, Approaches for Scaling Back the Defense Department’s Budget Plans, 9, March 2013, 

accessed May 14, 2014, http://www.cbo.gov/sites/default/files/cbofiles/attachments/43997_Defense_Budget.pdf. 64 Executive Office of the President, Budget of the United States Government, Fiscal Year 2015, 203, accessed May 14, 

2014, http://www.whitehouse.gov/sites/default/files/omb/budget/fy2015/assets/budget.pdf. 65 Office of the Under Secretary of Defense (Comptroller)/CFO, Fiscal Year 2015 Budget Request, March 2014, 9, 

accessed May 14, 2014,

http://comptroller.defense.gov/Portals/45/Documents/defbudget/fy2015/fy2015_Budget_Request.pdf. 
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Table 2. Budget and End Strength Data66

DoD Budget Projections FY 2019

 GDP (CBO Projection) $21,867B

 DoD Base Budget Topline (PB15) $559B 2.6% of GDP

 DoD Base Budget Topline (BCA, estimated by CBO) $536B 2.5% of GDP

End Strength Reductions from FY 2014 (PB15)

 Active Component -81K 6% reduction

 Guard/Reserve Component -33K 4% reduction

Perhaps in response to these budget pressures, PB15 also proposes several changes to 

compensation programs designed to slow the growth of associated funding.67 Changes 

include limited pay raises, restoring Service member out-of-pocket costs for housing, 

reductions in commissary benefits, and consolidation of TRICARE health benefit 

programs.68 The specifics of these changes are included in the relevant program 

descriptions throughout the remainder of this report.

As the Commission continues its work, it will refine its analysis of the sustainability of 

current compensation programs. It will also factor these analyses and proposed 

changes in PB15 into its recommendations to the President of the United States and 

the Congress in February 2015. 

 

66 GDP CBO projection is from Congressional Budget Office report, The Budget and Economic Outlook: 2014 to 2024,

February 2014, accessed May 15, 2014, http://www.cbo.gov/sites/default/files/cbofiles/attachments/45010-

Outlook2014_Feb.pdf. The third line of the table is from Congressional Budget Office, Approaches for Scaling Back the 

Defense Department’s Budget Plan, 9, accessed May 15, 2014, 

http://www.cbo.gov/sites/default/files/cbofiles/attachments/43997_Defense_Budget.pdf. The second, fourth, and 

fifth lines of the table are from Office of the Under Secretary of Defense (Comptroller)/CFO, Fiscal Year 2015 Budget 

Request, accessed May 15, 2014, 

http://comptroller.defense.gov/Portals/45/Documents/defbudget/fy2015/fy2015_Budget_Request.pdf.

67 Executive Office of the President, Budget of the United States Government, Fiscal Year 2015, 206, accessed May 14, 

2014, http://www.whitehouse.gov/sites/default/files/omb/budget/fy2015/assets/budget.pdf. 68 Ibid.
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PAGE 25

3. PAYS AND RETIREMENT

3.1. REGULAR MILITARY COMPENSATION

Regular Military Compensation (RMC) includes basic pay, basic allowance for 

subsistence (BAS), basic allowance for housing (BAH) (or overseas housing allowance, 

depending on duty location), and the Federal tax advantage.1 Every member of the 

uniformed services, depending on their duty status, is entitled to receive these four

basic elements of military compensation.2 In 1962, the Gorham Report, the product of 

a comprehensive study of military compensation for then-Secretary of Defense Robert 

McNamara, first proposed the construct of “regular military compensation” as a “rough 

yardstick for comparing military and civilian compensation levels.”3

3.1.1. BASIC PAY

Basic pay4 is the primary means of compensating members of the uniformed services 

for their service to the country. The amount of basic pay to which a particular member 

is entitled depends on the member’s pay grade, length of service, and status (Active or 

Reserve).5

Members serving in active status receive basic pay on a regular basis—typically twice 

monthly. Members of the Reserve Component are entitled to compensation at the rate 

of one-thirtieth of the monthly basic pay authorized for an active-duty member of 

equal pay grade and length of service:

(1) for each regular period of instruction, or period of appropriate duty, at 

which the member is engaged for at least two hours, including that 

performed on a Sunday or holiday;

(2) for the performance of such other equivalent training, instruction, duty, 

or appropriate duties, as the Secretary may prescribe; or

(3) for a regular period of instruction that the member is scheduled to 

perform but is unable to perform because of physical disability resulting 

from an injury, illness, or disease incurred or aggravated— 

(a) in line of duty while performing (i) active duty or (ii) inactive-duty 

training

 

1 Pay and Allowances of the Uniformed Services, 37 U.S.C. § 101(25). 2 Pay and Allowances of the Uniformed Services, 37 U.S.C. §§ 204, 206. The basic pay that each member is entitled to 

is described in detail further in this report. 3 Department of Defense, Military Compensation Background Papers, Seventh Edition, November 2011, 864, accessed 

May 14, 2014, http://militarypay.defense.gov/Docs/MC_All-Combined.pdf. 4 The current term, “basic pay,” was adopted in the Career Compensation Act of 1949, ch. 681, Pub. L. No. 81-351, 

§§ 201, 202, 63 Stat. 802, 805–9 (1949). 5 Pay and Allowances of the Uniformed Services, 37 U.S.C. §§ 204, 206. 
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(b) while traveling directly to or from that duty or training (unless 

such injury, illness, disease, or aggravation of an injury, illness, or 

disease is the result of the gross negligence or misconduct of the 

member); or

(c) in line of duty while remaining overnight immediately before the 

commencement of inactive-duty training, between successive periods 

of inactive-duty training, at or in the vicinity of the site of inactiveduty training.6

Different types of Reserve duty result in different levels of compensation, which, in 

effect, result in three different pay plans:7

 Selected Reservists who are not activated typically participate in 38 days of 

required training per year.8 A portion of that training is usually performed one 

weekend a month on inactive duty for training (also called drills, unit training 

assemblies, or battle assemblies). Each training period is a minimum of four 

hours, with a maximum of two periods per day.9 Reserve Component personnel 

performing inactive-duty training receive one-thirtieth of monthly basic pay for 

each period for a total of four days of basic pay for the weekend.10

 Reservists also participate in annual training, typically for 14 days.11 These two 

weeks of training are performed on active duty, generally referred to as “activeduty for training.”12 For this duty, Reserve Component personnel receive one 

day of basic pay plus allowances—the subsistence allowance and a reduced 

housing allowance—for each day of service.13

 Reserve Component members who are called to active duty for 31 days or more

receive basic pay, along with the subsistence allowance and full housing 

allowance.14 In this case, Reserve members are paid the same as Active

Component personnel.15

Beneficiaries 

Basic pay is paid to all uniformed Service members.16

Historical Context 

Active Duty

All active-duty uniformed Service members are entitled to a primary form of pay as 

compensation for their military service to their country.17 For the vast majority of 

members of the uniformed services, this primary form of pay is known as “basic 

 

6 Pay and Allowances of the Uniformed Services, 37 U.S.C. § 206. 7 Ibid.

8 Armed Forces, 10 U.S.C. § 10147. 9 Uniform Reserve, Training, and Retirement Categories for the Reserve Components, DoDI 1215.06, 12-14 (2014). 10 Pay and Allowances of the Uniformed Services, 37 U.S.C. § 206(a). 11 Armed Forces, 10 U.S.C. § 10147. National Defense, 32 CFR 101.5. 12 Ibid. 13 Pay and Allowances of the Uniformed Services, 37 U.S.C. § 204(a)(2). (37 U.S.C. §§ 402-403 provide that Service 

members who are entitled to basic pay under 37 U.S.C. § 204 are also entitled to BAS and BAH. These allowances are 

discussed later in this report.)

14 Pay and Allowances of the Uniformed Services, 37 U.S.C. § 204(b). (37 U.S.C. §§ 402-403 provide that Service 

members who are entitled to basic pay under 37 U.S.C. § 204 are also entitled to BAS and BAH. These allowances are 

discussed later in this report.)

15 Ibid. 16 Pay and Allowances of the Uniformed Services, 37 U.S.C. §§ 204, 206. 17 Ibid. 
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PAYS AND RETIREMENT

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pay.”18 This type of pay is also supplemented by additional pays and allowances 

intended to address various specialized needs and requirements of the uniformed 

services or to offset certain costs that members have to bear as a result of conditions 

of service.19

The following are some of the highlights of changes to basic pay over the past century:

 1922 – The first pay legislation that dealt with compensation for all the 

Services—the Joint Service Pay Readjustment Act of 1922—increased the pay 

rates, and established that officers would be paid according to “pay periods.” 

The Act essentially created pay tables for officer and enlisted personnel in which

pay was based on longevity, not just pay grade.20

 1949 – The Career Compensation Act of 1949 was the first legislation that 

called the primary pay element “basic pay.” Basic pay was coupled with the two 

primary allowances “basic allowance for quarters” (BAQ) and “basic allowance 

for subsistence” (BAS).21

 1958 – The Uniformed Services Pay Act of 1958 added pay grades O-9 and O-10 

for officers, E-8 and E-9 for enlisted, and special junior grade rates in O-1 

through O-3 for members who had more than four years of prior enlisted 

service when they became officers (limited-duty officers).22

 1967 – The first automatic pay raise mechanism was instituted. The Congress 

enacted policy stating whenever the general schedule of compensation for Civil 

Service employees changed, the basic pay of uniformed services would receive a 

comparable upward adjustment. Regular Military Compensation (RMC), which 

included basic pay, basic allowances for quarters, subsistence, and various tax 

advantages, became the defined term used for military compensation.23

 1974 – The Congress enacted policy that created a new pay adjustment 

mechanism in which the entire pay increase was not concentrated in basic pay, 

but was spread to allowances for quarters and subsistence as well. Increases 

for all three were to be comparable to increases in Civil Service General 

Schedule salaries.24

 1977 – The DoD Appropriation Authorization Act authorized the President to 

allocate raises across the three RMC elements in an other-than-equal 

percentage fashion, although, in such a scenario, the amount allocated to 

monthly basic pay was not permitted to be less than 75 percent of the amount 

that would be allocated in an equal distribution.25

 1988 – The House Armed Services Committee noted that the military pay gap 

relative to the Employment Cost Index (ECI, discussed on page 30) was 

 

18 The current term, “basic pay,” was adopted in the Career Compensation Act of 1949, ch. 681, Pub. L. No. 81-351, 

§§ 201, 202, 63 Stat. 802, 805–9 (1949). 19 Service members who are entitled to basic pay are also entitled to basic allowance for subsistence (BAS) under Pay 

and Allowances of the Uniformed Services, 37 U.S.C. § 402 and basic allowance for housing (BAH) under Basic 

Allowances of the Uniformed Services, 37 U.S.C. § 403. These allowances are discussed later in this report. 20 Act of June 10, 1922 (Joint Service Pay Readjustment Act of 1922), ch. 212, Pub. L. No. 67-235, 42 Stat. 625 (1922). 21 The Career Compensation Act of 1949, ch. 681, Pub. L. No. 81-351, 63 Stat. 802 (1949). 22 The Act of May 20, 1958 (Uniformed Services Pay Act of 1958), Pub. L. No. 85-422, § 1(a), 72 Stat. 122, 122–23 

(1958). 23 The Act of December 16, 1967, Pub. L. No. 90-207, § 8(a), 81 Stat. 649, 649–50 (1967). 24 Act of September 19, 1974, Pub. L. No. 93-419, § 4, 88 Stat. 1152, 1152–1153 (1974). 25 Department of Defense Appropriation Authorization Act, 1977, Pub. L. No. 94-361, § 303(b), 90 Stat. 923, 925 

(1976). 
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approximately 11 percent and, if not closed, could result in recruiting and 

retention problems.26

 2001–2006 – After 2004, ECI became the index for measuring the comparability 

of military pay (RMC) and civilian pay.27 Military pay raises were set on average 

of 0.5 percent above ECI for each year, to attempt to close the military/civilian 

pay gap.28 Also, some pay raises were targeted to specific grades and years of 

service.29

National Guard

The first law establishing “a Uniform Militia throughout the United States” stated that 

free, able-bodied, white male citizens between the ages of 18 and 45 were, in effect,

enrolled in the militia where they lived and required to furnish their own arms, 

ammunition, and accoutrements.30 It also required that these men appear armed, 

equipped, and ready to meet the call to exercise or serve.31 The original acts 

empowered the militia to serve as State defense forces and to augment the regular 

forces of the United States in time of emergency—a mission that still exists today.

A companion law stated that militiamen “employed in the service of the United States” 

could receive identical pay and allowances as troops of the United States; but provided 

no pay for those “called out to exercise.”32

Reserves 

 1916 – Federal funds used to pay for inactive-duty training were authorized.33

For officers, the amount was $500 per year for captains and higher-ranking 

officers, $240 for first lieutenants, and $200 for second lieutenants.34 For 

enlisted personnel, the amount was 25 percent of the annual base pay for the 

individual’s rank.35 The requirement to attend not less than 48 drills of at least 

1.5 hours in duration was established.36 The Army Reserve Officers’ Training 

Corps (ROTC) was created and an Officers’ Reserve Corps in which ROTC 

graduates could be commissioned was also established.37 Furthermore, the

Regular Army Reserve, composed of prior-service enlisted personnel, and the

Enlisted Reserve Corps, composed of nonprior-service men qualified by virtue of 

their civilian occupations, was established.38

 1917 – Fleet Naval Reserve (FNR) personnel without any inactive duty or 

training became eligible for retainer pay. Enlisted with less than eight years of 

service were entitled to an annual retainer of $50; those with between 8 and 12 

years of service received $72 per year; and those with more than 12 years 

received $100 per year. Enlisted personnel who had transferred to the FNR after 

 

26 H.R. Rep. No. 100-563 (Committee on Armed Services), at 251-252 (1988). 27 National Defense Authorization Act for FY 2004, Pub. L. No. 108-136, § 602, 117 Stat. 1392, 1498-1499 (2003). 28 National Defense Authorization Act for FY 2000, Pub. L. No. 106-65, § 602(a), 113 Stat. 512, 649 (2000). 29 Department of Defense, Tenth Quadrennial Review of Military Compensation, February 2008, 54, accessed May 14, 

2014, http://www.whs.mil/library/doc/Tenth.pdf. 30 The Act of May 8, 1792 (Militia Act of 1792), ch. 33, 1 Stat. 271 (1792). 31 Ibid. 32 The Act of May 8, 1792 (Militia Act of 1792), ch. 28, 1 Stat. 264 (1792). 33 Act of June 3, 1916 (National Defense Act of 1916), ch. 134, Pub. L. No. 64-85, 39 Stat. 166 (1916). 34 Act of June 3, 1916 (National Defense Act of 1916), ch. 134, Pub. L. No. 64-85, § 109, 39 Stat. 166, 209 (1916). 35 Act of June 3, 1916 (National Defense Act of 1916), ch. 134, Pub. L. No. 64-85, § 110, 39 Stat. 166, 209- 211 (1916). 36 Act of June 3, 1916 (National Defense Act of 1916), ch. 134, Pub. L. No. 64-85, § 92, 39 Stat. 166, 206 (1916). 37 Act of June 3, 1916 (National Defense Act of 1916), ch. 134, Pub. L. No. 64-85, § 40, 39 Stat. 166, 191 (1916). 38 Act of June 3, 1916 (National Defense Act of 1916), ch. 134, Pub. L. No. 64-85, §§ 30 and 55, 39 Stat. 166, 209 

(1916). 
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completion of at least 16 or 20 years of active naval service were entitled to 

retainer pay of one-third or one-half, respectively, of their base and longevity 

pay at the time of transfer. They were also entitled to an annual retainer equal 

to two months of basic pay of the corresponding rank in the Navy.39

 1920 – The Army reorganized into the Regular Army, the National Guard (while 

in Federal service), and the Organized Reserve.40 National Guard personnel 

were entitled to compensation for inactive-duty training—also called “drill 

pay”—at the rate of one-thirtieth of monthly base pay for each regular drill or 

assembly.41 This method of computation became standard for all inactive-duty 

training pay and continues basically unchanged in existing law to this day.42

For officers, the pay was authorized only for drills of not less than 1.5 hours 

attended and participated in by at least 50 percent of the commissioned 

strength and 60 percent of the enlisted strength. The number of paid drills 

could not exceed five in any month; and no more than $500 per year in drill pay 

could be paid to those above the grade of captain.43 For enlisted personnel, paid 

drills could not exceed eight in a month or 60 in a year, and no pay was 

authorized for any month in which a member attended less than 60 percent of 

the drills or other exercises scheduled for his organization.44

 1924 – The number of drills for which National Guard officers could be paid 

changed from five per month with a maximum of 60 per year, to “not less than” 

48 per year, and allowed the President to prescribe the minimum number of 

enlisted personnel and officers to be present at a drill to receive pay.45

 1925 – The Secretary of the Navy was given authority to require a four-year 

Reserve obligation for men enlisting in the Regular Navy after July 1, 1925.

Personnel assigned to the FNR as a result of the obligation were entitled to an 

annual retainer of $25 but were not required to perform any inactive-duty 

training.46

 1948 – Reserve pay was authorized at the rate of one-thirtieth of one month’s 

basic and longevity pay for each drill, rather than at the rate of one-thirtieth of 

one month of basic pay.47 The inactive-duty training pay authority for all 

branches of service was also combined into one statute, and it fixed two hours 

instead of 1.5 hours as the minimum length of a period of drill or instruction 

required to qualify a member for the pay.48

 1952 – Six Reserve Components were established: the National Guard of the 

United States, the Army Reserve, the Naval Reserve, the Marine Corps Reserve, 

the Air National Guard, and the Air Force Reserve.49 Members in an inactive or 

retired status were not eligible for inactive-duty training or the pay associated 

with it.50

 1988 – Reserve members were authorized to receive “incapacitation pay” equal 

to the pay and allowances of a member of a regular component of a uniformed 

 

39 Naval Service Appropriation Act of 1917, ch. 417, Pub. L. No. 64-241, 39 Stat. 556, 587–92 (1916). 40 The Act of June 4, 1920, ch. 227, Pub. L. No. 66-242, § 3, 41 Stat. 759 (1920). 41 The Act of June 4, 1920, ch. 227, Pub. L. No. 66-242, § 47-48, 41 Stat. 759, 783-784 (1920). 42 Reserves; Members of National Guard: Inactive-Duty Training, 37 U.S.C. § 206(a). 43 The Act of June 4, 1920, ch. 227, Pub. L. No. 66-242, § 47, 41 Stat. 759, 783-784 (1920). 44 The Act of June 4, 1920, ch. 227, Pub. L. No. 66-242, § 48, 41 Stat. 759, 784 (1920). 45 The Act of June 3, 1924, ch. 244, Pub. L. No. 68-186, § 2, 43 Stat. 363, 363–64 (1924). 46 The Act of February 28, 1925, ch. 374, Pub. L. No. 68-512, § 1, 43 Stat. 1080 (1925). 47 The Act of March 25, 1948, ch. 157, Pub. L. No. 80-460, § 3, 62 Stat. 87, 88-89 (1948). 48 Ibid. 49 The Armed Forces Reserve Act of July 9, 1952, ch. 608, Pub. L. No. 82-476, § 203, 66 Stat. 481, 483 (1952). 50 The Armed Forces Reserve Act of July 9, 1952, ch. 608, Pub. L. No. 82-476, § 211(b), 66 Stat. 481, 485 (1952). 
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service if the member was physically disabled as the result of an injury, illness, 

or disease incurred or aggravated in the line of duty while performing active 

duty; in the line of duty while performing inactive-duty training; or while 

traveling directly to or from such duty or training.51 Any income earned by an 

incapacitated member from nonmilitary employment or self-employment during 

a month he or she would otherwise have been entitled to incapacitation pay 

reduces the amount of incapacitation pay the member actually receives on a 

dollar-for-dollar basis.52 Incapacitation pay may be paid for up to six months.53

Financial Summary 

In FY 2013, basic pay for the Active Component of DoD, the U.S. Coast Guard (USCG), 

and the National Oceanic and Atmospheric Administration (NOAA) Commissioned 

Corps totaled $57.2 billion. In FY 2013, basic pay for the Reserve Components of DoD 

and USCG totaled $10.8 billion.54 Section 6.5 of this report contains 2014 pay tables.

Employment Cost Index Adjustment

The ECI is a measure of changes in wages and employer costs for employee benefits.55 

Created in the mid-1970s, the ECI is published quarterly by the Department of Labor’s 

Bureau of Labor Statistics and is part of the Bureau’s National Compensation Survey 

program, which provides measures of occupational wages, employment cost trends, 

and benefit incidence and detailed plan provisions.56 Organizations use the ECI to 

inform their decision making in a variety of ways—including adjusting their wage rates 

to keep pace with their competitors’ pay rates or adjusting wage rates in collective 

bargaining agreements. In addition, the Federal Government uses the ECI to inform its 

decision making.57 For example, the Congress included a provision in the National 

Defense Authorization Act (NDAA) for FY 2004 tying the annual basic pay raise for 

military personnel to the ECI.58 The law contains a provision allowing the President to 

propose alternative pay adjustments to the Congress, in certain circumstances, if the 

President deems the standard increase required by the law to be inappropriate.59

3.1.2. BASIC ALLOWANCE FOR SUBSISTENCE

The purpose of basic allowance for subsistence (BAS) is to provide a cash allowance to 

members of the uniformed services to defray a portion of the cost of subsistence.60

There are variations in the allowance to account for the unavailability of adequate 

messing facilities at some duty stations. BAS is nontaxable.61

 

51 National Defense Authorization Act for FY 1989, Pub. L. No. 100-456, § 631, 102 Stat. 1918, 1984–1985 (1988). 52 Ibid. 53 Ibid. 54 “Defense Budget Materials,” Office of the Under Secretary of Defense (Comptroller), accessed May 15, 2014, 

http://comptroller.defense.gov. 55 “Employment Cost Trends,” Bureau of Labor Statistics, accessed May 14, 2014, 

http://www.bls.gov/ncs/ect/home.htm. 56 U.S. Department of Labor, Employment Cost Indexes 1975-1979, accessed May 15, 2014, 1, 

http://www.bls.gov/ncs/ect/sp/ecbl0014.pdf. 57 “Employment Cost Index Technical Note,” Bureau of Labor Statistics, accessed May 15, 2014, 

http://www.bls.gov/news.release/eci.tn.htm. 58 National Defense Authorization Act for FY 2004, Pub. L. No. 108-136, § 602, 117 Stat. 1392, 1498-1499 (2003). 59 Pay and Allowances of the Uniformed Services, 37 U.S.C. § 1009. 60 Pay and Allowances of the Uniformed Services, 37 U.S.C. § 402. 61 Internal Revenue Code, 26 U.S.C. § 134. Pay and Allowances of the Uniformed Services, 37 U.S.C. § 101(25). Jones v. 

United States, 60 Ct. Cl. 552 (1925).
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Because BAS is intended to provide meals for the Service member, its level is linked to 

the price of food.62 Each year BAS is adjusted based on the increase of the price of 

food as measured by the U.S. Department of Agriculture (USDA) food cost index. This 

accounts for why the increase to BAS will not necessarily be the same percentage as 

that applied to the increase in the pay table, as annual pay raises are linked to the 

increase of private sector wages.63

Beneficiaries 

Each Active Component member, or Reserve Component member in active status, of a 

uniformed service who is entitled to basic pay is entitled to BAS.64 At the end of 

FY 2013 approximately 1.4 million members of the military were eligible for BAS

(approximately 1.3 million members of the Active Component of the military,65

approximately 77,240 full-time support personnel in the Reserve Component,66 and 

approximately 49,700 Federally-mobilized members of the Reserve Component67).

Some of these military members (i.e., basic trainees) did not receive a BAS payment, 

but rather received subsistence-in-kind at the location where they were stationed.68

Historical Context 

 1922 – Officer subsistence allowances as a function of marital and dependency 

status were established.69

 1949 – BAS rates for officer and enlisted were established, applying one rate for 

officers and one for enlisted personnel.70

 1968 – Changes to RMC were tied to Civil Service General Schedule, but BAS 

was not part of adjustment (only basic pay).71

 1974 – Raises were equally distributed for basic pay, BAQ, and BAS.72

 1977 – The President was given authority to give unequal raises among 

elements of RMC.73

 1998 – A new formula was established for DoD to determine BAS.74 The plan 

moved enlisted members from a daily to a monthly payment schedule, thus 

ending a disparity between officer and enlisted payment calculations that had 

existed since enactment of the Career Compensation Act of 1949. The starting 

points for determining the BAS of enlisted and officer personnel remained 

 

62 Pay and Allowances of the Uniformed Services, 37 U.S.C. § 402(b). 63 Ibid. Pay and Allowances of the Uniformed Services, 37 U.S.C. § 1009(b). 64 Pay and Allowances of the Uniformed Services, 37 U.S.C. § 402(a). 65 Executive Office of the President, FY 2015 Budget of the United States Appendix, 233, accessed May 22, 2014, 

http://www.whitehouse.gov/sites/default/files/omb/budget/fy2015/assets/appendix.pdf. 66 Ibid, 234. 67 Deputy Director, Mobilization, Office of the Assistant Secretary of Defense for Reserve Affairs, e-mail to MCRMC, 

May 28, 2014. 68 Basic Allowance for Subsistence (BAS) Policy, DoDD 1418.05, 4.1 (2003). 69 The Act of June 10, 1922 (Joint Service Pay Readjustment Act of 1922), ch. 212, Pub, L. No. 67-235, § 5, 42 Stat. 

625, 628 (1922). The President would set the rates based on the $.60 rate set in FY 1922. The President would make 

this determination based on a certification by the Secretary of Labor. The connection between dependency status and 

allowance is that if a Service member had no dependents, then that Service member could not receive more than one 

subsistence allowance. A Service member could receive more subsistence allowances when that member moved up in 

“periods” as set forth in the law.

70 The Career Compensation Act of 1949, ch. 681, Pub. L. No. 81-351, § 301, 63 Stat. 802, 812 (1949). 71 The Act of December 16, 1967, Pub. L. No. 90-207, § 8, 81 Stat. 649, 654 (1967). 72 The Act of September 28, 1974, Pub. L. No. 93-419, § 4, 88 Stat. 1152, 1152–1153 (1974). Service members’ basic 

pay, BAQ, and BAS would be adjusted upward whenever the General Schedule of compensation for Federal Classified 

Employees was adjusted upward. The upward adjustment of each element of compensation would be the same as the 

overall average percentage increase in the General Schedule of compensation for Federal Classified Employees.

73 The Department of Defense Appropriation Authorization Act, 1977, Pub. L. No. 94-361, § 303, 90 Stat. 923, 925–26 

(1976). 74 National Defense Authorization Act for FY 1998, Pub. L. No. 105-85, § 602, 111 Stat. 1629 (1977).
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different under the 1998 reform. Enlisted BAS amounts in a given year were to 

be based on the USDA average food cost figures in effect the previous 

October 1. The enlisted BAS was to be an amount halfway between the monthly 

cost of a “moderate-cost food plan” and the monthly cost of a “liberal food plan” 

for a male in the United States between ages 20 and 50, as established by the 

USDA. The officer BAS was to be based on the rate in effect for officers when 

the new legislation went into effect, then increased yearly by the same 

percentage as that by which the enlisted BAS increased. The 1998 legislation 

limited the yearly increase to 1 percent for both enlisted and officer personnel.75

 2001 – The formula for enlisted BAS was changed once again.76 Because 

officers’ annual increase rates remained the same as those for enlisted 

personnel, this change had the same effect for both categories. Under the 

revised formula, beginning January 1, 2002, monthly BAS rates were to be 

adjusted at the beginning of every calendar year by the same percentage as that 

by which the USDA estimated that the cost of a “liberal food plan” for a male 

age 20 to 50 had increased over the previous year. By eliminating the 1-percent 

stipulation, this change made possible substantially larger annual increases. 

The 2001 legislation also brought the BAS rates of enlisted personnel with fewer

than four months of service equal with those of all other enlisted personnel. All 

enlisted members received full BAS, but had to pay for their meals (including 

those provided by the Government).

Financial Summary 

In FY 2013, BAS totaled $4.7 billion for the Active Component of DoD and USCG, and 

$749 million for the Reserve Component.77

U.S. Department of Agriculture Market Basket

Monthly BAS rates are adjusted at the beginning of every calendar year by the same 

percentage by which the USDA estimates that the cost of a “liberal food plan” for a 

male age 20 to 50 has increased over the previous year.78 In other words, the annual 

increase matches the national inflation rate for food.79 These annual rate increases are 

published by the USDA, Center for Nutrition Policy and Promotion, as “Official USDA 

Food Plans: Cost of Food at Home at Four Levels, U.S. Average.”80 The market basket 

of the Liberal Food Plans specifies the types and quantities of foods that people could 

purchase and prepare at home to obtain a nutritious diet using food expenditures in 

the top quartile of food spending.81

 

75 Ibid. 76 Floyd D. Spence National Defense Authorization Act for FY 2001, Pub. L. No. 106-398, 114 Stat. 1654 (2000). 77 “Defense Budget Materials,” Office of the Under Secretary of Defense (Comptroller), accessed May 15, 2014, 

http://comptroller.defense.gov. Appropriated Budget Data, presented in Section 6.2 of this report. 78 Pay and Allowances of the Uniformed Services, 37 U.S.C. § 402(b)(1)(B). 79 Department of Defense, Military Compensation Background Papers, Seventh Edition, November 2011, 192, accessed 

May 14, 2014, http://militarypay.defense.gov/Docs/MC_All-Combined.pdf. 80 “Cost of Food at Home,” U.S. Department of Agriculture, accessed May 15, 2014, 

http://www.cnpp.usda.gov/USDAFoodCost-Home.htm. U.S. Department of Agriculture, Center for Nutrition Policy and 

Promotion, The Low-Cost, Moderate-Cost, and Liberal Food Plans, 2007, CNPP-20, ES-1, accessed May 14, 2014, 

http://www.cnpp.usda.gov/publications/foodplans/miscpubs/foodplans2007adminreport.pdf.

81 Ibid.
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Effective January 1, 2014, the BAS rates increased 1.5 percent from 2013 rates. The 

monthly BAS rate for officers in 2014 is $246.24, and for enlisted is $357.55.82

3.1.3. BASIC ALLOWANCE FOR HOUSING

Basic allowance for housing (BAH) is a U.S.-based allowance that enables military 

personnel to obtain adequate civilian housing for themselves and their dependents 

when government quarters are not available or provided.83 BAH is nontaxable.84

In general, the amount of BAH depends on a Service member’s location, pay grade, 

and dependency status.85 Under most circumstances, the BAH amount is calculated 

based on the location where Service members are assigned, not where they live. There 

are several types of BAH to satisfy various housing situations that occur among 

Service members. Each type of BAH is described below.86

BAH (with dependents and without dependents) is provided to members 

assigned on permanent duty within the 50 United States, who are not furnished 

with government housing.87 Members stationed outside the continental United 

States (OCONUS), who are not furnished government housing, receive an Overseas 

Housing Allowance (OHA) based on the member’s dependency status.88 If serving 

an unaccompanied overseas tour, the member is eligible for BAH at the “with 

dependents” rate, based on the dependent’s U.S. residence ZIP code, plus OHA at 

the “without dependents” rate, if the member is not furnished government housing 

overseas.89

Partial BAH is compensation for Service members without dependents who may 

live in government quarters where the housing standards are below those for offpost housing.90

BAH II (Reserve Component/Transit) (BAH-II (RC/T)) is provided to members in 

particular circumstances, for example, Reservists who are on active duty less than 

30 days.91 It also applies to members in transit from selected areas where no prior 

BAH rate existed.92 BAH-II (RC/T) rates do not vary by geographic location, but 

were set based on the old BAQ, which was based on the national average for 

 

82 Defense Finance and Accounting Service, Military Pay Table 2014, accessed May 22, 2014, 

http://www.dfas.mil/dam/dfas/militarymembers/pdf/MilPayTable2014.pdf. U.S. Department of Agriculture, Official 

USDA Food Plans: Cost of Food at Home at Four Levels, U.S. Average, October 2013, accessed May 15, 2014, 

http://www.cnpp.usda.gov/Publications/FoodPlans/2013/CostofFoodOct2013.pdf. U.S. Department of Agriculture,

Official USDA Food Plans: Cost of Food at Home at Four Levels, U.S. Average, October 2012, accessed May 15, 2014, 

http://www.cnpp.usda.gov/Publications/FoodPlans/2012/CostofFoodOct2012.pdf.

83 Pay and Allowances of the Uniformed Services, 37 U.S.C. § 403. 84 Internal Revenue Code, 26 U.S.C. § 134. Pay and Allowances of the Uniformed Services, 37 U.S.C. § 101(25). 

Jones v. United States, No. 60 Ct. Cl. 552 (1925). 85 Pay and Allowances of the Uniformed Services, 37 U.S.C. § 403. 86 “Different Types of BAH,” Under Secretary of Defense (P&R), accessed May 16, 2014, 

http://militarypay.defense.gov/pay/DifferentBAH.html. 87 Pay and Allowances of the Uniformed Services, 37 U.S.C. § 403(a). 88 Pay and Allowances of the Uniformed Services, 37 U.S.C. § 403(c). 89 Pay and Allowances of the Uniformed Services, 37 U.S.C. § 403(d). 90 Pay and Allowances of the Uniformed Services, 37 U.S.C. § 403(n). 91 Pay and Allowances of the Uniformed Services, 37 U.S.C. § 403(g). 92 Pay and Allowances of the Uniformed Services, 37 U.S.C. § 403(i).
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housing.93 BAH-II rates are published annually and are determined by increasing 

the previous year’s table by the percentage growth of housing costs.94

BAH–Differential (BAH-DIFF) is provided to members who are assigned to singletype quarters and are authorized a BAH solely by reason of the member’s payment 

of child support.95 A member is not entitled to BAH-DIFF if the monthly rate of that 

child support is less than the BAH-DIFF.96

Beneficiaries 

BAH is provided to all Active Component members, and all Reserve Component 

members in active status, whose assigned permanent duty station is within the 

50 United States, and who are not furnished with government housing. Members 

stationed OCONUS, who are not provided with government housing, are eligible for 

OHA.

Historical Context 

The following are the highlights of the legislative history of BAH: 

 1918 – Dependency status was introduced as a factor for receiving the 

allowance. Prior to that time, the Service member had to personally occupy the 

quarters to be reimbursed.97

 1922 – A rental allowance system was substituted for commutation of quarters, 

heat, and light. The basis used to compute the rental allowance was the average 

monthly cost in the United States of renting one room.98 Both enlisted and 

officers were given a rental allowance with officers receiving a lower amount.99

 1942 – A system of rates based on pay grade and dependency status was 

established.

 1949 – The nomenclature of “rental allowance” changed to “basic allowance for 

quarters” (BAQ). Chartered by the Secretary of Defense, the Advisory 

Commission on Service Pay (popularly known as the Hook Commission) 

recommended BAQ rates by pay grade, with and without dependents, with the 

goal of achieving housing accommodation equal to 75 percent that of 

comparable civilian income groupings with comparable dependent statuses.100

 1971 – The BAQ rate was increased to achieve 15 percent of out-of-pocket costs 

of the median for Federal Housing Administration rates for comparable income 

groups.101

 1974 – The practice of increasing BAQ in accordance with rate of increase of 

military pay raise began.102

 1977 – The President was authorized to reallocate pay raises among pay and 

allowances in an unequal manner to accommodate changes in housing and 

subsistence costs.103

 

93 Housing Allowances, JFTR U10002(B)(6)-(7) (2014) (Change 329). 94 Pay and Allowances of the Uniformed Services, 37 U.S.C. § 403(b). 95 Pay and Allowances of the Uniformed Services, 37 U.S.C. § 403(m). 96 Pay and Allowances of the Uniformed Services, 37 U.S.C. § 403(m)(2). 97 Act of April 16, 1918, ch. 53, Pub. L. No. 65-131, 40 Stat. 530 (1918). 98 Act of June 10, 1922 (Joint Service Pay Readjustment Act of 1922), ch. 212, Pub. L. No. 67-235, 42 Stat. 625 (1922). 99 Ibid. 100 The Career Compensation Act of 1949, ch. 681, Pub. L. No. 81-351, 63 Stat. 802 (1949). 101 The Act of September 28, 1971 (Military Selective Service Act of 1967 Amendments), Pub. L. No. 92-129, §§ 204 and 

206, 85 Stat. 348, 359 (1971). 102 Act of September 19, 1974, Pub. L. No. 93-419, § 4, 88 Stat. 1152, 1152–1153 (1974).
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 1980 – Variable Housing Allowance (VHA) was established to work in 

conjunction with BAQ to provide for geographical differences in housing 

costs.104

 1985 – Adjustments to BAQ and VHA were made so that Service members paid 

no more than 15 percent of out-of-pocket costs for housing. Adjustments were 

no longer tied to basic pay raises.105

 1998 – BAH was established. BAQ and VHA merged into one allowance. Local 

housing allowance rates were based on average costs in the area rather than 

actual member expenditures.106

 2001-2005 – The 15 percent of out-of-pocket costs to the member gradually 

moved into the BAH rate structure.107 Since BAH is based on median rental 

prices, Service members whose rental price was greater than the median, or 

those who purchased residences, may have incurred out-of-pocket costs.108

Financial Summary 

In FY 2013, BAH totaled $20.7 billion for the Active Component and $2.3 billion for 

the Reserve Component of DoD.109

Survey Adjustments

BAH is calculated based on median rental housing costs, which include current fairmarket rent, average utilities, and renters’ insurance.110 BAH rates are protected by 

statute, so members do not experience a reduction in BAH as long as they maintain 

“uninterrupted eligibility” for BAH.111 Individuals are authorized the January 1 rate for 

their respective grade and location or the housing allowance being paid on 

December 31 of the previous year, whichever is larger.112

There are three situations in which a member may receive a lower BAH. The first is if 

the member is assigned and moves (permanent change of station) to a location at 

which the housing cost is less than at the previous duty station.113 At the new duty 

station the member may receive a lower housing allowance, but the member should be 

no worse off, because the allowance is driven by the housing costs at the new 

location.114 Second, if members are demoted, their housing allowance reverts to the 

current published BAH rates at the location at the members’ lower rank.115 Finally, if 

members’ dependency status changes from with-dependents to without-dependents, 

 103 Department of Defense Appropriation Authorization Act, 1977, Pub. L. No. 94-361, § 303(b), 90 Stat. 923, 925 

(1977).

104 Military Personnel and Compensation Amendments of 1980, Pub. L. No. 96-343, § 4, 94 Stat. 1123, 1125 (1980). 105 Department of Defense Authorization Act, 1985, Pub. L. No. 98-525, § 602(1f)(3), 98 Stat. 2492, 2533–2534 (1984). 106 National Defense Authorization Act for FY 1998, Pub. L. No. 105-85, § 603, 111 Stat. 1775 (1997). 107 National Defense Authorization Act for FY 2001, Pub. L. No. 106-398, 114 Stat. 1654 (2000). Statute removed 

section that permitted up to 15 percent of out-of-pocket costs, and the Secretary of Defense implemented the removal 

of the out-of-pocket costs by gradually reducing out-of-pocket costs over the 2001–2005 period. 108 Pay and Allowances of the Uniformed Services, 37 U.S.C. § 403(b). 109 “Defense Budget Materials,” Office of the Under Secretary of Defense (Comptroller), accessed May 15, 2014, 

http://comptroller.defense.gov. Appropriated Budget Data, presented in Section 6.2 of this report. 110 Housing Allowances, JFTR U10002(A), April 1, 2014. 111 Basic Allowances for Housing, 37 U.S.C. § 403(b)(6). 112 Ibid. 113 Housing Allowances, JFTR U10004, May 1, 2014 (Change 329). 114 Ibid. 115 Ibid. 
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the housing allowance will change to the current BAH rate in the new dependency 

status at members’ current rank and location.116

The overall 2014 BAH rates, which took effect January 1, 2014, increased an average 

of five percent.117 On average, BAH rates for members with dependents increased 

approximately $79 per month and $76 for members without dependents.118 As stated 

above, BAH is based on median rental prices, so Service members whose rental price 

is greater than the median, or those who purchase residences, may incur out-ofpocket costs.119

3.1.4. FEDERAL INCOME TAX ADVANTAGE

According to the Military Compensation Background Papers, a legislative and 

regulatory history of military compensation, benefits, and manpower cost items, 

published by the Department of Defense as an authoritative reference tool:

The Federal income tax advantage attributed to members of the uniformed 

services derives from the non-taxable status of the basic allowance for 

subsistence (BAS) and basic and overseas housing allowances (BAH and 

OHA, respectively), and Congress’s determination that those allowances be 

treated as part of regular military compensation, along with basic pay.

The origin of the tax advantage attributed to military personnel can be traced

to a 1925 decision of the United States Court of Claims that held that neither 

the provision of certain items in kind to uniformed services personnel, nor the 

payment of an allowance in commutation thereof, was subject to Federal 

income taxation under a remote precursor of the present-day Internal Revenue 

Code.

With the subsequent extension of the rationale underlying this decision both to 

other items provided in kind and to allowances paid in lieu thereof, the tax 

advantage is appropriately seen as a more or less incidental by-product of the 

way Congress has chosen to pay military personnel—namely, the pay plus 

non-taxable allowances system of military compensation.120

Conceptually, an individual Service member’s tax advantage is the added amount of 

taxable income the member would have to receive in cash if their quarters and 

subsistence allowances were suddenly to become subject to Federal income taxation. 

The purpose of the tax advantage is to ensure Service members are as well off in afterFederal-tax income as under the existing system of taxable pay and nontaxable 

allowances. A great many factors can influence any given member’s actual tax 

advantage-including, for example, filing status (married, single, head of household, 

etc.), additional family income, number of dependents, etc.

 

116 Ibid. 117 “Department of Defense Releases 2014 Basic Allowance for Housing Rates,” Department of Defense, accessed 

May 15, 2014, http://www.defense.gov/releases/release.aspx?releaseid=16434. 118 Ibid. 119 Basic Allowances for Housing, 37 U.S.C. § 403(b). 120 Department of Defense, Military Compensation Background Papers, Seventh Edition, November 2011, 197, accessed 

May 14, 2014, http://militarypay.defense.gov/Docs/MC_All-Combined.pdf.
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Beneficiaries 

All Service members who are paid BAH, BAS, or any other tax-excluded pays, benefit 

from the Federal income tax advantage.121

Historical Context 

The following are legislative highlights in the development of the Federal income tax 

advantage:

 1861 – As a result of the costs of the Civil War, the first income tax was 

established. Military members’ pay was not excluded from taxation.122

 1913 – Income tax mostly lapsed until 1913, with the passage of the 

16th amendment to the Constitution reestablishing Federal income tax.123

 1925 – Court of Claims (Jones case) decision ruled that military members did 

not need to include the fair market rental value of in-kind housing as “gross 

income,” nor did they need to include any cash allowances paid in lieu 

thereof.124

 1967 – Increases in RMC were tied to Civil Service pay, but targeted only to 

basic pay, not BAQ and BAS, thus avoiding increasing the tax advantage.125

 1974 – Raises were applied to all elements of RMC and tax advantage increased 

proportionally.126

Financial Summary 

There is no cost per se to DoD for the Federal income tax advantage provided to 

Service members.

3.2. SPECIAL AND INCENTIVE PAYS

Some Service members receive special and incentive pays in addition to basic pay, 

housing, and subsistence.127 The first special and incentive pays were intended to 

provide enlistment and reenlistment incentives.128 More recent special and incentive 

pays were intended to compensate members exposed to conditions more hazardous 

than those experienced by the average member of the uniformed services during 

peacetime.129 Today, the military services often use special and incentive pays to 

induce members to volunteer for certain career fields that would, without those 

incentives, experience staffing shortfalls.130 Aviation career incentive pay131 and 

nuclear officer incentive pay132 are examples of special and incentive pays that are 

 

121 Internal Revenue Code, 26 U.S.C. § 134. Jones v. United States, 60 Ct. Cl. 552 (1925). 122 Revenue Act of 1861, ch. 45, 12 Stat. 292 (1861). Military pay is not explicitly excluded from this original tax code. 123 S.J. Res. 40, 61st Cong., 36 Stat. 184 (Enacted February 25, 1913). 124 Jones v. United States, 60 Ct. Cl. 552 (1925). 125 Act of December 16, 1967, Pub. L. No. 90-207, § 8, 81 Stat. 649, 654-655 (1967). 126 Act of September 19, 1974, Pub. L. No. 93-419, § 4, 88 Stat. 1152, 1152–1153 (1974). 127 Pay and Allowances of the Uniformed Services, 37 U.S.C. §§ 301-374. 128 Act of March 3, 1791, ch. 28, § 4, 1 Stat. 222 (1791). This act provides a “bounty” for each noncommissioned officer, 

private, and musician who enlisted pursuant to the act. Act of March 3, 1975, ch. 44, § 6, 1 Stat. 430 (1795). This act 

provides a “bounty” of $16 to each soldier who reenlisted pursuant to the act.

129 See, e.g., Pay and Allowances of the Uniformed Services, 37 U.S.C. § 301. 130 See, e.g., Military Pay Policy: Active Duty Reserve Pay, DoD FMR 7000.14-R, Volume 7a, Chapter 9, ¶ 090101 

(2012).

131 Pay and Allowances of the Uniformed Services, 37 U.S.C. §§ 301a, 301b. 132 Pay and Allowances of the Uniformed Services, 37 U.S.C. § 333(b).
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used to balance the supply of personnel willing to enter and remain in critical military 

career fields.

Historical Context 

In 2008, in response to recommendations of the Defense Advisory Committee on 

Military Compensation and the Tenth Quadrennial Review of Military Compensation, 

the Congress consolidated the 65 categories of special and incentive pays into eight

general bonus authorities.133 The consolidation retained two additional special pays—

the career status bonus associated with members choosing the REDUX retirement 

plan and a retention incentive for members qualified in critical skills or assigned to 

high-priority units.134 The Congress provided the Secretaries of Defense, Homeland 

Security, Health and Human Services, and Commerce 10 years to transition the 

previous special and incentive pay authorities to the new consolidated authorities in 

37 U.S.C. §§ 331–355.135 Under the new system, most special and incentive pays will 

be classified under one of the following broad legislative authorities: Enlisted Force 

Management, Officer Force Management, Nuclear Officer Force Management, Aviation 

Officer Force Management, Health Professions Officer Management, Hazardous Duty 

Pay, Assignment or Special Duty Pay, and Skill Incentive/Proficiency Pay.136

DoD is still implementing the transition to the consolidated authorities. The Services 

still continue to use some of the legacy special and incentive pay authorities, as well 

as some of the new consolidated authorities, during this transition.137 The categories 

below describe the types of special and incentive pays—both the new consolidated 

pays as well as the legacy special and incentive pays. Note that the legacy statutes 

may be implemented using different consolidated special pay authorities once DoD’s 

transition to the new authorities is complete.

Beneficiaries 

Service members who meet specific eligibility criteria receive corresponding special 

and incentive pays, as described in the following sections.

Financial Summary 

In FY 2013, special and incentive pays totaled $4.2 billion for DoD, USCG, and the 

NOAA Commissioned Corps.138

3.2.1. ASSIGNMENT PAY/SPECIAL DUTY PAY

Military members may be eligible for special pays if they are assigned jobs that are 

considered unusually demanding, at locations that have living conditions below 

U.S. standards, or have responsibilities that are considered greater than normal for 

someone of the same rank.139

 

133 National Defense Authorization Act for FY 2008, Pub. L. No. 110-181, § 661(a), 122 Stat. 3, 163-178 (2008). 134 National Defense Authorization Act for FY 2008, Pub. L. No. 110-181, §§ 661(b), 661(c), 122 Stat. 3, 178 (2008). 135 National Defense Authorization Act for FY 2008, Pub. L. No. 110-181, § 662(b), 122 Stat. 3, 180 (2008). 136 Pay and Allowances of the Uniformed Services, 37 U.S.C. §§ 331–335. 137 Assistant Director, Special and Incentive Pays, OSD(P&R), e-mail to MCRMC, February 28, 2014. 138 “Defense Budget Materials,” Office of the Under Secretary of Defense (Comptroller), accessed May 15, 2014, 

http://comptroller.defense.gov.

139 Pay and Allowances of the Uniformed Services, 37 U.S.C. §§ 301c, 305, 305a, 306, 306a, 307, 308d, 314, 352.
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Assignment Incentive Pay (AIP) is used to compensate Service members for certain 

unusual and extended assignments.140 Members who voluntarily extend their tours of 

duty overseas, for example in Afghanistan or South Korea, may be eligible for AIP.141

Also, AIP is used to extend military service for members with critical skills, such as 

those required for intelligence career fields.142

Hardship Duty Pay (HDP) is additional compensation paid to Service members

assigned to locations where living conditions are substantially below those conditions 

in the continental United States.143 HDP is intended to recognize the extraordinarily 

arduous living conditions, excessive physical hardship, and/or unhealthful conditions 

that exist at a location or assignment.144 Members may receive HDP for performing 

designated hardship missions.145

Finally, there are special pays for demanding assignments. For example, career sea 

pay is a special payment in recognition of the greater than normal rigors of sea duty, 

the arduous duty involved in long deployments, the repetitive nature of assignment to 

such duty, as well as to compensate sailors for the separation from home and family 

required of sea duty.146 There are also pays for members who are executing the duties 

of a position with responsibilities beyond those normal for officers or enlisted 

personnel of the same rank.147

3.2.2. AVIATION OFFICER INCENTIVE PAY AND BONUS 

AUTHORITIES

Aviation officer incentive pay and bonus authorities148 provide additional pay for 

aviation service to increase the ability of the uniformed services to attract and retain 

officers in military aviation careers. Providing these special pays allows the uniformed 

services to provide compensation for aviators that is competitive with the civilian 

aviation industry.149 These pays are provided to members who maintain an 

aeronautical rating.150

 

140 Pay and Allowances of the Uniformed Services, 37 U.S.C. §§ 307, 307a. Assignment Incentive Pay, DoDI 1340.26 

(2013). Security Cooperation Policy, DoD FMR 7000.14-R, Chapter 15 (2013). 141 Pay and Allowances of the Uniformed Services, 37 U.S.C. § 314. 142 See, e.g., Security Cooperation Policy, DoD FMR 7000.14-R, Chapter 15 (2013). Entitlement of AIP as part of 

Voluntary Extension Program for Army Intelligence Assets Program. 143 Pay and Allowances of the Uniformed Services, 37 U.S.C. § 305. Special Pay: Hardship Duty, DoD FMR 7000.14-R, 

Chapter 17 (2012).

144 “Hardship Duty Pay,” OUSD(P&R), accessed May 15, 2014, http://militarypay.defense.gov/pay/hdp.html. 145 Location Assignment Entitlement, DoD FMR 7000.14-R, 170103 (2012). 146 Pay and Allowances of the Uniformed Services, 37 U.S.C. § 305a. 147 Pay and Allowances of the Uniformed Services, 37 U.S.C. § 306. 148 Pay and Allowances of the Uniformed Services, 37 U.S.C. §§ 301a, 301b, 334. 149 Department of Defense, Military Compensation Background Papers, Seventh Edition, November 2011, 281-302, 

accessed May 14, 2014, http://militarypay.defense.gov/Docs/MC_All-Combined.pdf. 150 Pay and Allowances of the Uniformed Services, 37 U.S.C. §§ 301a, 301b, 334. Aviation Service of Rated Army 

Officers, AR 600-105, 4 (2010). Aviation and Parachutist Service, Aeronautical Ratings, and Aviation Badges, 

AFI 11-402, 18 (2013).
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3.2.3. BONUS AND INCENTIVE PAY AUTHORITIES FOR 

NUCLEAR OFFICERS

Bonus and incentive pay authorities for nuclear officers151 encourage accessions into 

the Navy’s nuclear-power officer community and provide an inducement for nucleartrained and nuclear-qualified Navy officers to continue active service upon completion 

of their service obligation.152 It is essential to retain experienced nuclear-trained 

officers and a steady accession of qualified junior officers in the nuclear propulsion 

program to facilitate operation of the Navy’s nuclear-powered warships. The requisite 

number of officers qualified for duties connected to supervising, operating, and 

maintaining naval nuclear propulsion plants can only be produced at a gradual rate. 

These authorities provide incentive for officers to join and remain in the nuclear 

propulsion program.153

3.2.4. GENERAL BONUS AUTHORITIES FOR OFFICERS AND 

ENLISTED

These bonus authorities are used to bring new officers and enlisted personnel into 

service through officer accession and enlistment bonuses.154 In general, these bonuses 

are used to bring personnel into the military to work in occupational fields that are 

critical to the military services and have staffing shortfalls, but also have been used to 

increase the size of the U.S. military force in times of war or national emergency.155

For those officers and enlisted already in military service, the Services also provide 

select personnel continuation (for officers) and reenlistment (for enlisted) bonuses.156

These bonuses are offered to personnel who have skills the Services would like to keep 

due to staffing requirements as a result of operational needs, experience requirements, 

or due to the large training investment costs that the military service made for the 

member to acquire and retain a specific skill.157 Also, there are bonuses to encourage 

personnel to transition from well-staffed occupational fields into occupational fields 

experiencing a shortage of qualified personnel.158

Finally, this category of bonuses includes those used to encourage personnel who 

might leave service to move between a military Service’s Active and Reserve 

Components, or potentially transfer to another Service.159 These bonuses allow the 

 

151 Pay and Allowances of the Uniformed Services, 37 U.S.C. §§ 312, 312b, 312c, 333. 152 Administration of Enlistment Bonuses, Accession Bonuses for New Officers in Critical Skills, Selective Reenlistment 

Bonuses, and Critical Skills Retention Bonuses for Active Members, DoDI 1304.29, § 3.1 (2004). 153 Nuclear Officer Incentive Pay Program, OPNAVINST 7220.11D, 2 (2012). 154 Pay and Allowances of the Uniformed Serves, 37 U.S.C. §§ 308, 308b, 308c, 308g, 308h, 308i, 308j, 309, 315, 319, 

321, 324, 326, 327, 330, 331, 332. See also Administration of Enlistment Bonuses, Accession Bonuses for New 

Officers in Critical Skills, Selective Reenlistment Bonuses, and Critical Skills Retention Bonuses for Active Members, 

DoDI 1304.29, § 3.1 (2004). 155 DoD FMR 7000.14-R, Volume 7a, Chapter 9, 090101 (2012). 156 See, e.g., Enlistment Bonus (EB) Program, OPNAVINST 1160.9 (2007). 157 Ibid, 2. 158 Pay and Allowances of the Uniformed Services, 37 U.S.C. § 326. 159 Pay and Allowances of the Uniformed Services, 37 U.S.C. § 327.
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military to retain skilled personnel and reduce training costs. They also have been 

used when Services needed to increase their end strength.160

3.2.5. HAZARDOUS DUTY PAY

Hazardous duty pays cover duty that is considered hazardous based on the inherent 

danger and possibility for physical injury associated with the duty, as well as special 

pays associated with duty at locations that are unsafe or expose the member to hostile 

fire.161 Occupations considered hazardous include parachute jumping, demolition of 

explosives, handling toxic fuels, and ship flight deck duty.162 Hostile Fire Pay is paid 

when military commanders certify that military members are (1) subjected to hostile 

fire or explosion of a hostile mine, (2) on duty in an area in close proximity to a hostile 

fire incident and the member is in danger of being exposed to the same dangers 

actually experienced by other members subjected to hostile fire or explosion of hostile 

mines, (3) killed, injured, or wounded by hostile fire, explosion of a hostile mine, or 

any other hostile action, or (4) was on duty in a foreign area in which the member was 

subject to the threat of physical harm or imminent danger on the basis of civil 

insurrection, civil war, terrorism, or wartime conditions.163 The Office of the Under 

Secretary of Defense for Personnel and Readiness reviews imminent danger pay area 

designations, based on the recommendations of Combatant Commanders, and makes 

changes to the locations where members are eligible for imminent danger pay.164 Some 

of the countries currently considered areas where military members may be in 

imminent danger are Iraq, Afghanistan, Lebanon, Jordan, Pakistan, and Yemen.165

3.2.6. HEALTH PROFESSION OFFICER INCENTIVE PAY AND 

BONUS AUTHORITIES

Health profession officer incentive pay and bonus authorities166 are used to attract 

and retain a sufficient number of qualified health professionals to meet the healthcare demands of the uniformed services.167 Over time, the uniformed services have 

experienced shortages in medical personnel, particularly those in high demand in the 

civilian sector, who could obtain high civilian salaries.168 A wide variety of health 

professions are covered by these bonus and special pay authorities including doctors, 

dentists, nurses, pharmacists, psychologists, and veterinarians.169 Some health 

professionals may receive bonuses if their specialty is a critical wartime specialty.170

 

160 Department of Defense, Military Compensation Background Papers, Seventh Edition, November 2011, 519-531, 561, 

accessed May 14, 2014, http://militarypay.defense.gov/Docs/MC_All-Combined.pdf. 161 Pay and Allowances of the Uniformed Services, 37 U.S.C. §§ 301, 305b, 310, 351. The types of duty that are 

considered to be particularly hazardous are listed in the statute.

162 Pay and Allowances of the Uniformed Services, 37 U.S.C. § 301(a). 163 Pay and Allowances of the Uniformed Services, 37 U.S.C. § 310(a)(2). 164 Hostile Fire Pay and Imminent Danger Pay, DoDI 1340.09, Enclosure 1 (2010). 165 Special Pay: Duty Subject to Hostile Fire or Imminent Danger, DoD FMR 7000.14-R, Figure 10-1. 166 Pay and Allowances of the Uniformed Services, 37 U.S.C. §§ 301d, 301e, 302, 302a, 302b, 302c, 302d, 302e, 302f, 

302g, 302h, 302i, 302j, 302k, 302l, 303, 335.

167 Department of Defense, Military Compensation Background Papers, Seventh Edition, November 2011, 429, accessed 

May 14, 2014, http://militarypay.defense.gov/Docs/MC_All-Combined.pdf. 168 Ibid, 429-485. 169 Pay and Allowances of the Uniformed Services, 37 U.S.C. §§ 301d, 301e, 302, 302a, 302b, 302c, 302d, 302e, 302f, 

302g, 302h, 302i, 302j, 302k, 302l, 303, 335. 170 Pay and Allowances of the Uniformed Services, 37 U.S.C. §§ 302g, 302k.
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3.2.7. SKILL INCENTIVE PAY/PROFICIENCY BONUS

Military members may be eligible for special pays to attain and maintain proficiency in 

skills considered critical to the Services that often require substantial training to 

obtain proficiency.171 For example, the Services offer foreign language proficiency pay 

to members who learn and are proficient in languages that are critical to national 

defense.172 As the member’s proficiency increases, the rate of pay increases.173

3.3. SPECIAL COMPENSATION FOR ASSISTANCE 

WITH ACTIVITIES OF DAILY LIVING

Special Compensation for Assistance with Activities of Daily Living (SCAADL) is 

monthly compensation provided to a Service member with a catastrophic injury or 

illness incurred or aggravated in the line of duty. This compensation applies when that 

Service member requires assistance with daily living or is at high risk of personal 

injury and cannot live independently without caregiver support.174 The purpose of 

SCAADL is to compensate designated caregivers for the time and assistance they 

provide to a catastrophically injured or ill Service member.175

The amount of the compensation is based on the Service member’s dependency, 

amount of caregiver assistance required, and the local wage rate for a home health 

aide in the member’s geographical location (based on U.S. Bureau of Labor Statistics 

data).176 The payments are taxable income for the Service member.177 Members receive 

these payments until 90 days after they separate from the military, or until they start 

receiving compensation under the Department of Veterans Affairs Caregiver Program, 

or until the time when they are no longer afflicted with the catastrophic injury or 

illness.178

Beneficiaries 

The number of Service members who received SCAADL payments in FY 2012 totaled 

840. 

Historical Context 

SCAADL was authorized by the NDAA for FY 2010 (Pub. L. No. 111-84).179

Financial Summary 

The amount paid out for SCAADL in FY 2012 totaled $9,324,186.180

 

171 Pay and Allowances of the Uniformed Services, 37 U.S.C. §§ 304, 316, 316a, 317, 320, 353. 172 Pay and Allowances of the Uniformed Services, 37 U.S.C. §§ 316, 316a. 173 Foreign Language Proficiency Bonus, DoD FMR 7000.14-R, Volume 7a, Chapter 19, Table 19-1 (2013). (Monthly 

entitlement increases as the Service member’s proficiency increases.)

174 Special Compensation for Assistance With Activities of Daily Living (SCAADL), DoDI 1341.12, 1 (2012). 175 Special Compensation for Assistance With Activities of Daily Living (SCAADL), DoDI 1341.12, Enclosure 3, 6 (2012). 176 Special Compensation for Assistance With Activities of Daily Living (SCAADL), DoDI 1341.12, Enclosure 3, 8-10 

(2012).

177 Ibid. 178 Pay and Allowances of the Uniformed Services, 37 U.S.C. § 439(d). 179 National Defense Authorization Act for FY 2010, Pub. L. No. 111-84, § 603(a), 123 Stat. 2190, 2348-2350 (2009).
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3.4. RETIREMENT

The military retirement system is a funded, noncontributory defined benefit plan that 

includes nondisability retired pay, disability retired pay, retired pay for Reserve 

service, survivor annuity programs, and compensation programs for certain disabled 

retirees, as outlined in the following sections. 

The military retirement system applies to members of the Army, Navy, Marine Corps, 

and Air Force.181 Additionally, most of the provisions apply to retirement systems for 

members of USCG (administered by the Department of Homeland Security),182 officers 

of USPHS (administered by the Department of Health and Human Services),183 and 

officers of NOAA (administered by the Department of Commerce).184

3.4.1. REGULAR (NONDISABILITY) RETIREMENT

There are three distinct nondisability benefit formulas related to three populations 

within the military retirement system.

Final Pay

 Military personnel who first became members of a uniformed service before 

September 8, 1980, have retired pay equal to final basic pay times a

multiplier.185 The multiplier is equal to 2.5 percent multiplied by years of 

service.186

High-36 (also known as High-3)

 If the retiree first became a member of a uniformed service on or after 

September 8, 1980, the average of the highest 36 months of basic pay is used 

instead of final basic pay.187

Career Status Bonus/REDUX

 Military personnel who first became members of a uniformed service on or after 

August 1, 1986, may choose between a High-36 and Career Status Bonus 

(CSB)/REDUX retirement.188

 Those who elect CSB/REDUX receive the CSB outlined below, also have retired 

pay computed on a base of the average of their highest 36 months of basic pay, 

but are subject to a multiplier penalty if they retire with less than 30 years of 

service; however, at age 62, their retired pay is recomputed without the 

multiplier penalty.189

 180 Personnel Analyst, OSD(P&R), e-mail to MCRMC, March 14, 2014. (FY 2012 SCAADL data is the most current data 

confirmed by OSD).

181 Armed Forces, 10 U.S.C. §§ 3411, 3414, 6323, 6330, 8911, 8914. 182 Coast Guard, 14 U.S.C. §§ 291, 355. 183 The Public Health and Welfare, 42 U.S.C. § 212. 184 Navigation and Navigable Waters, 33 U.S.C. § 3044. 185 Armed Forces, 10 U.S.C. § 1406. 186 Armed Forces, 10 U.S.C. § 1409. 187 Armed Forces, 10 U.S.C. § 1407. 188 Pay and Allowances of the Uniformed Services, 37 U.S.C. § 354. 189 Armed Forces, 10 U.S.C. § 1409(b)(2).
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 Members make their election during the 15th year of service and may receive the 

CSB of $30,000 in either a lump-sum or installments.190

 Those who elect CSB/REDUX must remain continuously on active duty until 

they complete 20 years of active-duty service or forfeit a portion of the $30,000 

(exceptions include death and disability retirement).191

Retired pay and survivor annuity benefits are automatically adjusted annually to 

protect the purchasing power of initial retired pay.192 Members first entering the 

uniformed services before August 1, 1986, and those entering on or after that date 

who do not take the CSB, have their benefits adjusted annually by the percentage 

increase in the average Consumer Price Index (CPI).193 This is commonly referred to as 

full CPI protection. Benefits associated with members entering on or after August 1, 

1986, who elect the $30,000 CSB payment, are annually increased by the percentage 

change in the CPI minus 1.0 percent (except when the change in the CPI is less than 

1.0 percent).194 However, when the military member’s age is 62, or when the member 

would have been age 62 for a survivor annuity, the benefits are restored to the amount 

that would have been payable had full CPI protection been in effect.195 After this 

restoral, partial indexing (CPI minus 1.0 percent) continues for future retired pay and 

survivor annuity payments.196

Beneficiaries 

As of September 30, 2013, there were 1.47 million nondisability retirees from active 

duty receiving retired pay. In FY 2013, 30,847 members retired with nondisability 

retirements from the Active Component.197

Historical Context 

In the mid-19th century, the U.S. Navy adopted a retired program for which officers 

were paid roughly 75 percent of their normal pay, but asked to leave active duty to 

make way for junior officers coming through the ranks.198 Other significant legislative 

changes to the system include: 

 1861 – Voluntary retirement after 40 years of service was authorized.199

 1882 – Retirement at age 64 was made mandatory for all Services.200

 1899 – Voluntary retirement for Navy enlisted personnel after 30 years of 

service was authorized.201

 1916 – A retirement system was enacted in conjunction with an up-or-out 

promotion system. Retirement was based on age and years of service.202

 1920 – Class B officers (failed to promote) were retired with as little as 10 years 

of service.203

 

190 Pay and Allowances of the Uniformed Services, 37 U.S.C. § 354. 191 Pay and Allowances of the Uniformed Services, 37 U.S.C. § 354(f). 192 Armed Forces, 10 U.S.C. § 1401a. 193 Ibid. 194 Armed Forces, 10 U.S.C. § 1401a(b)(3). 195 Armed Forces, 10 U.S.C. § 1410. 196 Armed Forces, 10 U.S.C. § 1401a(b)(3). 197 Department of Defense, Office of the Actuary, Statistical Report of the Military Retirement System, Fiscal Year 2013,

May 2014, 57, accessed June 6, 2014, http://actuary.defense.gov/Portals/15/Documents/statbook13.pdf. 198 Act of February 28, 1855, ch. 127 § 1, 10 Stat. 616 (1855). 199 Act of August 3, 1861, ch. 42, 12 Stat. 287 (1861). 200 Act of June 30, 1882, ch. 254, 22 Stat. 110 (1882). 201 Act of March 3, 1899, ch. 413, 30 Stat. 1004 (1899). 202 Act of August 29, 1916, ch. 417, Pub. L. No. 64-241, 39 Stat. 556, 579 (1916).
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 1926 – The integrated Navy officer promotion/involuntary retirement system 

was changed from age-in-grade to service-in-grade program.204

 1945 – The basic structure of the current defined-benefit, 20-year retirement 

system was originally created for the Army by the Armed Forces Voluntary 

Recruitment Act of 1945. Mandatory retirement points and 2.5 percent as 

standard multiplier were established.205

 1946-1948 – Follow-on legislation for Navy, Marine Corps, and enlisted took 

place in 1946206 and for the Air Force in 1947.207

 1981 – The annuity changed from a final pay basis to a high-36 month average 

pay basis.208

 1986 – The REDUX retirement system was established for new entrants on or 

after August 1, 1986.209

 2000 – The REDUX system was repealed. The system that existed prior to 1986 

was reestablished for all personnel, which provided a voluntary option for new 

entrants and those members who qualified for REDUX to choose CSB/REDUX 

rather than the current (high-36 month) system.210

Financial Summary 

In FY 2013, nondisability retired pay entitlements totaled $43.1 billion.211

3.4.2. RESERVE RETIREMENT

Members of the Reserve Component may retire after 20 qualifying years of creditable 

service; 212 however, Reserve retired pay is not payable until age 60 unless the member 

performs certain types of active duty or active service specified in 10 U.S.C. § 12731(f).

In such cases, the age to receive retired pay is reduced below 60 by three months for 

every 90 days of such service within a fiscal year.213 The age cannot go below 50, and 

eligibility for subsidized retiree health benefits remains at age 60 even if the eligibility 

age for retired pay is reduced.214

As with the Active Component, retired pay for the Reserve Component is computed as 

base pay times 2.5 percent times years of service.215 If the Reservist was first a 

member of a uniformed service before September 8, 1980, base pay is defined as the

active-duty basic pay in effect for the retiree’s pay grade and years of service at the 

time retired pay begins.216 If the Reservist first became a member of the uniformed 

services on or after September 8, 1980, base pay is the average basic pay for the 

 203 Act of June 4, 1920, ch. 227, Pub. L. No. 66-242, 41 Stat. 773 (1920). 204 Act of June 22, 1926, ch. 649, Pub. L. No. 69-412, 44 Stat. 761 (1926). 205 Armed Forces Voluntary Recruitment Act of 1945, ch. 393, Pub. L. No. 79-190, 59 Stat. 53538 (1945). 206 Act of February 21, 1946, ch. 34, Pub. L. No. 79-305, 60 Stat. 26, 27 (1946). 207 National Security Act of 1947, ch. 343, Pub. L. No. 80-253, 61 Stat. 495 (1947). 208 Department of Defense Authorization Act, 1981, Pub. L. No. 96-342, 94 Stat. 1077, 1100 (1980). 209 Military Retirement Reform Act of 1986, Pub. L. No. 99-348, 100 Stat. 682 (1986). 210 National Defense Authorization Act for FY 2000, Pub. L. No. 106-65, 113 Stat. 662 (1999). 211 Department of Defense, Office of the Actuary, Statistical Report on the Military Retirement System, Fiscal Year 2013, 

accessed June 5, 2014, http://actuary.defense.gov/Portals/15/Documents/statbook13.pdf. 212 Armed Forces, 10 U.S.C. § 12731(a)(2). 213 Armed Forces, 10 U.S.C. § 12731(f). 214 Armed Forces, 10 U.S.C. §§ 12731(f)(2)(C), 1074(b)(2). 215 Armed Forces, 10 U.S.C. § 12739(a). 216 Armed Forces, 10 U.S.C. § 1406(b)(2).
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member’s pay grade in the highest 36 months computed as if the member was on 

active duty for the entire period preceding the age at which retired pay commences.217

Years of service are determined by using a point system, for which 360 points convert 

to a year of service.218 Typically, one point is awarded for one day of active-duty service

(e.g., active-duty training) or one inactive-duty training (IDT) drill attendance.219

Reservists may perform two IDT periods in one day thereby receiving two retirement 

points per day.220 In addition, 15 points are awarded for completion of one year’s 

membership in a Reserve Component.221 A creditable year of service is one in which 

the member earned at least 50 points.222 A member generally cannot retire with fewer 

than 20 creditable years, although points earned in noncreditable years are used in 

the retirement calculation.223 Beginning with years of service that include October 30, 

2007, non-active-duty points are limited in any year to no more than 130,224 although 

lesser limitations have applied in the past.225

For example, a member who joined the military in 1991, spent four years on active 

duty and then entered the Reserves, retiring with 20 satisfactory years of service, with 

2,708 points, and a high-36 month average basic pay of $4,500, would receive a gross 

monthly retired pay of $846.226 A member who joined in 1981, spent four years on 

active duty and then entered the Reserves, who retired with 30 satisfactory years of 

service, with 3,488 points, and the same average basic pay would receive a gross 

monthly retired pay of $1,090.227

The annual retired pay for a Reserve retirement is increased by an annual cost of 

living adjustment that is determined by the percentage increase in the CPI.228

Beneficiaries 

The Statistical Report on the Military Retirement System for FY 2013 indicates that an 

average of 20,230 members retired per year (2002–2013) with nondisability 

retirements from the Reserve Component.229 As of September 30, 2013, there were 

383,000 Reserve retirees receiving retired pay.

 

217 Armed Forces, 10 U.S.C. § 1407(d). 218 Armed Forces, 10 U.S.C. §§ 12732–12733. 219 Armed Forces, 10 U.S.C. § 12732(a)(2). 220 Uniform Reserve, Training, and Retirement Categories for the Reserve Components, DoDI 1215.06, 12 (2014). 221 Armed Forces, 10 U.S.C. § 12732(a)(2)(C). 222 Armed Forces, 10 U.S.C. § 12732(a)(2). 223 Armed Forces, 10 U.S.C. §§ 12731(a)(2), 12733. 224 Armed Forces, 10 U.S.C. § 12733(3)(D). 225 Ibid. 226 Calculation for reserve retirement: (4 years active duty: 4x365=1,460 points)+(16 years of reserve drills: 16x48=768 

points)+(16 years of annual training: 16x15=240 points)+(16 years of annual reserve membership points: 16x15=240 

points) = 2,708 points. Reserve years of service (YOS/360): 2,708/360 = 7.52 YOS; monthly retired pay: YOSx2.5%x

average monthly basic pay of the Service members highest 36 months of basic pay) 7.52x.025x$4,500 = $846.00. 227 Calculation for reserve retirement: (4 years active duty: 4x365=1,460 points)+(26 years of reserve drills: 

26x48=1,248 points)+(26 years of annual training: 26x15=390 points)+(26 years of annual reserve membership points: 

26x15=390 points) = 3,488 points. Reserve years of service (YOS/360): 3,488/360 = 9.69 YOS; monthly retired pay: 

YOSx2.5%x average monthly basic pay of the Service members highest 36 months of basic pay) 9.69x.025x$4,500 = 

$1090.13.

228 Armed Forces, 10 U.S.C. § 1401a. 229 Department of Defense, Office of the Actuary, Statistical Report on the Military Retirement System, Fiscal Year 2013, 

162, accessed June 5, 2014, http://actuary.defense.gov/Portals/15/Documents/statbook13.pdf. 
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Historical Context 

The basic structure of the current nondisability Reserve retirement system was 

created in the Army and Air Force Vitalization and Retirement Equalization Act of 

1948.230 Since 1948, the following have been key changes to the Reserve retirement 

system:

 1981 – The annuity changed from a final pay basis to a high-36 month average 

pay basis.231

 1993 – Two provisions were adopted to induce members of Selected Reserve to 

apply for transfer to the retired Reserve: (1) Reservists who were younger than 

60 years old, but had more than 20 years of creditable service, could transfer to 

the retired Reserve and receive up to five years of annuity prior to age 60 (equal 

to 12 times member’s monthly basic pay had they been serving on active duty 

times five percent plus 0.5 percent for each year of creditable service to a 

maximum of 10 percent); and (2) Reservists with at least 15 but less than 

20 years of retirement creditable service would receive Reserve retirement at age 

60, based on their years of service.232

 2008 – The NDAA for FY 2008 allows National Guard and Reserve members to 

receive retirement pay earlier than the normal age 60 by three months for every 

90 days served on active duty after January 29, 2008.233

Financial Summary 

In FY 2013, Reserve retired pay entitlements totaled $5.61 billion.234

3.4.3. DISABILITY RETIREMENT

A military member in an Active Component or on active duty for more than 30 days 

who is found unfit for duty is entitled to disability retired pay if the disability: (a) is 

incurred while entitled to basic pay, (b) is neither the result of the member’s 

intentional misconduct nor willful neglect, and (c) was not incurred during a period of 

unauthorized absence.235 Additionally, the member must have at least 20 years of 

service, or the disability must be rated at least 30 percent according to the 

Department of Veterans Affairs Schedule of Rating Disabilities.236 One of the following 

conditions must be met: (a) the disability was not noted at the time of the member’s 

entrance on active duty (unless clear and unmistakable evidence demonstrates that 

the disability existed before the member’s entrance on active duty and was not 

aggravated by active military service); (b) the disability is the proximate result of 

performing active duty; (c) the disability was incurred in the line of duty during time of 

war or national emergency; or (d) the disability was incurred in the line of duty after 

September 14, 1978.237 Under certain conditions generally similar to the above, 

 

230 Army and Air Force Vitalization and Retirement Equalization Act of 1948, ch. 706, Title III, 62 Stat. 1081, 

1087-1091 (1948). 231 Department of Defense Authorization Act, 1981, Pub. L. No. 96-342, § 813, 94 Stat. 1077, 1100-1110 (1980). 232 The National Defense Authorization Act for FY 1993, Pub. L. No. 102-484, § 4416, 106 Stat. 2315, 2714-2716

(1992). 233 National Defense Authorization Act for FY 2008, Pub. L. No. 110-181, § 647(a), 122 Stat. 3 (2005). 234 Department of Defense, Office of the Actuary, Statistical Report on the Military Retirement System, Fiscal Year 2013, 

25, accessed June 5, 2014, http://actuary.defense.gov/Portals/15/Documents/statbook13.pdf. 235 Armed Forces, 10 U.S.C. § 1201(b). 236 Armed Forces, 10 U.S.C. § 1201(b)(3). 237 Armed Forces, 10 U.S.C. § 1201(b).
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members on active duty for 30 days or less or on inactive-duty training are also 

entitled to disability retired pay for disabilities incurred or aggravated in the line of 

duty.238

With disability retirement, the member may elect to receive retired pay equal to either: 

(a) the accrued nondisability retirement benefit regardless of eligibility to retire or 

(b) base pay multiplied by the rated percent of disability.239 Except for members with 

more than 30 years of service, the benefit cannot be more than 75 percent of base 

pay.240 If the payment under option (a) is higher than that under option (b), then the 

excess payment under option (a) is subject to Federal income taxes if the member had 

service on or before September 24, 1975.241 If not a member of a uniformed service on 

September 24, 1975, disability retired pay is tax-exempt only for those disabilities that 

are combat or hazardous duty related.242 Base pay is equal to final basic pay if the 

retiree first became a member of a uniformed service before September 8, 1980;

otherwise, base pay is equal to the average of the highest 36 months of basic pay.243

Members whose disabilities may not be permanent are placed on a temporarydisability retired list and receive disability retirement pay just as if they were 

permanently disabled.244 However, they must be physically examined every 18 months 

for any change in disability.245 A final determination must be made within five 

years.246 The temporary disability pay is calculated like the permanent disability 

retired pay, except that it can be no less than 50 percent of base pay.247

Members who elected the CSB/REDUX retirement option, but who retired for 

disability, are not subject to the reduced CSB/REDUX retired pay multiplier and are 

awarded retired pay based on the disability retired rules outlined above.248 However, 

such members continue to be subject to the reduced CPI (with age 62 restoral) as CSB

recipients.249

Beneficiaries 

As of September 30, 2013, there were 103,000 disability retirees receiving retired 

pay.250

The practice of providing for special compensation to be paid to persons disabled while 

performing military service can be traced to some of the earliest enactments of the 

Federal Congress.251 The Act of April 30, 1790, for example, allowed the placement of 

 

238 Armed Forces, 10 U.S.C. § 1204. 239 Armed Forces, 10 U.S.C. § 1401(a). 240 Armed Forces, 10 U.S.C. § 1409(b)(3). 241 Armed Forces, 10 U.S.C. § 1403. 242 Armed Forces, 10 U.S.C. § 104(b)(4). 243 Armed Forces, 10 U.S.C. §§ 1406, 1407. 244 Armed Forces, 10 U.S.C. § 1202. 245 Armed Forces, 10 U.S.C. § 1210(a). 246 Armed Forces, 10 U.S.C. § 1210(h). 247 Armed Forces, 10 U.S.C. § 1401(a). 248 Ibid. The service member is now being retired under the authority of Chapter 61 of Title 10, which is specifically 

exempted from the Retired Pay Multiplier provisions of 10 U.S.C. § 1409. 249 Armed Forces, 10 U.S.C. §§ 1401a, 1410. Unlike the provisions of 10 U.S.C. § 1409, Chapter 61 retirees are not 

exempted from the Reduced CPI provisions if they elected to receive the Career Status Bonus.

250 Department of Defense, Office of the Actuary, Statistical Report on the Military Retirement System, Fiscal Year 2013, 

124, accessed June 5, 2014, http://actuary.defense.gov/Portals/15/Documents/statbook13.pdf. 251 The Act of April 30, 1790, ch. 10, § 11, 1 Stat. 119, 121 (1790). 
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disabled military personnel on “the list of the invalids of the United States.”252 While 

on this “invalid,” or pension, list, officers could receive up to one-half their “pay,” and 

enlisted personnel could receive up to $5 a month for life.253

Financial Summary 

In FY 2013, disability retired pay entitlements totaled $1.43 billion.254

3.4.4. COST OF LIVING ADJUSTMENT 

All nondisability retirement, disability retirement, and most survivor annuities are 

adjusted annually for inflation to ensure that the purchasing power of retired pay or 

the survivor annuity is not eroded by inflation.255 The cost-of-living adjustment (COLA) 

is automatically scheduled to occur every 12 months, on December 1, and is reflected 

in checks issued at the beginning of January.256

The “full” COLA is computed by calculating the percentage increase in the average CPI 

of the third quarter of the prior calendar year to the third quarter of the current 

calendar year.257 The increase is based on the Urban Wage Earner and Clerical Worker 

Consumer Price Index (CPI-W), published by the Bureau of Labor Statistics, and is 

rounded to the nearest tenth of one percent.258 Recent retirees/annuitants receive a 

prorated COLA depending on their date of retirement/eligibility.259

Beneficiaries 

As stated, all nondisability retirement, disability retirement, and most survivor 

annuities are provided COLAs. At the end of FY 2013, approximately 2.3 million

military retirees and survivors received COLA.260

Historical Context 

The benefits of retirees (and most survivors) are increased annually with the full 

COLA, except for those first entering a uniformed service on or after August 1, 1986,

who elect the CSB/REDUX Retirement Plan.261 Their benefits are increased annually 

with a partial COLA equal to the full COLA minus 1.0 percent (except if the full COLA 

is less than or equal to 1.0 percent).262 A one-time restoral is given to a partial COLA 

recipient on the first day of the month after the retiree’s 62nd birthday.263 At this time, 

retired pay (or the survivor benefit if the retiree is deceased) is increased to the 

 

252 Ibid. 253 Ibid. 254 Department of Defense, Office of the Actuary, Statistical Report on the Military Retirement System, Fiscal Year 2013, 

25, accessed June 5, 2014, http://actuary.defense.gov/Portals/15/Documents/statbook13.pdf. 255 Armed Forces, 10 U.S.C. § 1401a. 256 Ibid. 257 Armed Forces, 10 U.S.C. §§ 1401a, 1451. 258 Armed Forces, 10 U.S.C. § 1401a(g). 259 Armed Forces, 10 U.S.C. § 1401a(e). 260 Department of Defense, Office of the Actuary, Statistical Report on the Military Retirement System, Fiscal Year 2013, 

25, accessed June 5, 2014, http://actuary.defense.gov/Portals/15/Documents/statbook13.pdf. 261 Armed Forces, 10 U.S.C. § 1401a. 262 Armed Forces, 10 U.S.C. § 1401a(b)(3). 263 Armed Forces, 10 U.S.C. § 1410.
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amount that would have been payable had full COLAs been in effect.264 Annual partial 

COLAs continue after this restoral.265

The Omnibus Budget Reconciliation Act of 1993 changed the effective date for future 

COLAs for military retired pay and for Federal civilian retirement annuities, which 

(before the Act) were effective on December 1 each year.266

Based on the increase in the CPI, there was a 1.5 percent COLA for retired pay and 

Survivor Benefit Plan (SBP) annuities effective December 1, 2013. Most retirees 

received the increase in their December 31, 2013, payment. SBP annuitants received 

their payments on January 2, 2014. Retirees who received a CSB received a 

0.5 percent increase.267

3.4.5. MILITARY RETIREMENT FUND

The military retirement system provides benefits for military members’ retirement from 

active duty, Reserve Component duty, disability retirement benefits, and survivor 

benefits.268 The Military Retirement Fund (MRF) accumulates funds to finance, on an 

actuarial basis, the liabilities of DoD under military retirement and survivor benefit 

programs.269

The MRF was established by the 1984 Defense Authorization Act.270 Since October 1, 

1984, the “accrual accounting” concept has been used to budget for the costs of 

military retired pay.271 Under this system, the DoD budget for each fiscal year includes 

not the amount of retired pay actually paid to retirees, but a contribution to the 

military retirement fund sufficient to finance future retirement payouts to current 

uniformed personnel when they retire.272 These annual “accrual” contributions 

accumulate in the military retirement fund, along with interest earned on them.273

Source of the Funds in the MRF

The amount DoD must contribute each year to cover future retirement costs is 

determined by an independent DoD Board of Actuaries. This Board consists of three 

members who are appointed by the Secretary of Defense from among qualified 

professional actuaries who are members of the Society of Actuaries.274 This Board 

decides how much is needed to cover future retirement costs as a percentage of 

military basic pay (normal cost percentages).275 Once military personnel retire, 

payments to them are made not from the annual DoD budget, but from the 

accumulated amounts in the MRF.276 Estimated future retirement costs are projected 

 

264 Ibid. 265 Armed Forces, 10 U.S.C. § 1401a(b). 266 Omnibus Budget Reconciliation Act of 1993, Pub. L. No. 103-65, § 2001, 107 Stat. 312, 335 (1993). 267 “Cost of Living Adjustments,” Defense Accounting and Finance Service, accessed May 15, 2014, 

http://www.dfas.mil/retiredmilitary/newsevents/newsletter/cola2014.html. 268 Armed Forces, 10 U.S.C. § 1461. 269 Ibid. 270 Department of Defense Authorization Act, 1984, Pub. L. No. 98-94, § 925, 97 Stat. 614, 644-648 (1983). 271 Ibid. 272 Armed Forces, 10 U.S.C. §§ 1465-1466. 273 Armed Forces, 10 U.S.C. § 1462. 274 Pub. L. No. 110-181, § 906 (2008). Armed Forces, 10 U.S.C. § 183. 275 Armed Forces, 10 U.S.C. § 183. 276 Armed Forces, 10 U.S.C. § 1483.
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based on the past rates at which active-duty military personnel stayed in the service 

until retirement, and on assumptions regarding the overall U.S. economy, including 

interest rates, inflation rates, and military pay levels.277

The aggregate entry-age normal cost percentage (NCP) is the level percentage of basic 

pay that must be contributed over the entire career of a typical group of new entrants 

to pay for all the future retirement and survivor benefits of that group.278 The NDAA 

for FY 1987 mandated that two separate NCPs be used for valuation of the military 

retirement system—one for active-duty personnel and full-time Reservists and one for 

part-time Reservists.279 For FY 2013, the full-time NCP was 43.3 percent and parttime NCP was 27.6 percent.280

When the military retirement system went to accrual funding of military members in 

October 1984, it did not cover retirement costs for service prior to that date.281 As a 

result, there was an initial unfunded accrued liability of $528.7 billion as of 

September 30, 1984.282 The 1984 Department of Defense Authorization Act declared 

that the U.S. Treasury is responsible for the payment on the unfunded liability, which 

the Board of Actuaries determined would be amortized as annual payments.283 The 

Treasury unfunded liability payment changes annually due to modifications to 

retirement/survivor benefit provisions, changes in actuarial assumptions, and gains 

and losses based on actual fund investment experience compared to expected fund 

investment experience.284 As of September 30, 2011, the Board of Actuaries estimated 

that the original unfunded liability balance will be zero by 2026, although the 

amortization of actuarial assumption and benefit changes to date will not be 

completed until 2040.285

The NDAA for FY 2004 required the Treasury to also pay the normal cost arising from 

increased benefits due to Concurrent Receipt—Concurrent Retirement and Disability 

Pay (CRDP) and Combat-Related Special Compensation (CRSC)—into the MRF at the 

beginning of each fiscal year.286

At the end of FY 2013, the assets in the MRF totaled $483.5 billion.287 During 

FY 2013, the Fund disbursed $54.7 billion to 2.28 million military retirees (regular, 

Reserve, and disability) and survivors.288

 

277 Armed Forces, 10 U.S.C. § 1465. 278 Armed Forces, 10 U.S.C. § 1465(c). 279 National Defense Authorization Act for FY 1987, Pub. L. No. 99-661, § 661, 100 Stat. 3816, 3891-3893 (1986). 280 DoD Office of the Actuary, Valuation of the Military Retirement System, September 30, 2011, 5, accessed May 16, 

2014, http://actuary.defense.gov/Portals/15/Documents/MRFValRpt2011.pdf. 281 Department of Defense Authorization Act, 1984, Pub. L. No. 98-94, § 925, 97 Stat. 614, 644-648 (1983). 282 DoD Office of the Actuary, Valuation of the Military Retirement System, September 30, 2012, 24, accessed April 2014, 

http://actuary.defense.gov/Portals/15/Documents/MRF_ValRpt2_2012.pdf. 283 Ibid. 284 Armed Forces, 10 U.S.C. § 1465. 285 DoD Office of the Actuary, Valuation of the Military Retirement System, September 30, 2011, 24, 29, 33, accessed 

May 16, 2014, http://actuary.defense.gov/Portals/15/Documents/MRFValRpt2011.pdf. 286 National Defense Authorization Act for FY 2004, Pub. L. No. 108-136, § 641(c), 117 Stat. 1392, 1514-1516 (2003). 287 Department of Defense, Office of the Under Secretary of Defense (Comptroller), Fiscal Year 2013, Military Retirement 

Fund Audited Financial Report, December 9, 2013, 21, accessed June 6, 2014, 

http://comptroller.defense.gov/Portals/45/documents/cfs/fy2013/13_Military_Retirement_Fund/Fiscal_Year_2013_M

ilitary_Retirement_Fund_Financial_Statements_and_Notes.pdf. 288 Ibid, 1, 5-10. 
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3.4.6. THRIFT SAVINGS PROGRAM

The Thrift Savings Plan (TSP) is a retirement savings and investment plan for Federal 

employees and members of the uniformed services, including the Ready Reserve. It 

was established by the Congress through the Federal Employees’ Retirement System 

Act of 1986 and offers the same types of savings and tax benefits that many private 

corporations offer their employees under 401(k) plans.289 The TSP is a defined 

contribution plan, meaning that the retirement income participants receive from their

TSP accounts depends on how much they (and their agency, if they are eligible to 

receive agency contributions) put into their accounts during their working years and 

the earnings accumulated over that time. TSP is currently a supplement to military 

retired pay.290

The NDAA for FY 2000, as amended by the NDAA for FY 2001, authorized members of 

the uniformed services on active duty or in the Ready Reserve to participate in TSP 

under the same terms and conditions as civilian Federal employees, but without 

agency matching contributions, similar to Federal civilian employees under the Civil 

Service Retirement System.291 Members of the uniformed services began enrolling on 

October 9, 2001.292

Service Secretaries are authorized to provide matching TSP contributions to a member 

in a specialty designated by the Secretary as critical to meet requirements (whether 

such specialty is designated as critical to meet wartime or peacetime requirements). 

Additionally, the member must commit to continue to serve on active duty in that 

specialty for six years.293

The Federal Retirement Thrift Investment Board (FRTIB) is an independent Federal 

agency that administers the TSP. It is charged by statute with operating the TSP

prudently and solely in the interest of its participants and beneficiaries.294 It is 

managed by a Presidentially-appointed, five-member board and an executive director 

who is appointed by the Board.295 The Board is responsible for developing the 

investment policies and overseeing the management of the TSP, which is under the 

day-to-day direction of the executive director.296 By law, the TSP must be audited 

annually.297 The most recent audit was completed on April 14, 2014.298

In addition to payroll deductions from basic pay before taxes are withheld (regular 

contributions) or after taxes have been withheld (Roth contributions), uniformed 

service members may also contribute from 1 to 100 percent of any incentive pay, 

special pay, or bonus pay, as long as the member contributes at least 1.0 percent from 

 

289 Federal Employees’ Retirement Act of 1986, Pub. L. No. 99-335, 100 Stat. 3131 (1986). 290 Pay and Allowances of the Uniformed Services, 37 U.S.C. § 211. 291 National Defense Authorization Act for FY 2000, Pub. L. No. 106-65, §§ 661-663, 113 Stat. 512, 670-674 (1999). 

National Defense Authorization Act for FY 2001, Pub. L. No. 106-398, § 661, 114 Stat. 1654, 1654A–167 (2000). 292 OSD(P&R) website: http://militarypay.defense.gov/tsp/index.html. (The later start date is because the authority 

granted by NDAA for FY 2001 allowed the Secretary of Defense to postpone enrollment up to 180 days subsequent to 

the 180 day window that TSP enrollment was supposed to begin).

293 Pay and Allowances of the Uniformed Services, 37 U.S.C. § 211(d). 294 Government Organization and Employees, 5 U.S.C. §§ 8472(h), 8477(b). 295 Government Organization and Employees, 5 U.S.C. § 8472(b). 296 Government Organization and Employees, 5 U.S.C. § 8473(f). 297 Government Organization and Employees, 5 U.S.C. § 8439(b). 298 CliftonLarsonAllen LLP, Thrift Savings Fund Financial Statements, December 31, 2013 and 2012, accessed June 2, 

2014, http://www.frtib.gov/pdf/reports/FinStmts/TSP-FS-Dec2013.pdf. 
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basic pay.299 Total contributions must not exceed the applicable Internal Revenue 

Code (IRC) contribution limits that are calculated each year.300 The IRC limit for 2014 

is $17,500.301 However, this limit does not apply to uniformed service member regular 

contributions made from tax-exempt pay earned in a combat zone.302

Plan participants are immediately vested in all of their own contributions and related 

earnings.303 Participants are also immediately vested in any agency matching 

contributions and related earnings.304 In general, participants cannot withdraw money 

from the TSP until they separate from the uniformed services unless they are 

experiencing a financial hardship or have reached age 591⁄2.305 The IRC imposes a 

10 percent additional tax penalty on distributions from TSP unless the member has 

reached age 591⁄2, dies, or becomes disabled.306

Participants may borrow from their TSP accounts under two types of loans: general 

purpose loans, which must be repaid within five years, or residential loans taken for 

the purpose of purchasing a primary residence, which must be repaid within 

15 years.307 Participant loans may be taken only from participant contributions and 

related earnings and cannot exceed the lesser of one-half of the participant’s vested 

account balance or $50,000.308 The interest rate for TSP loans is the “G Fund” interest 

rate at the time the loan agreement is issued by the plan’s record keeper.309 Interest 

earned on loans is allocated to the participant account upon repayment.310

Beneficiaries 

As of December 31, 2013, there were approximately 4.6 million participants in TSP, 

with approximately 2.9 million contributing their own money.311 Of the 4.6 million

participants, 921,000 were members of the uniformed services.312

Historical Context 

The assets of TSP are maintained in the Thrift Savings Fund, which invests the assets 

in accordance with participant instructions in five investment funds authorized by the 

Congress to be included in the plan.313 The FRTIB currently contracts with investment 

 

299 Government Organization and Employees, 5 U.S.C. § 8440e(d)(2). 300 Internal Revenue Code, 26 U.S.C. § 402(g). 301 Internal Revenue Code, 26 U.S.C. § 402(g)(4). Internal Revenue Service, IRS News Release IR-2013-86, accessed 

May 16, 2014, http://www.irs.gov/uac/IRS-Announces-2014-Pension-Plan-Limitations;-Taxpayers-May-Contributeup-to-$17,500-to-their-401(k)-plans-in-2014. 302 The limits found in Internal Revenue Code, 26 U.S.C. § 415(c) will still apply. Internal Revenue Code, 26 U.S.C. 

§ 112 excludes combat pay from income and because it is not “income” for tax purposes; combat pay is not being 

deferred and can be contributed above the excess amount.

303 Government Organization and Employees, 5 U.S.C. § 8432(g)(1). 304 Ibid. 305 Government Organization and Employees, 5 U.S.C. § 8433(h). Internal Revenue Code, 26 U.S.C. § 401(k)(2)(B). 306 Internal Revenue Code, 26 U.S.C. § 72(t). 307 Government Organization and Employees, 5 CFR 1655.5. 308 Government Organization and Employees, 5 CFR 1655.6. 309 Government Organization and Employees, 5 CFR 1655.7. 310 Government Organization and Employees, 5 CFR 1655.9(d). 311 CliftonLarsonAllen LLP, Thrift Savings Fund Financial Statements, December 31, 2013 and 2012, 6, accessed 

May 20, 2014, http://www.frtib.gov/pdf/reports/FinStmts/TSP-FS-Dec2013.pdf. 312 Federal Retirement Thrift Investment Board, 2012 Annual Report of the Thrift Savings Plan Required by Section 105 

of the TSP Enhancement Act of 2009, 3, accessed May 16, 2014, http://www.frtib.gov/pdf/reports/ToCongress/TSPAnnual-Report-2012.pdf. 313 Government Organization and Employees, 5 U.S.C. §§ 8437-8438.
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management company BlackRock Institutional Trust Company N.A., to manage the 

index funds in which the assets are invested.314

The costs of administering the TSP are paid from the assets of the Thrift Savings 

Fund.315 Administrative costs of the TSP in 2013 were 2.9 basis points (one basis 

point is 1/100 of 1.0 percent), or approximately 29 cents for each $1,000 invested.316

The TSP maintains individual accounts for each participant.317 Participant accounts 

are credited with the participant’s contributions and agency contributions, and are 

charged for withdrawals.318 The value of the participant’s account reflects the number 

of shares and the daily share prices of the funds in which the account is invested.319

Administrative expenses are a component of the share price calculation.320 The benefit 

to which a participant is entitled is the participant’s vested account.321

The TSP offers its participants various investment funds that are exposed to different 

types and amounts of risk, including interest rate, credit, and market risk.322 The 

funds (except for the G Fund, which is invested in a way to avoid losses) can be 

expected to experience greater or lesser volatility over time, depending upon each 

fund’s individual risk profile, thus affecting the fund balances from one period to the 

next.323

The G Fund assets are managed internally by the FRTIB.324 The G Fund buys a 

nonmarketable U.S. Treasury security that is guaranteed by the U.S. Government.325

The earnings consist entirely of interest income on the security.326 This is the default 

fund into which TSP contributions are deposited unless the participant specifies a 

different fund allocation.327

BlackRock Institutional Trust Company, N.A., holds the current contract with FRTIB

to manage assets for the F, C, S, and I funds. These funds are index funds, and are

invested in a manner to replicate risk and return characteristics of each respective 

fund’s benchmark index.328 Despite securities market performance or the overall 

economy, the F, C, S, and I Funds remain invested in their respective indexes.329 The 

F and C Fund assets are held in separate accounts, and the S and I Fund assets are 

 

314 CliftonLarsonAllen LLP, Thrift Savings Fund Financial Statements, December 31, 2013 and 2012, 7, accessed 

May 20, 2014, http://www.frtib.gov/pdf/reports/FinStmts/TSP-FS-Dec2013.pdf. 315 Government Organization and Employees, 5 U.S.C. § 8437(d). 316 Thrift Savings Plan website: https://www.tsp.gov/investmentfunds/fundsoverview/expenseRatio.shtml. 317 Government Organization and Employees, 5 U.S.C. § 8439(a)(1). 318 Government Organization and Employees, 5 U.S.C. § 8439(a)(2). 319 Government Organization and Employees, 5 U.S.C. § 8439(a)(3). 320 Government Organization and Employees, 5 U.S.C. § 8439(a)(3). Government Organization and Employees, 

5 CFR 1645.1-1645.6. 321 Government Organization and Employees, 5 U.S.C. § 8433. 322 Government Organization and Employees, 5 U.S.C. § 8438. 323 Government Organization and Employees, 5 CFR 1601.33 (establishes that a participant must sign an 

acknowledgement of risk form when investing in anything other than the G Fund).

324 Government Organization and Employees, 5 U.S.C. § 8438(e). 325 Ibid. 326 Ibid. (Government Organization and Employees, 5 U.S.C. § 8438(e) provides authority for the administration of the 

G Fund. Government Organization and Employees, 5 U.S.C. § 8438(e)(2)(A) provides that Treasury Obligations issued 

for the G Fund shall bear interest at a rate equal to the average market yield).

327 Government Organization and Employees, 5 U.S.C. § 8438(c)(2). 328 Government Organization and Employees, 5 U.S.C. § 8438(b). 329 “Fund Management,” Thrift Savings Plan, accessed May 16, 2014, 

https://www.tsp.gov/investmentfunds/fundsoverview/fundManagement.shtml. 
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invested in collective funds.330 These trust funds comprise investments by tax-exempt 

institutions similar to the TSP, including pension plans and endowments.331 The 

BlackRock Collective Funds operate similarly to mutual funds; however, they are not

mutual funds,332 because they are not available to individual investors. Because they 

are regulated by the Comptroller of the Currency, not by the Securities and Exchange 

Commission, they do not have ticker symbols.333

The F Fund is managed to track the Barclays Capital U.S. Aggregate Bond Index. This 

broad index includes the following sectors of the U.S. bond market: U.S. Government, 

mortgage-backed, corporate, and foreign government (issued in the United States).334

Earnings constitute interest income on the securities and relative gains in the

securities’ value.335

The C Fund is invested in a stock index fund that mirrors the Standard and Poor’s 

500 (S&P 500) Index.336 The S&P 500 is a broad market index comprising stocks of 

500 medium- to large-sized U.S. companies.337 The objective of the C Fund is to 

perform equivalent to the S&P 500.338 The earnings consist of dividend income, as well 

as gains or losses in the price of stocks.339

The S Fund is intended to match Dow Jones U.S. Completion Total Stock Market 

Index performance.340 The Dow Jones Index is a broad market index comprising

stocks of U.S. companies not included in the S&P 500 Index.341 The earnings consist 

of dividend income, as well as gains or losses in the price of stocks.342

The I Fund’s objective is matching performance of the Morgan Stanley Capital 

International EAFE (Europe, Australasia, Far East) Index. The earnings consist of 

relative gains of stock prices, dividend, and fluctuations in currencies value.343

The TSP L (Lifecycle) Funds, created in 2005, are asset allocation portfolios.344 The 

investment mixes, designed by Mercer Investment Consulting, Inc. (Mercer), are based 

on the TSP’s existing investment funds, tailored to complement the time horizon when 

the participant intends to withdraw the funds.345 The L2020, L2030, L2040, and 

L2050 Funds are designed for participants who will withdraw their accounts five years 

 

330 Ibid. 331 Ibid. 332 Ibid. 333 Ibid. 334 “F Fund: Fixed Income Index Fund,” Thrift Savings Plan, accessed May 16, 2014, 

https://www.tsp.gov/investmentfunds/fundsheets/fundPerformance_F.shtml.

335 Ibid. 336 “C Fund: Common Stock Index Fund,” Thrift Savings Plan, accessed May 16, 2014, 

https://www.tsp.gov/investmentfunds/fundsheets/fundPerformance_C.shtml. 337 Ibid. 338 Ibid. 339 “S Fund: Small Stock Index Investment Fund,” Thrift Savings Plan, accessed May 16, 2014, 

https://www.tsp.gov/investmentfunds/fundsheets/fundPerformance_S.shtml. 340 Ibid. 341 Ibid. 342 Ibid. 343 “I Fund: International Stock Index Investment Fund,” Thrift Savings Plan, accessed May 16, 2014, 

https://www.tsp.gov/investmentfunds/fundsheets/fundPerformance_I.shtml. 344 CliftonLarsonAllen LLP, Thrift Savings Fund Financial Statements, December 31, 2012 and 2011, 7, accessed 

May 17, 2014, http://www.frtib.gov/pdf/reports/FinStmts/TSP-FS-Dec2013.pdf. 345 Ibid.
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before or after the year in the title of the account.346 The L Income Fund was designed 

to produce current income for the participants who are already receiving money from 

their accounts through monthly payments.347

Financial Summary 

At the end of calendar year 2013, the assets in the TSP totaled $395 billion.348

3.5. CONCURRENT RECEIPT 

Concurrent receipt refers to the simultaneous receipt of military retired pay and 

disability compensation from the Department of Veterans Affairs (VA).349 Prior to 2004, 

a military retiree could not receive two payments from Federal agencies for the same 

purpose.350 As a result, military retirees with physical disabilities recognized by the VA 

had retired pay offset dollar for dollar by the amount of their VA compensation. The 

VA disability compensation is not taxable.351

3.5.1. CONCURRENT RETIREMENT AND DISABILITY 

PAYMENTS

The NDAA for FY 2004 authorized military retirees to receive both full military retired 

pay and VA disability compensation, regardless of the causes of the disability, as long 

as the member has at least 50 percent disability rating as determined by the VA.352

This is called the Concurrent Retirement and Disability Payment (CRDP) benefit.353

When the statute was enacted, 100 percent disabled retirees were entitled immediately 

to full concurrent receipt.354 The amount of concurrent receipt for others between 50 

and 90 percent disability was phased in over the 2004-2013 period.355 By 2014, the 

offset in retired pay for those awarded at least a 50 percent rating by the VA, was 

eliminated.356

There are two groups of retirees not eligible for CRDP.357 One group is military retirees 

with noncombat-related disabilities rated at 40 percent or less by the VA.358 The other 

group comprises retirees with service-connected disability ratings of 100 percent or 

less, and less than 20 years of service.359

 

346 Ibid. 347 Ibid. 348 CliftonLarsonAllen LLP, Thrift Savings Fund Financial Statements, December 31, 2013 and 2012, 5, accessed 

May 22, 2014, http://www.frtib.gov/pdf/reports/FinStmts/TSP-FS-Dec2012.pdf. 349 Armed Forces, 10 U.S.C. § 1414. 350 Veterans’ Benefits, 38 U.S.C. § 5304 (prohibited the duplication of benefits until the NDAA for FY 2004 was 

enacted).

351 Veterans’ Benefits, 38 U.S.C. § 5301(a). 352 National Defense Authorization Act for FY 2004, Pub. L. No. 108-136, § 641, 117 Stat. 1392, 1511-1516 (2003). 353 Ibid. 354 The Ronald W. Reagan National Defense Authorization Act for FY 2005, Pub. L. No. 108-375, § 642, 118 Stat. 1811, 

1957-1958 (2004) amended the NDAA for FY 2004 to authorize this full concurrent receipt. 355 National Defense Authorization Act for FY 2004, Pub. L. No. 108-136, § 641, 117 Stat. 1392, 1511-1516 (2003). 356 Ibid. 357 Armed Forces, 10 U.S.C. §§ 1414(a), (b). 358 Ibid. 359 Ibid.
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A retiree may not receive both Combat-Related Special Compensation (CRSC) and 

CRDP benefits.360 The retiree must choose between the two during an annual “open 

season” as specified by the statute.361 Similar to CRSC payments, the funds for the 

payment of CRDP come from the U.S. Treasury.362

3.5.2. COMBAT-RELATED SPECIAL COMPENSATION

The NDAA for FY 2003, as amended, created the CRSC.363 Military retirees (regular, 

disability, Temporary Early Retirement Authority, and most Reserve) are eligible for 

CRSC if (1) the disability is attributable to an injury for which the member was 

awarded the Purple Heart Medal and the VA rates the disability at 10 percent or 

higher, or (2) the disability rating results from the involvement in armed conflict, 

hazardous service (for example, diving, parachuting, or handling explosives), duty 

simulating war (e.g., training exercises in the field), or through an instrumentality of 

war (e.g., accidents in combat vehicles or injuries from gases used in training for 

combat).364 Retirees must apply for CRSC through their Service Component, as the 

Component is responsible for verifying the disability is combat related.365

CRSC payments are generally equal to the amount of VA disability compensation that 

is determined to be combat related.366 Retirees still have their retired pay reduced by 

the amount of the total VA disability compensation, but retirees receive the CRSC 

payment as “special compensation,”367 as the statute specifies that CRSC is not retired 

pay.368 Funding for CRSC payments comes from the U.S. Treasury.369

Beneficiaries 

As of September 30, 2013, there were 395,143 personnel receiving CRDP benefits and 

82,929 personnel receiving CRSC benefits.370

Historical Context 

A summary of significant statutes relating to disability retirement and retired pay

follows: 

 2002 – Authority for concurrent receipt of military retired pay and veterans’ 

disability compensation was approved, contingent on enactment of legislation to 

offset expenditures; minimum disability rating was reduced to 60 percent for 

receipt of special compensation for severely disabled retirees.371

 

360 Armed Forces, 10 U.S.C. § 1414(d)(1). 361 Armed Forces, 10 U.S.C. § 1414(d)(2). 362 Armed Forces, 10 U.S.C. § 1413a(h). The Treasury puts funds into the Military Retirement Fund to cover CRDP 

payments to retirees.

363 Bob Stump National Defense Authorization Act for FY 2003, Pub. L. No. 107-314, § 636, 116 Stat. 2458, 2574-2576 

(2002).

364 Armed Forces, 10 U.S.C. §§ 1413a(c), (e). 365 Armed Forces, 10 U.S.C. § 1413a(d). 366 Armed Forces, 10 U.S.C. § 1413a(b). 367 Ibid. 368 Armed Forces, 10 U.S.C. § 1413a(g). 369 Armed Forces, 10 U.S.C. § 1413a(h). The Treasury puts funds into the Military Retirement Fund to cover CRDP 

payments to retirees.

370 Department of Defense, Office of the Actuary, Statistical Report of the Military Retirement System, Fiscal Year 2013,

May 2014, 30, accessed June 6, 2014, http://actuary.defense.gov/Portals/15/Documents/statbook13.pdf. 371 National Defense Authorization Act for FY 2002, Pub. L. No. 107-107, § 641, 115 Stat. 1012, 1149-1151 (2001).
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 2003 – Concurrent receipt of military retired pay and veterans’ disability was 

authorized for veterans categorized as combat-related disabled uniformed 

services retirees, if their disability rating was 60 percent or higher.372

 2004 – Phase-in over a 10-year period (through 2013) of full concurrent receipt 

of military retired pay and veterans’ disability compensation was provided for 

military retirees with greater than 50 percent disability. Eligibility for combatrelated disability special compensation was extended to all retirees with 

combat-related disabilities, regardless of disability rating.373

 2005 – The phase-in of concurrent receipt of retired pay and veterans’ disability 

compensation was repealed for military retirees with service-connected 

disabilities rated as 100 percent, making individuals in that category 

immediately eligible for full, concurrent retired and disability compensation.374

 2008 – Eligibility for CRSC was expanded to medical retirees with fewer than 

20 years of service, subject to documentation of the link between disability and 

combat.375

Financial Summary 

As of September 30, 2013, there were 395,143 personnel who received $7.1 billion in 

annual CRDP benefits and 82,929 personnel who received $1.0 billion in annual 

CRSC benefits.376

3.6. SURVIVOR BENEFIT PLAN

Members retiring from the military are given the option to provide a lifetime monthly 

annuity to qualified survivors through the Survivor Benefit Plan (SBP).377 They may 

choose coverage for a spouse, former spouse, dependent child, or natural person with 

an insurable interest in the retiring member.378 The coverage is established on a base 

dollar amount that may not exceed the member’s retired pay.379 The usual cost of 

coverage is 6.5 percent of the base amount elected and the usual coverage is 

55 percent of the base amount elected.380 Once the member has reached age 70 or has 

participated in SBP for 360 months, the reductions in the retired pay to cover the 

retiree’s share cease.381 If a retiree elects not to participate, or to participate at a 

reduced level of coverage, the retiree’s spouse must be notified, and in the case of such 

an election made on or after March 1, 1986, the spouse must concur with the election 

to be effective.382 The coverage for children and for persons with insurable interest has 

 

372 Bob Stump National Defense Authorization Act for FY 2003, Pub. L. No. 107-314, § 636, 116 Stat. 2458, 2574-2576 

(2002).

373 National Defense Authorization Act for FY 2004, Pub. L. No. 108-136, § 641, 117 Stat. 1392, 1511-1516 (2003). 374 Ronald W. Reagan National Defense Authorization Act for FY 2005, Pub. L. No. 108-375, § 642, 118 Stat. 1811, 

1957-1958 (2004). 375 National Defense Authorization Act for FY 2008, Pub. L. No. 110-181, § 641, 122 Stat. 3, 156 (2008). 376 Department of Defense, Office of the Actuary, Statistical Report of the Military Retirement System, Fiscal Year 2013,

May 2014, 192, accessed June 6, 2014, http://actuary.defense.gov/Portals/15/Documents/statbook13.pdf. 377 Armed Forces, 10 U.S.C. § 1448(a). 378 Armed Forces, 10 U.S.C. §§ 1448(a)(1), (b)(2). 379 Armed Forces, 10 U.S.C. §§ 1447(6), 1451. 380 Armed Forces, 10 U.S.C. § 1452(a)(1). 381 Armed Forces, 10 U.S.C. § 1452(j). 382 Armed Forces, 10 U.S.C. § 1448(a)(3).
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different costs based on the age or difference in age between the member and the 

covered survivor.383

The cost of coverage is deducted from retired pay before taxes.384 DoD subsidizes 

40 to 50 percent of the total cost of the program.385 In general, SBP payments to the 

covered survivor are taxable income.386

Reserve Component members may elect to participate in the Reserve Component 

Survivor Benefit Program (RCSBP) to provide survivor protection for an eligible 

beneficiary before members are eligible to draw retired pay.387 Reserve Component 

members may decline to participate in RCSBP, but will be eligible for SBP once they 

are eligible to receive retired pay.388 There are two options under RCSBP: (1) survivor 

payments will begin on the date of the retiree’s death or the date the retiree would 

become eligible to receive retired pay, whichever is later or (2) survivor benefits begin 

immediately following the death of the retiree regardless of the age of the retiree at the 

time of death.389 The amount paid to the survivor under RCSBP is computed in the 

same manner as the SBP except that the base annuity amount is 55 percent of the 

difference between the base amount and the cost of the Reserve Component add-on 

premium.390 The added cost of RCSBP is borne completely by the Service member 

through reductions from future retired pay.391 Similar to SBP, the costs of RCSBP 

premiums are dependent on the type of coverage as well as the age of the retiree and 

the selected beneficiaries.392

Beneficiaries 

As of September 30, 2013, there were 286,893 recipients of SBP payments.393 The 

2013 Annual DoD Actuary Statistical Report of the Military Retirement System 

indicated 80 percent of Service members who retired in 2013 participated in the 

program (79 percent enlisted and 83 percent officer) compared to 60 percent in 1989 

(54 percent enlisted and 76 percent officer).394

Historical Context 

Legislation originating in 1953 provided optional survivor benefits. It was later referred 

to as the Retired Servicemen’s Family Protection Plan (RSFPP).395 The Uniformed 

Services Contingency Option Act of 1953 was the first law to permit military members 

to receive reduced retired pay during their lifetime in return for ensuring that their 

 

383 Armed Forces, 10 U.S.C. §§ 1452(b), (c). 384 Internal Revenue Code, 26 U.S.C. § 122(a). 385 “Overview of the Survivor Benefit Plan,” Office of the Secretary of Defense, accessed May 16, 2014, 

http://militarypay.defense.gov/survivor/sbp/01_overview.html. Army G-1 Deputy Chief of Staff, Retirement Services 

Office, Survivor Benefit Plan, The Simple Facts, accessed May 16, 2014, 

http://www.armyg1.army.mil/rso/docs/SBP_Simple_Facts.pdf. 386 Internal Revenue Code, 26 U.S.C. § 72(n). Provides that if the SBP premiums were excluded from income then the 

payments received by the beneficiary are taxed. If they were not excluded, then SBP payments are not taxed until the 

beneficiary receives the same amount that was paid in premiums.

387 Armed Forces, 10 U.S.C. § 1448(a)(2)(B). 388 Ibid. 389 Survivor Annuity Program Administration, DoDI 1332.42, 16-17 (2009). 390 DoD FMR, Volume 7B, 54-17 (1999). 391 Survivor Annuity Program Administration, DoDI 1332.42, 21-24 (2009). 392 Ibid. 393 Department of Defense, Office of the Actuary, Statistical Report of the Military Retirement System, Fiscal Year 2013,

May 2014, 218, accessed June 6, 2014, http://actuary.defense.gov/Portals/15/Documents/statbook13.pdf. 394 Ibid. 395 The Act of October 4, 1961, Pub. L. No. 87-381, § 2, 75 Stat. 810 (1961).
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widows and eligible children would receive an annuity after their death. Under this 

Act, retired members were in effect allowed to pass on part of their retired pay to 

future survivors.396 The Act provided, however, that the mechanism for so doing had to 

be constructed on an actuarially self-supporting basis.397 Hence, a member’s 

contribution costs (i.e., the amount of the reduction in the member’s retired or 

retainer pay), were determined on the basis of the member’s age and the age of the 

member’s eligible dependents at the time of retirement, and by whether the member 

was retired for disability or nondisability.398 Under the original Contingency Option 

Plan, members could elect, before the completion of their eighteenth year of service, to 

leave their survivors an annuity of either one-half, one-fourth, or one-eighth of their 

initial retired pay, where the amount of such “retired pay” in the case of any particular 

individual was the amount of such pay as reduced by the amount of the 

contribution.399

The RSFPP proved to be expensive to the participants and inadequate because the 

survivor annuities were never adjusted for inflation and could not be more than 

50 percent of retired pay.400 RSFPP was designed to be self-supporting in the sense 

that the present value of the reductions to retired pay equaled the present value of the 

survivor annuities.401 Pub. L. No. 92-425 replaced the RSFPP with the SBP.402 Despite 

numerous changes to the RSFPP statute, only 15 percent of eligible members 

participated in the program.403 The SBP participation rate has increased annually, and 

reached 80 percent starting in 2008.404

Although RSFPP was replaced by the SBP, RSFPP continues to cover those Service 

members who retired before 1972 but did not convert to the new plan, or who retained 

RSFPP in conjunction with SBP.405 RSFPP continues to pay survivor annuities.406

Financial Summary 

In FY 2013, SBP payments totaled $3.8 billion.407

 

396 The Uniformed Services Contingency Option Act of 1953, ch. 393, Pub. L. No. 83-239, § 3, 67 Stat. 501, 502 (1953). 397 The Uniformed Services Contingency Option Act of 1953, ch. 393, Pub. L. No. 83-239, § 4, 67 Stat. 501, 502-504 

(1953).

398 Ibid. 399 Ibid. 400 Department of Defense, Fiscal Year 2012, Military Retirement Fund Audited Financial Report, 8, accessed June 6, 

2014, http://comptroller.defense.gov/Portals/45/documents/cfs/fy2012/13_Military_Retirement_Fund/Fiscal_

Year_2012_Military_Retirement_Fund_Financial_Statements_and_Notes.pdf. 401 Government Accountability Office, Actuarial Soundness of the DoD Survivor Benefit Plan Program, GAO-06-837R

(2006), accessed June 2, 2014, http://www.gao.gov/assets/100/94369.pdf. 402 Act of September 21, 1972, Pub. L. No. 92-425, 86 Stat. 706 (1972). 403 Department of Defense, Military Compensation Background Papers, Seventh Edition, November 2011, 737, accessed 

May 14, 2014, http://militarypay.defense.gov/Docs/MC_All-Combined.pdf. 404 Department of Defense, 2012 Annual DoD Actuary Statistical Report of the Military Retirement System, 224, accessed 

May 7, 2014, http://actuary.defense.gov/Portals/15/Documents/statbook11.pdf. 405 Armed Forces, 10 U.S.C. §§ 1431-1436. 406 Ibid. 407 Department of Defense, Office of the Actuary, Statistical Report of the Military Retirement System, Fiscal Year 2013,

May 2014, 25, accessed June 6, 2014, http://actuary.defense.gov/Portals/15/Documents/statbook13.pdf.
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3.6.1. DEPENDENCY AND INDEMNITY COMPENSATION 

OFFSET

The Department of Veterans Affairs (VA) Dependency and Indemnity Compensation 

(DIC) is paid to survivors of Service members or veterans who died from: (1) a disease 

or injury incurred or aggravated in the line of duty while on active duty or active-duty 

training, (2) an injury incurred or aggravated in the line of duty while on inactive duty 

for training, or (3) a disability compensable under laws administered by VA.408 DIC 

payments are non-taxable.409

The surviving spouse or former spouse of the retiree is entitled to DIC payments from 

the VA.410 However, the spouse or former spouse is restricted by law from receiving the 

full amounts of both SBP and DIC benefits.411 The SBP benefit is offset by the amount 

of DIC received, although the total amount is equal to the full SBP benefit.412 If the 

DIC is paid to an SBP-eligible surviving spouse or former spouse, the portion of the 

deceased retiree’s original SBP premiums that are related to the amount of the SBP 

payment reduction as a result of the DIC offset will be returned to the surviving 

spouse or former spouse,413 with one exception. The Veterans Benefits Act of 2003 

eliminated the SBP-DIC offset for surviving spouses who remarry after attaining the 

age of 57, and the surviving spouse is eligible to receive full payment of both SBP and 

DIC.414 The elimination of the offset was reaffirmed by the U.S. Court of Appeals for 

the Federal Circuit in the case of Sharp v. The United States in August 2009.415

3.6.2. SPECIAL SURVIVOR INDEMNITY ALLOWANCE

In 2009, the Congress created the Special Survivor Indemnity Allowance (SSIA) to 

partially offset the DIC offset.416 At that time, those survivors subject to the SBP-DIC 

offset would receive $50 a month.417 The amount of the payment is set in statute and 

increases annually until reaching $310 per month by January 2017.418 The amount 

received under SSIA may not be greater than the amount of the SBP-DIC offset.419

SSIA is set to terminate on October 1, 2017.420

3.7. UNEMPLOYMENT COMPENSATION

Unemployment Compensation for ex-Servicemembers (UCX) provides income support 

while former active-duty Service members, or Reserve and National Guard members 

 

408 Armed Forces, 10 U.S.C. § 1310(a). 409 Veterans’ Benefits, 38 U.S.C. § 5301(a). 410 Armed Forces, 10 U.S.C. § 1310(a). 411 Armed Forces, 10 U.S.C. § 1450(c). 412 Ibid. 413 Armed Forces, 10 U.S.C. § 1450(e). 414 Veterans Benefits Act of 2003, Pub. L. No. 108-183, § 101, 117 Stat. 2651, 2652-2653 (2003). 415 Sharp v. United States, 580 F.3d 1234 (2009). 416 Thrift Savings Plan Enhancement Act of 2009, Pub. L. No. 111-31, § 201, 123 Stat. 1776, 1857-1858 (2009). 417 Armed Forces, 10 U.S.C. § 1450(m)(2)(A). 418 Armed Forces, 10 U.S.C. § 1450(m)(2)(I). 419 Armed Forces, 10 U.S.C. § 1450(m)(3). 420 Armed Forces, 10 U.S.C. § 1450(m)(6).
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released from more than 90 days of active duty, search for work.421 Former Service 

members are treated the same as other unemployed workers with respect to benefit 

levels, waiting period for benefits, and benefit duration.422

UCX is a program mandated by Federal law423 but administered by State 

governments.424 The State unemployment insurance programs provide unemployment 

benefits to eligible workers who become unemployed through no fault of their own, 

and meet certain other eligibility requirements, such as being able to work, available 

for suitable full-time work, and seeking work.425

Former Service members may apply for UCX benefits in any State.426 This is different 

than in the civilian unemployment compensation program, where benefits are 

determined by the location of the unemployed worker’s previous employment.427

Unemployment compensation eligibility criteria and benefits vary by State.

Unlike the larger U.S. unemployment insurance program, in which States fund 

unemployment compensation through a combination of employer taxes and employee 

paycheck deductions,428 funds are not deducted from Service members’ paychecks to 

fund UCX benefits. Instead, States submit the amount of UCX disbursed by the State 

to the Federal Government for reimbursement and the former employing Service (for 

example, the U.S. Air Force) pays the amount from its operating budget.429 The 

Federal Government funds these UCX benefits through the transfers from the 

appropriate Military Services’ budgets to the Unemployment Trust Fund to reimburse 

the appropriate States for the UCX benefits distributed to unemployed former Service 

members.430

When military members are separated from active duty either because of completion of 

a tour of duty, enlistment contract, disability retirement, as a result of the Selective 

Early Retirement Board, or regular retirement, and have not been unfavorably 

discharged, they may be eligible for unemployment compensation.431 If former Service 

members were Reservists formerly on active duty, they must have been on active duty 

for at least 90 continuous days.432

By law, UCX benefits are not payable during periods in which the former Service 

member is eligible to receive certain allowances or educational assistance allowances 

from two Department of Veterans’ Affairs programs—Survivors’ and Dependents’ 

Educational Assistance Program or the Vocational Rehabilitation and Education 

 

421 Government Organization and Employees, 5 U.S.C. § 8521(a)(1). 422 Government Organization and Employees, 5 U.S.C. § 8502(b) (provides that compensation will be paid in the same 

amount, on the same terms, and subject to the same conditions as the compensation which would be payable under 

the unemployment compensation law of the State if Federal wages had been included as employment and wages under 

that State law). Government Organization and Employees, 5 U.S.C. § 8521(b) makes that provision applicable to exService members.

423 Government Organization and Employees, 5 U.S.C. §§ 8521–8525. 424 Government Organization and Employees, 5 U.S.C. § 8502. 425 The Public Health and Welfare, 42 U.S.C. § 503. If a State’s unemployment laws are compliant with the 

requirements found in the statute, that State is entitled to Federal funding for its unemployment program.

426 Government Organization and Employees, 5 U.S.C. § 8522. 427 Government Organization and Employees, 5 U.S.C. § 8504. 428 Internal Revenue Code, 26 U.S.C. § 3301. 429 Government Organization and Employees, 5 U.S.C. §§ 8505, 8509. 430 Government Organization and Employees, 5 U.S.C. § 8509. 431 Government Organization and Employees, 5 U.S.C. §§ 8502, 8522. 432 Government Organization and Employees, 5 U.S.C. § 8521(a)(1).
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Program.433 The law does not preclude receipt of UCX benefits when a former Service 

member is receiving benefits from the Montgomery GI Bill or Post-9/11 GI Bill.434

Beneficiaries 

The Department of Labor confirmed 77,569 people filed first-time claims for 

unemployment benefits in the military program in 2013, compared with 71,000 in 

2008.435

Historical Context 

The program for former military members started under a 1958 law aimed partly at 

helping troops transition from life in uniform to the private sector.436

Financial Summary 

For FY 2013, approximately $747 million in UCX benefits was distributed to former 

Service members.437

3.8. SOCIAL SECURITY COMPENSATION

Service members have paid into the contributory Social Security system since 

January 1, 1957.438 For the Old Age, Survivor, and Disability Insurance (OASDI) 

program, military Service members must contribute the employee portion of the 

OASDI payroll tax, with the Federal Government contributing the matching employer 

contribution.439 Only the basic pay of a military member constitutes wages for Social 

Security purposes.440 One feature of OASDI, unique to military personnel, grants a 

noncontributory wage credit of (a) $300 for each quarter between 1956 and 1978 in 

which such personnel received military wages, and (b) up to $1,200 per year after.441

The purpose of this credit is to take into account elements of compensation, such as 

quarters and subsistence, not included in wages for Social Security benefit calculation 

purposes.442

Beneficiaries 

As full participants in the Social Security system, military personnel are in general 

entitled to the same benefits and are subject to the same eligibility criteria and rules 

as other employees.443

 

433 Government Organization and Employees, 5 U.S.C. § 8525. 434 Ibid. 435 Department of Labor Economist, e-mail to MCRMC, March 11, 2014. 436 Ex-Servicemen’s Unemployment Compensation Act of 1958, Pub. L. No. 85-848, § 3, 72 Stat. 1087, 1087–1088 

(1958).

437 Department of Labor Economist, e-mail to MCRMC, March 11, 2014. 438 The Servicemen’s and Veterans’ Survivor Benefits Act, ch. 837, Pub. L. No. 84-881, § 401, 70 Stat. 857, 869–70 

(1956).

439 Internal Revenue Code, 26 U.S.C. §§ 3101, 3111, 3121. 440 Internal Revenue Code, 26 U.S.C. § 3121(i)(2). 441 The Public Health and Welfare, 42 U.S.C. § 429. 442 Department of Defense, Fiscal Year 2012 Military Retirement Fund Audited Financial Report, 12, accessed May 15, 

2014, http://comptroller.defense.gov/Portals/45/documents/cfs/fy2012/13_Military_Retirement_Fund/Fiscal_

Year_2012_Military_Retirement_Fund_Financial_Statements_and_Notes.pdf.

443 The Public Health and Welfare, 42 U.S.C. § 402.
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Historical Context 

The Social Security Act of 1935 created a federal system of old-age benefits for retired 

workers who had been employed in industry or commerce.444 Beginning in 1946, the 

Congress enacted a series of amendments to the Social Security Act that extended 

some benefits to military personnel and their survivors.445 The Servicemen’s and 

Veterans’ Survivor Benefits Act brought members of the uniformed services on active 

duty into the contributory Social Security system effective January 1, 1957.446

Financial Summary 

For FY 2013, DoD, the USCG, and NOAA paid $4.4 billion in social security tax.447

3.9. FINANCIAL LITERACY IN THE MILITARY

DoD uses DoD Instruction 1342.22, Military Family Readiness, to establish policy, 

assign responsibilities, and establish procedures for providing military family 

readiness services to include setting requirements for financial education and 

counseling.448 Additional information on the Services’ financial management programs 

is found in Section 5.1.10.4 of this report.

DoD policy requires the following:

 Organizational goals related to recruitment, retention, morale and operational 

readiness of the military force will incorporate personal and family life.

 Primary responsibility for well-being will fall to Service members and their 

families.

 Family readiness services correlate to the challenges associated with military 

service: mobilization and deployment readiness, mobility and financial 

readiness, and personal and family life readiness. 

 Family readiness services will be provided in a collaborative manner that 

creates a network of agencies, programs, and services promoting readiness 

among military families.449

Responsibilities for implementing this policy are issued to DoD officials and 

Secretaries of the military departments. Examples of their duties include the following:

 sharing lessons learned between the Active and Reserve Components

 monitoring financial institutions operating on military installations in 

accordance with Volume 5, Chapter 34 of DoD 7000.14-R, the DoD Financial 

Management Regulation

 supporting Service members in preparing their families for their mission-related 

absence

 directing commanders to refer Service members for financial management 

services when notified those in their commands are experiencing financial 

difficulty or indebtedness450

 

444 The Social Security Act of 1935, ch. 531, Pub. L. No. 74-271, 49 Stat. 620 (1936). 445 Department of Defense, Military Compensation Background Papers, Seventh Edition, November 2011, 724, accessed 

May 14, 2014, http://militarypay.defense.gov/Docs/MC_All-Combined.pdf. 446 The Servicemen’s and Veterans’ Survivor Benefits Act, ch. 837, Pub. L. No. 84-881, § 401, 70 Stat. 857, 869–70 

(1956). 447 Appropriated Budget Data, presented in Section 6.2 of this report. 448 Military Family Readiness, DoDI 1342.22, 1 (2012). 449 Ibid, 2.
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DoD encourages Service members to adhere to the following eight financial readiness 

campaign pillars to help members and their families reach their financial goals and 

achieve financial freedom through personal financial management:

 maintain good credit

 achieve financial stability

 establish routine savings

 participate in the TSP and Savings Deposit Program

 sustain the Servicemembers’ Group Life Insurance and other insurance

 encourage low-cost loan products as alternative to payday lending and 

predatory loans

 use low-cost Morale, Welfare, and Recreation programs

 preserve security clearances451

Beneficiaries 

All uniformed Service members and their dependents are eligible to receive financial 

management services.452

 450 Ibid, 9-12. 451 Ibid, 16. 452 Ibid, 1.
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4. HEALTH BENEFITS

4.1. DEPARTMENT OF DEFENSE PROGRAMS 

The Military Health System (MHS) performs two functions, albeit to different degrees. 

Primarily, the MHS maintains a healthy, ready military force and provides combat 

casualty care and humanitarian relief in theater.1 The MHS also provides health care 

to family members, military retirees, survivors, and certain former spouses.2 To 

perform these missions, the MHS comprises inpatient and outpatient facilities (usually 

Military Treatment Facilities (MTFs), but also facilities of the other nonmilitary 

uniformed services); military medical personnel; and network and non-network

participating civilian health providers, facilities, and pharmacies.3

The MHS serves approximately 9.5 million beneficiaries.4 Worldwide, the MHS employs 

approximately 167,000 military and civilian medical professionals.5 For FY 2014, the 

MTF system was projected to include 56 hospitals and medical centers, 360 outpatient 

clinics, and 262 dental clinics.6

MTFs provide health care to the various beneficiary groups on a priority basis.7 Activeduty Service members may receive medical and dental care in any MTF of any service.8

Subject to the availability of space and facilities and to the capabilities of the staff, 

dependents of active-duty Service members are also entitled, upon request, to medical 

and dental care at an MTF.9 However, access to military Dental Treatment Facilities 

(DTFs) is restricted for those enrolled in the TRICARE Dental Program (TDP).10

 

1 See generally Armed Forces, 10 U.S.C. ch. 55. See also Assistant Secretary of Defense for Health Affairs, 

DoDD 5136.01, 9-10 (2013), accessed May 19, 2014, http://www.dtic.mil/whs/directives/corres/pdf/513601p.pdf. 

“Defense Health Agency,” Military Health Service and Defense Health Agency, accessed May 19, 2014, 

http://health.mil/About-MHS/Defense-Health-Agency. “Global Preparedness and Response,” Military Health Service 

and Defense Health Agency, accessed May 19, 2014, http://health.mil/Military-Health-Topics/HealthReadiness/Global-and-Domestic-Health-Preparedness-and-Response. 2 See generally Armed, Forces, 10 U.S.C. ch. 55. See also “Defense Health Agency,” Military Health System and Defense 

Health Agency, accessed May 19, 2014, http://www.health.mil/About-MHS/Defense-Health-Agency. Department of 

Defense, Evaluation of the TRICARE Program, Fiscal Year 2014 Report to Congress, 4, accessed June 20, 2014, 

http://www.tricare.mil/tma/congressionalinformation/downloads/TRICARE%20Program%20Effectiveness%20%28FY

%202014%29%201.pdf. 3 Ibid.

4 Department of Defense, Evaluation of the TRICARE Program, Fiscal Year 2014 Report to Congress, 5, accessed 

June 20, 2014, 

http://www.tricare.mil/tma/congressionalinformation/downloads/TRICARE%20Program%20Effectiveness%20%28FY

%202014%29%201.pdf. 5 “Chief Human Capital Office,” Health.mil, accessed April 10, 2014, http://www.health.mil/AboutMHS/Organizational-Overview/Human-Capital-Office. 6 Department of Defense, Evaluation of the TRICARE Program, Fiscal Year 2014 Report to Congress, 11, accessed 

June 20, 2014, 

http://www.tricare.mil/tma/congressionalinformation/downloads/TRICARE%20Program%20Effectiveness%20%28FY

%202014%29%201.pdf. 7 Armed Forces, 10 U.S.C. § 1074. 8 Ibid.

9 Armed Forces, 10 U.S.C. § 1076. 10 Armed Forces, 10 U.S.C. § 1077(c). With limited exceptions, dependents of active duty, selected Reserve, and 

Individual Ready Reserve members enrolled in TDP may not obtain TDP-covered benefit services in military dental care 

facilities. The limited exceptions include: emergency treatment, dental care provided outside the United States, dental 
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Unlike active-duty Service members and their dependents, retirees are not entitled to 

receive health care at MTFs.11 However, retirees may, upon request, receive medical 

and dental care in an MTF, subject to the availability of space and facilities and the 

capabilities of the medical and dental staff.12

DoD established the following priorities for access to health care in MTFs:13

 Priority 1: Active-duty Service members

 Priority 2: Family members of active-duty Service members who are enrolled in 

TRICARE Prime, (all TRICARE programs are discussed below), transitional 

survivors of Service members who died on active duty and who are enrolled in 

TRICARE Prime, and North Atlantic Treaty Organization/Partnership for Peace 

Status of Forces Agreement and other foreign military family members 

pursuant to applicable international agreements

 Priority 3: Retirees, their family members and survivors who are enrolled in 

TRICARE Prime, and TRICARE Plus beneficiaries when being appointed for 

primary care at the MTF where they are enrolled 

 Priority 4: Family members of ACTIVE-duty Service members who are not 

enrolled in TRICARE Prime, transitional survivors of deceased active-duty 

Service members who are not enrolled in TRICARE Prime, and TRICARE 

Reserve Select beneficiaries

 Priority 5: Retirees, their family members, and survivors who are not enrolled 

in TRICARE Prime, and TRICARE Plus beneficiaries being appointed for 

specialty care at the MTF where they are enrolled

The MHS contracts with civilian providers (referred to as purchased care) to 

supplement MTFs (commonly called direct care).14 Three TRICARE regional offices 

manage purchased care.15 Health Net Federal Services provides contracted health care 

in the North, Humana Military Healthcare Services delivers care in the South, and 

UnitedHealthcare supports the West region.16

 services incidental to medical services, and dental services provided to dependents 12 years of age or younger by 

postgraduate dental residents at a DTF under a dental education program. 11 Armed Forces, 10 U.S.C. § 1074. 12 Ibid. 13 Department of Defense, DOD Health Affairs Policy Memo 11-005, TRICARE Policy for Access to Care, accessed April 

10, 2014,

http://www.health.mil/~/media/MHS/Policypercent20Files/Import/11-005.ashx. 14 Department of Defense, Evaluation of the TRICARE Program: Access, Cost, and Quality, Fiscal Year 2013 Report to 

Congress, 4, accessed June 20, 2014, 

http://tricare.mil/tma/dhcape/program/downloads/TRICARE2013%2002_28_13%20v2.pdf. 15 Ibid. 16 Ibid, 5.
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Historical Context 

In July 1775, the Congress established a “hospital” (technically a medical 

department).17 It was staffed with a director-general (chief physician), four surgeons, 

an apothecary (pharmacy), and nurses (who were usually wives or widows of military 

personnel) to care for military members.18 The Congress authorized and required the 

Secretaries of War, Navy, and Treasury to build Navy hospitals, with an initial 

appropriation of $50,000, to begin in 1811.19 In 1818, Secretary of War John C. 

Calhoun established a permanent medical department.20 In 1884, the Congress 

directed, “medical officers of the Army and contract surgeons shall whenever 

practicable attend the families of the officers and soldiers free of charge.”21 In 1943, 

the Congress authorized emergency maternity and infant care, providing for maternity 

and infant care for wives and children of enlisted Service members.22 The program was 

administered by State health agencies.23

On December 7, 1956, the Dependents’ Medical Care Act became effective.24 This law 

authorized ambulatory care for active-duty family members, effective October 1, 

1956.25 The Military Medical Benefits Amendments of 1966 created what would be 

called the Civilian Health and Medical Program of the Uniformed Services 

(CHAMPUS).26 Amendments relating to outpatient care in civilian facilities for spouses 

and children of members of uniformed services on active duty for more than 30 days 

became effective October 1, 1966.27 Retirees, their family members, and certain 

surviving family members of deceased military sponsors joined the program on 

January 1, 1967.28 In the 1980s, the search for ways to improve access to top-quality 

medical care, while keeping costs under control, led to several CHAMPUS 

“demonstration” projects in various parts of the United States, a major one being the 

“CHAMPUS Reform Initiative” (CRI) in California and Hawaii.29 CHAMPUS, now known 

as TRICARE, was “established for the purpose of implementing a comprehensive 

managed health care program for the delivery and financing of health care services in 

the Military Health System.”30

 

17 Mary C. Gillett, The Army Medical Department, 1775-1818 (Washington, DC: Government Printing Office, 1981), 22, 

accessed June 11, 2014, http://history.amedd.army.mil/booksdocs/rev/gillett1/ch2.html. 18 Ibid. 19 An Act Establishing Naval Hospitals, Statutes at Large, I-II, Chapter XXVI (1811). 20 Mary C. Gillett, The Army Medical Department, 1818-1865 (Washington, DC: Government Printing Office. 1981), 27, 

accessed June 11, 2014, http://history.amedd.army.mil/booksdocs/civil/gillett2/amedd_1818-1865_chpt2.html. 21 Act of 5 July 1884, Army Appropriations, Statutes at Large, XXIII, Chapter 217 (1884). 22 Labor-Federal Security Appropriation Act, 1944, Pub. L. No. 78-135, 57 Stat. 494, 497 (1943). 23 Ibid. 24 Dependents’ Medical Care Act, Pub. L. No. 84-569, 70 Stat. 250 (1956). 25 Ibid. 26 Military Medical Benefits Amendments of 1966, Pub. L. No. 89-614, 80 Stat. 862 (1966). 27 Military Medical Benefits Amendments of 1966, Pub. L. No. 89-614, § 3, 80 Stat. 862, 866 (1966). 28 Ibid. 29 National Defense Authorization Act, 1987, Pub. L. No. 99-661, 100 Stat. 3816 (1986). Department of Defense 

Appropriations Act, 1988, Pub. L. No. 100-202, § 8104, 101 Stat. 1329, 1329-80 (1987). 30 National Defense, 32 CFR 199.17(a).
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The following table depicts the evolution of the DoD health care benefit: 

Table 3. TRICARE Program and Benefits Timeline: FY 1995–FY 201331

1956 Dependents’ Medical Care Act enacted32

Authorized ambulatory care for active-duty family members began33

Dental care to dependents only in emergencies to relieve pain and suffering, as a necessary adjunct to the 

medical or surgical treatment for which the dependent is hospitalized, and OCONUS areas or remote 

CONUS locations where adequate civilian dental facilities were unavailable began34

1966 Military Medical Benefits Amendments of 1966 adopted35

Types of medical care for dependents that can be provided in facilities of uniformed services defined36

Medical care payment provisions for dependents established 37

1967 CHAMPUS created38

Retirees, their family members, and certain surviving family members of deceased military sponsors 

brought into CHAMPUS39

1988 CHAMPUS Reform Initiative (CRI) in CA and HI adopted40

CHAMPUS Prime introduced41

1993 CRI expanded in other States42

The new program renamed “TRICARE.” 

Three plan options introduced: TRICARE Prime, TRICARE Standard, and TRICARE Extra (CHAMPUS evolved 

into “TRICARE Standard”)

1995 TRICARE benefit began in the Northwest Region

Expanded Active-Duty Dental Benefit Plan began

1996 Cancer Treatment Clinic Trial demonstration began

Requirement for outpatient nonavailability statement dropped

TRICARE website launched

1997 National Mail Order Pharmacy program began

TRICARE Standard/Extra added comprehensive preventive benefits

TRICARE Retiree Dental Program began

1998 TRICARE implementation completed

1999 TRICARE Prime Remote benefit began

Nonavailability statements requirement for maternity care instituted

2000 Expansion of TRICARE Retiree Dental Program to dependents began

TRICARE benefits expanded to cover school physicals

 

31 Department of Defense, Evaluation of the TRICARE Program, Fiscal Year 2014 Report to Congress, March 15, 2013, 8, 

accessed June 20, 2014, 

http://www.tricare.mil/tma/congressionalinformation/downloads/TRICARE%20Program%20Effectiveness%20%28FY

%202014%29%201.pdf (unless otherwise cited). 32 Dependents’ Medical Care Act, Pub. L. No. 84-569, 70 Stat. 250 (1956). 33 Dependents’ Medical Care Act, Pub. L. No. 84-569, § 103(f), 70 Stat. 250, 251 (1956). 34 Dependents’ Medical Care Act, Pub. L. No. 84-569, § 103(h), 70 Stat. 250, 252 (1956). 35 Military Medical Benefits Amendments of 1966, Pub. L. No. 89-614, 80 Stat. 862 (1966). 36 Military Medical Benefits Amendments of 1966, Pub. L. No. 89-614, § 2(4), 80 Stat. 862, 863 (1966). 37 Military Medical Benefits Amendments of 1966, Pub. L. No. 89-614, 80 Stat. 862 (1966). 38 Ibid. 39 Military Medical Benefits Amendments of 1966, Pub. L. No. 89-614, § 3, 80 Stat. 862, 866 (1966). 40 National Defense Authorization Act, 1987, Pub. L. No. 99-661, 100 Stat. 3816 (1986). Department of Defense 

Appropriations Act, 1988, Pub. L. No. 100-202, § 8104, 101 Stat. 1329, 1329-80 (1987). 41 Congressional Budget Office, Reforming the Military Health Care System, 36-38, accessed April 14, 2014, 

https://www.cbo.gov/sites/default/files/cbofiles/ftpdocs/84xx/doc8450/88-cbo-006.pdf. 42 Department of Defense Appropriations Act, 1993, Pub. L. No. 102-396, § 9032, 106 Stat. 1876, 1907 (1992).
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2001 TRICARE for Life benefit began43

TRICARE eliminated Prime copays for active-duty family members

TRICARE Senior Pharmacy benefit began

TRICARE simplified and reduced copay structure for prescription drugs

Permanent chiropractic care benefit in MTFs for active-duty Service members instituted

Medal of Honor recipients receive entitlement44

Certain travel expenses reimbursed45

School physicals for certain minor dependents covered46

TRICARE Plus program initiated47

2002 TRICARE Prime Remote benefit for active-duty family members began

2003 TRICARE Prime Remote modified to allow family members residing in Prime Remote locations to remain 

enrolled when sponsors undergo Permanent Change of Station on unaccompanied tour

Requirement for Guard/Reserve sponsor’s activation orders TRICARE Global Remote Overseas benefit 

began

Requirements for TRICARE Standard beneficiaries to obtain a nonavailability statement eliminated except 

for mental health

2004 Transitional Assistance Management Program coverage permanently extended to 180 days following 

active duty

Elimination of nonavailability statements except for inpatient mental health48

2005 TRICARE Reserve Select benefit began

2006 Opportunity to purchase TRS extended to all qualifying members of the National Guard and Reserve

2007 Anesthesia and other costs for dental care for certain children and other beneficiaries authorized

Eligibility expanded for Selected Reserve members

Claims processed under TRICARE program and Medicare program standardized

Mental health screening and services for members of the Armed Forces enhanced

TRS simplified and opened to all Reservists other than those with Federal Employees Health Benefits Plan

Disease management program expanded to include TRICARE Standard beneficiaries49

2008 Mental health care program included in definition of health care

2009 Active Duty Dental Program implemented

TRICARE Pharmacy manufacturer refunds are established retroactive to January 2008

Outpatient Prospective Payment System implemented

Copays for preventive services for certain TRICARE Standard beneficiaries eliminated50

2010 TRICARE Overseas Program began health care delivery

TRICARE Retired Reserve program launched allowing retirees to purchase TRICARE health coverage for 

themselves and eligible family members

Coverage for National Guard/Reserve for early eligibility expanded51

 

43 Floyd D. Spence National Defense Authorization Act for FY 2001, Pub. L. No. 106-398, § 712, 114 Stat. 1654A-1, 

1654A-176 (2000). 44 Floyd D. Spence National Defense Authorization Act for FY 2001, Pub. L. No. 106-398, § 706, 114 Stat. 1654A-1, 

1654A-175 (2000). 45 Floyd D. Spence National Defense Authorization Act for FY 2001, Pub. L. No. 106-398, § 758, 114 Stat. 1654A-1, 

1654A-199 (2000). 46 Floyd D. Spence National Defense Authorization Act for FY 2001, Pub. L. No. 106-398, § 703, 114 Stat. 1654A-1, 

1654A-174 (2000). 47 Department of Defense, Policy Memorandum to Refine Policy for Access to Care in Medical Treatment Facilities and 

Establish the TRICARE Plus Program (Jun. 22, 2001), accessed April 14, 2014, http://health.mil/~/media/MHS/Policy 

Files/Import/01-015.ashx. 48 Floyd D. Spence National Defense Authorization Act for FY 2001, Pub. L. No. 106-398, § 728, 114 Stat. 1654A-1, 

1654A-189 (2000) (as amended by National Defense Authorization Act for FY 2002, Pub. L. No. 107-107, § 735, 115 

Stat. 1012, 1171 (2001)).

49 John Warner National Defense Authorization Act for FY 2007, Pub. L. No. 109-364, § 734, 120 Stat. 2083, 2299 

(2006).

50 Duncan Hunter National Defense Authorization Act for FY 2009, Pub. L. No. 110-417, § 711, 122 Stat. 4356, 4500 

(2008).

51 Armed Forces, 10 U.S.C. § 1074(d).
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2011 TRICARE Young Adult began offering TRICARE Standard coverage to certain beneficiaries through age 25

TRICARE Pharmacy copay decreased for the home-delivery option and increased for retail pharmacy 

purchases

TRICARE Prime enrollment fee adjusted and authorized to be changed annually except for survivors and 

certain significantly injured or ill retirees

2012 Copays for authorized preventive services eliminated

TYA extended to offer TRICARE Prime coverage

2013 Copays increased for brand name and nonformulary medications that are not filled at military clinics or 

hospitals52

Tobacco cessation medications covered through the TRICARE Pharmacy Home Delivery program53

Number of Prime Service Areas reduced54

Department of Defense Costs to Provide Health Benefits 

Although the following sections describe TRICARE and other health benefit programs, 

budgetary funding for these individual programs cannot be determined. Instead, most 

DoD health benefits are funded centrally through the Defense Health Program (DHP).55

As identified in Section 6, DHP funding was more than $30 billion in FY 2013 and 

represented approximately eight percent of total compensation funding.56 In addition, 

some costs of providing these benefits exist beyond the DHP. For example, the cost of 

the military medical personnel supporting the DHP is accounted for in the military 

personnel budget accounts and not the DHP budget account.57 In FY 2013, these 

additional costs were approximately $18 billion, providing a total cost of approximately 

$48 billion for DoD funded health programs.

Furthermore, Medicare-eligible DoD beneficiaries are funded separately.58 These 

benefits are funded in the budget at the point at which the government accrues the 

liability for the benefit through an accrual fund.59 As identified in Section 6, DoD 

payments to this fund were approximately $8 billion in FY 2013.60 This total includes 

the normal cost contribution for future Medicare-eligible retirees and an amortization 

payment for the unfunded liability of existing retirees when the fund was created.

In FY 2013, 9.46 million people were eligible for the TRICARE benefit.61 Of those 

eligible beneficiaries, 8.03 million actually used the TRICARE program; however, only 

5.19 million enrolled in the program.62 Figure 16 displays these figures, broken out by 

beneficiary category.

 

52 National Defense Authorization Act for FY 2013, Pub. L. No. 113-66, § 712, 127 Stat. 672, 793 (2013). 53 TRICARE: Smoking Cessation Program, 78 Fed. Reg. 13236 (2013). 54 TRICARE Operations Manual, 6010.56-M, Chapter 27, Section 1 (2008) (C-122, March 26, 2014) (2014). 55 Appropriated Budget Data, presented in Section 6.2 of this report. 56 Ibid. 57 Under Secretary of Defense (Comptroller), Defense Health Program Fiscal Year (FY) 2014 Budget Estimates Budget 

Item Justification, Procurement Program, accessed June 5, 2014, 

http://comptroller.defense.gov/Portals/45/Documents/defbudget/fy2014/budget_justification/pdf/09_Defense_Healt

h_Program/VOL_II/VOL_II_Sec_2_Procurement_P-40_DHP_PB14.pdf. 58 Appropriated Budget Data, presented in Section 6.2 of this report. 59 Armed Forces, 10 U.S.C. § 1111. 60 Appropriated Budget Data, presented in Section 6.2 of this report. 61 Department of Defense, Evaluation of the TRICARE Program, Fiscal Year 2014 Report to Congress, 19, accessed 

June 20, 2014, 

http://www.tricare.mil/tma/congressionalinformation/downloads/TRICARE%20Program%20Effectiveness%20%28FY

%202014%29%201.pdf. 62 Ibid. 
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Figure 16. Average Number of FY 2013 Eligibles, Enrollees, and Users63

The President’s Budget Proposals for FY 2015 

The President’s Budget for FY 2015 (PB15) includes three main TRICARE initiatives: 

the consolidation of TRICARE Prime, Standard, and Extra options into one plan, an 

adjustment in pharmacy copays, and the introduction of an enrollment fee for TFL 

beneficiaries.64 DoD has proposed increasing cost-shares for pharmaceuticals and 

enrollment fees for TFL in past budget cycles.65 The “consolidated TRICARE health 

plan” is a new initiative for FY 2015.66

The consolidated TRICARE health plan proposal would have one TRICARE plan for 

active-duty Service members, family members, and non-Medicare eligible retirees. To 

participate, beneficiaries would be required to enroll each year. Retirees would pay an 

annual premium indexed to cost of living adjustments; active-duty Service members 

and their families would be exempt from paying an enrollment fee.67 Most copays 

 

63 Ibid. Note: Numbers may not sum to bar totals due to rounding. 64 For a description of the PB15 health care proposals, see Office of the Undersecretary of Defense (Comptroller), United 

States Department of Defense Fiscal Year 2015 Budget Request Overview (March 2014), 5-10 – 5-14, accessed April 14, 

2014, http://comptroller.defense.gov/Portals/45/Documents/defbudget/fy2015/fy2015_Budget_

Request_Overview_Book.pdf.

65 For example, the President’s Budget for FY 2013 and FY 2014 included proposals to adjust pharmacy copays and 

establish an enrollment fee for TRICARE for Life. See Office of the Undersecretary of Defense (Comptroller), United 

States Department of Defense Fiscal Year 2013 Budget Request Overview (February 2012), 5-3, accessed April 14, 

2014, http://comptroller.defense.gov/Portals/45/Documents/defbudget/fy2013/FY2013_Budget_Request_ 

Overview_Book.pdf. See also Office of the Undersecretary of Defense (Comptroller), United States Department of Defense 

Fiscal Year 2014 Budget Request Overview (April 2013), 5-3, accessed April 14, 2014, http://comptroller.defense.gov/ 

Portals/45/Documents/defbudget/fy2014/FY2014_Budget_Request_Overview_Book.pdf. 66 For a description of the PB15 health care proposals, see Office of the Undersecretary of Defense (Comptroller), United 

States Department of Defense Fiscal Year 2015 Budget Request Overview (March 2014), 5-10 – 5-14, accessed April 14, 

2014, http://comptroller.defense.gov/Portals/45/Documents/defbudget/fy2015/fy2015_Budget_

Request_Overview_Book.pdf.

67 Office of the Undersecretary of Defense (Comptroller), United States Department of Defense Fiscal Year 2015 Budget 

Request Overview (March 2014), 5-10 – 5-14, http://comptroller.defense.gov/Portals/45/Documents/defbudget/

fy2015/fy2015_Budget_Request_Overview_Book.pdf. 
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would increase and be tiered according to venue of care, ranging from the lowest at 

MTFs, with higher copays at in-network providers, and the highest at out-of-network 

providers. Under the proposal, MTFs would be free to active-duty Service members 

and their families, but would cost $10 or $20 for working-age retirees’ primary care 

and specialist care, respectively. Deductibles, which in accordance with the current 

and proposed system only apply to out-of-network care, would increase, as would 

catastrophic caps.68

Increased cost-sharing for pharmaceuticals would build on adjustments to pharmacy 

costs set forth in the NDAA FY 2013.69 PB15 includes a gradual increase in pharmacy 

copays spanning 10 years and a requirement to fill maintenance medications at MTFs 

or through the TRICARE mail order pharmacy program.70 Beneficiaries would continue 

to be able to fill prescriptions at MTFs for free.71

The PB15 proposal includes a TFL Enrollment Fee for Medicare-eligible retirees.72

Currently, retirees participating in TFL pay an annual premium for Medicare Part B, 

but not for TRICARE.73 According to the PB15 proposal, future TFL beneficiaries would 

pay an annual fee based on their retired pay. The fee would be phased in during a 

four-year period and indexed to cost of living adjustments after FY 2018. Current 

users of TFL program would be grandfathered.74

4.1.1. TRICARE PRIME

TRICARE Prime is a health benefit most closely resembling a Health Maintenance 

Organization (HMO), a type of health insurance plan that limits coverage to care from 

doctors who work for or contract with the plan.75 Active-duty members are 

automatically enrolled in TRICARE Prime, as it is their only option; however, 

dependents of active-duty members must enroll, and enrollment is subject to 

availability.76 Participants in the program must either choose a primary care manager 

(PCM) or be assigned one.77 The PCM provides primary care and referrals for specialty 

care and nonemergent inpatient care.78 TRICARE Prime gives beneficiaries priority 

access for treatment in military facilities.79 Specialty care requires referrals and/or 

authorizations.80 A point-of-service (POS) option permits enrollees to seek care from 

 

68 Ibid. 69 National Defense Authorization Act for FY 2013, Pub. L. No. 112-239, §§ 702, 712, 716, 126 Stat. 1632 (2013). 70 Office of the Undersecretary of Defense (Comptroller), United States Department of Defense Fiscal Year 2015 Budget 

Request Overview (March 2014), 5-13, accessed April 14, 2014, http://comptroller.defense.gov/Portals/

45/Documents/defbudget/fy2015/fy2015_Budget_Request_Overview_Book.pdf.

71 Ibid. 72 Ibid, 5-11 and 5-14. 73 “TRICARE for Life,” Department of Defense, accessed June 20, 2014, 

http://www.tricare.mil/Plans/HealthPlans/TFL.aspx. 74 Office of the Undersecretary of Defense (Comptroller), United States Department of Defense Fiscal Year 2015 Budget 

Request Overview (March 2014), 5-11 and 5-14, accessed April 14, 2014, http://comptroller.defense.gov/Portals/45/

Documents/defbudget/fy2015/fy2015_Budget_Request_Overview_Book.pdf. 75 Department of Defense, TRICARE Choices at a Glance, 3, accessed June 20, 2014, 

http://www.tricare.mil/~/media/Files/TRICARE/Publications/BrochuresFlyers/Choices_Glance_BR.pdf. 76 National Defense, 32 CFR 199.17(c)(1). See also National Defense, 32 CFR 199.17(c)(2). (Exception to this rule found 

in 32 CFR 199.17(b)(3) where certain dependents are automatically enrolled in TRICARE Prime.)

77 National Defense, 32 CFR 199.17(n)(2). 78 Ibid. 79 National Defense, 32 CFR 199.17(n)(1)(ii). 80 National Defense, 32 CFR 199.17(n)(2).
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providers other than the assigned PCM without a referral, but with higher deductibles 

and cost shares than those under TRICARE Standard.81

Beneficiaries 

The following beneficiaries are eligible for TRICARE Prime:82

 active-duty Service members and their family members

 retired Service members and their family members (when retired service 

members and their families become eligible for TRICARE for Life, they are no 

longer able to enroll in TRICARE Prime)

 activated Reserve and National Guard members and their family members

 nonactivated Reserve and National Guard members, and their family members, 

who qualify for care under the Transitional Assistance Management Program 

(TAMP) (see Section 4.1.13.3)

 retired Reserve and National Guard members (age 60 and receiving retirement 

pay) and their family members

 qualified survivors 

 Medal of Honor recipients and their family members

 qualified former spouses

Financial Summary 

The following highlights the costs for TRICARE Prime:

 For active-duty Service members and their families, surviving spouses (during 

the first three years), and surviving dependent children enrolled in TRICARE 

Prime, there are no costs.83

 In FY 2014, retired Service members, their families, surviving spouses (after 

first three years), and eligible former spouses pay an annual premium of 

$273.84 for an individual and $547.68 for a family (two or more people).84

 Retired Service members, their families, surviving spouses (after first three 

years), and eligible former spouses pay no annual deductible or copays for 

clinical preventive services on this plan. This group does, however, pay a $12 

copayment for outpatient visits.85

As reflected in Figure 17, participant fees for families and survivors of retirees under 

age 65 enrolled in TRICARE Prime were set in 1995 and remained unchanged at $230 

per year for individual plans and $460 per year for family plans until October 1, 

2011.86 Costs for retirees who were already in the program, as well as survivors of 

active-duty Service members and medically retired participants, remained at $230 and 

$460 per year until September 30, 2012. Beneficiaries who joined TRICARE Prime in 

FY 2012 paid $260 for an individual plan and $520 for a family plan.87 For FY 2013 

 

81 National Defense, 32 CFR 199.17(n)(3). 82 National Defense, 32 CFR 199.17. National Defense, 32 CFR 199.3. National Defense, 32 CFR 199.25(a)(4)(iv). 

TRICARE Enrollment Policy for Activating Reserve Component Members and Their Families, Office of the Assistant 

Secretary of Defense, HA Policy 10-007 (2010). “TRICARE Prime,” accessed June 20, 2014, 

http://www.tricare.mil/Plans/HealthPlans/Prime.aspx. 83 Department of Defense, TRICARE Choices at a Glance, 3, accessed June 20, 2014, 

http://www.tricare.mil/~/media/Files/TRICARE/Publications/BrochuresFlyers/Choices_Glance_BR.pdf. 84 Ibid. 85 Ibid. 86 Department of Defense, Evaluation of the TRICARE Program, Fiscal Year 2012 Report to Congress, 7, accessed 

June 20, 2014, http://mldc.whs.mil/public/docs/library/health/2012_-_DoD_-_TRICARE_Evaluation_Report_-

_FY12.pdf. 87 Ibid.
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the premiums for retirees rose at the rate of COLA.88 Between 1999 and 2013, the 

TRICARE Prime annual premium rose 17 percent.89 In comparison, private sector 

workers’ annual premiums for their health insurance plans rose from approximately 

$1,500 in 1999 to more than $4,500 in 2013, an increase of 196 percent.90

Figure 17. Annual Family Enrollment Fees (Premiums)91,92

4.1.2. TRICARE STANDARD

TRICARE Standard is a fee-for-service, non-network plan.93 TRICARE Standard 

preserves broad freedom of choice of civilian providers, but does not offer reduced outof-pocket costs.94 These beneficiaries continue to be eligible to receive care in MTFs on 

a space available basis.95 All beneficiaries pay cost shares; with TRICARE Extra, 

 

88 Department of Defense, Evaluation of the TRICARE Program: Access, Cost, and Quality, Fiscal Year 2013 Report to 

Congress, 7, accessed June 20, 2014, 

http://tricare.mil/tma/dhcape/program/downloads/TRICARE2013%2002_28_13%20v2.pdf. 89 Ibid. TRICARE Management Activity, Office of Communications & Customer Service, TRICARE 2000 Stakeholders’ 

Report, Vol. II, accessed June 11, 2014, http://www.tricare.mil/stakeholders/downloads/stakeholders_2000.pdf. 90 “Employer Health Benefits: 2013 Annual Survey,” The Kaiser Family Foundation and Health Research & Educational 

Trust, 75, accessed April 14, 2014, http://kff.org/private-insurance/report/2013-employer-health-benefits/. 91 Data from the Kaiser Family Foundation and Health Research & Educational Trust, Employer Health Benefits: 2013 

Annual Survey, August 2013, 75, accessed April 14, 2014, 

http://kaiserfamilyfoundation.files.wordpress.com/2013/08/8465-employer-health-benefits-20132.pdf. Department of 

Defense, Evaluation of the TRICARE Program, Fiscal Year 2012 Report to Congress, 7, accessed June 20, 2014, 

http://mldc.whs.mil/public/docs/library/health/2012_-_DoD_-_TRICARE_Evaluation_Report_-_FY12.pdf. Department 

of Defense, Evaluation of the TRICARE Program: Access, Cost, and Quality, Fiscal Year 2013 Report to Congress, 7, 

accessed June 20, 2014, http://tricare.mil/tma/dhcape/program/downloads/TRICARE2013%2002_28_13%20v2.pdf. 92 Only non-Medicare eligible retirees and their family members pay TRICARE Prime premiums. 93 National Defense, 32 CFR 199.17(a)(6)(ii)(C). National Defense, 32 CFR 199.17(f). Department of Defense, Evaluation 

of the TRICARE Program Fiscal Year 2014 Report to Congress, 5, accessed June 20, 2014, 

http://www.tricare.mil/tma/congressionalinformation/downloads/TRICARE%20Program%20Effectiveness%20%28FY

%202014%29%201.pdf. 94 National Defense, 32 CFR 199.17(a)(6)(ii)(C). 95 Ibid.
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however, beneficiaries pay a reduced percentage if they select providers or services 

within the TRICARE network (see TRICARE Extra).96

TRICARE Standard does not require enrollment or associated fees, but does include an 

annual deductible for outpatient services and cost-shares for most services.97

Coverage under this plan is automatic as long as the individual is eligible for TRICARE 

when registered in the Defense Enrollment Eligibility Reporting System (DEERS).98

TRICARE Prime enrollees retain the freedom to obtain services from civilian providers 

on a point-of-service basis. In such cases, all requirements applicable to standard 

CHAMPUS shall apply, except there are larger deductible and cost sharing 

requirements.99 TRICARE Standard beneficiaries who are eligible for Medicare based 

on age (and are enrolled in Medicare Part B) are automatically covered under TRICARE 

Standard.100

Beneficiaries 

The following beneficiaries are eligible for TRICARE Standard:101

 family members of active-duty Service members

 retired Service members and their family members

 family members of activated Reserve and National Guard members

 nonactivated Reserve and National Guard members, and their family members, 

who qualify for care under TAMP (see Section 4.1.13.3) 

 retired Reserve and National Guard members (age 60 and receiving retirement 

pay) and their family members

 qualified survivors

 Medal of Honor recipients and their family members

 qualified former spouses

Financial Summary 

TRICARE Standard annual deductible and cost-shares vary depending on beneficiary 

status (e.g. active-duty family member, retiree), rank, and services required.102

Annual deductible amounts range from $0 for family members of Reserve or Guard 

members ordered to active service for more than 30 consecutive days in support of a 

contingency operation, to $100 for a family with sponsor rank of E-4 or lower, to $300 

for a family with sponsor rank of E-5 or higher, retirees, and all others.103

 

96 National Defense, 32 CFR 199.17(a)(6)(ii)(B). National Defense, 32 CFR 199.17(e). Department of Defense, TRICARE 

Choices at a Glance, 3, accessed June 20, 2014, 

http://www.tricare.mil/~/media/Files/TRICARE/Publications/BrochuresFlyers/Choices_Glance_BR.pdf. 97 National Defense, 32 CFR 199.17(m). Department of Defense, TRICARE Standard Fact Sheet, accessed June 20, 

2014, http://www.tricare.mil/~/media/Files/TRICARE/Publications/FactSheets/TSE_FS.pdf. 98 “TRICARE Standard and Extra,” Department of Defense, accessed June 20, 2014, 

http://www.tricare.mil/Plans/HealthPlans/TSE.aspx. 99 National Defense, 32 CFR 199.17(n)(3). 100 National Defense, 32 CFR 199.17(c). 101 Ibid. “TRICARE Standard and Extra,” Department of Defense, accessed June 20, 2014, 

http://www.tricare.mil/Plans/HealthPlans/TSE.aspx. 102 Department of Defense, TRICARE Choices at a Glance, 6, accessed June 20, 2014, 

http://www.tricare.mil/~/media/Files/TRICARE/Publications/BrochuresFlyers/Choices_Glance_BR.pdf. 103 Ibid.
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The range of cost shares depends on the type of plan and type of service. The following 

are examples:

 20 percent of allowable charges (after deductible is met) for services including 

outpatient visits, ambulance services, and clinical preventive services

 hospitalization charges of $17.65 per day for active-duty family members 

(ADFM) and TRICARE Reserve Select (TRS)

 $744 per day or 25 percent of billed charges for institutional services, 

whichever is less, plus 25 percent cost share for separately billed services for 

retirees and all others

 $25 for ambulatory surgery for ADFM and TRS or 25 percent for retirees and all 

others104

4.1.3. TRICARE EXTRA

TRICARE Extra is similar to TRICARE Standard, but is the option considered most 

similar to Preferred Provider Organization (PPO) plans.105 It is a fee-for-service option 

with no enrollment and the same annual deductible amounts; however, if beneficiaries 

visit providers who are in the TRICARE network, they pay reduced cost shares.106

Beneficiaries 

TRICARE Extra beneficiaries are the same as those eligible for TRICARE Standard:107

 family members of active-duty Service members

 retired Service members and their family members

 family members of activated Reserve and National Guard members

 nonactivated Reserve and National Guard members, and their family members, 

who qualify for care under TAMP (see Section 4.1.13.3) 

 retired Reserve and National Guard members (age 60 and receiving retirement 

pay) and their family members

 qualified survivors

 Medal of Honor recipients and their family members

 qualified former spouses

Financial Summary 

TRICARE Extra has the same annual deductible amounts as TRICARE Standard.108

The range of TRICARE Extra cost shares includes the following:109

 15 percent of allowable charges (after deductible is met) for ADFM and TRS, and 

20 percent for retirees and others, for services including outpatient visits, 

ambulance services, and clinical preventive services 

 hospitalization charges of $17.65 per day for ADFM and TRS (same as TRICARE 

Standard), and $250 per day or 25 percent of billed charges for institutional 

 

104 Ibid. 105 National Defense, 32 CFR 199.17(a)(6)(ii)(B). “TRICARE Standard and Extra,” Department of Defense, accessed 

June 20, 2014, http://www.tricare.mil/Plans/HealthPlans/TSE.aspx. 106 National Defense, 32 CFR 199.17(e). Department of Defense, TRICARE Choices at a Glance, 3, accessed June 20, 

2014, http://www.tricare.mil/~/media/Files/TRICARE/Publications/BrochuresFlyers/Choices_Glance_BR.pdf. 107 National Defense, 32 CFR 199.17(a)(6)(ii)(B). National Defense, 32 CFR 199.17(e). “TRICARE Standard and Extra,” 

Department of Defense, accessed June 20, 2014, http://www.tricare.mil/Plans/HealthPlans/TSE.aspx. 108 Department of Defense, TRICARE Choices at a Glance, 3, accessed June 20, 2014, 

http://www.tricare.mil/~/media/Files/TRICARE/Publications/BrochuresFlyers/Choices_Glance_BR.pdf. 109 Ibid.
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services, whichever is less, plus 20 percent cost share for separately billed 

services for retirees and all others

 $25 for ambulatory surgery for ADFM/TRS (same as TRICARE Standard) or 

20 percent for retirees and all others, after the annual deductible is met

4.1.4. TRICARE RESERVE SELECT

TRICARE Reserve Select is a premium-based plan, similar to TRICARE Standard for 

active-duty dependents, available for qualified members of the Selected Reserve of the 

Ready Reserve and their families.110 Members must enroll to participate, and

beneficiaries may receive care from any TRICARE-authorized provider without 

referrals.111 If TRICARE Reserve Select beneficiaries receive care from network 

providers, cost shares are lower than if beneficiaries are seen by non-network 

providers.112 Additionally network providers will submit the claims for beneficiaries, 

but doing so is optional for non-network providers.113

Beneficiaries 

Beneficiaries for TRICARE Reserve comprise members of the Selected Reserve of the 

Ready Reserve and their families. Members of the Selected Reserve of the Ready 

Reserve must meet the criteria below to participate in this plan:114

 not on active-duty orders

 not covered under TAMP

 not eligible for or enrolled in the Federal Employees Health Benefits Program 

(FEHBP), either under their own eligibility or through a family member

Financial Summary 

There is a range of cost shares that depends on type of plan and type of service. The 

following are examples:

 Premium rates are established annually for a calendar year. Current monthly 

premium rates are $51.68 for member-only and $204.29 for member and 

family.

 Cost shares vary based on what service is obtained and whether or not 

providers are in the TRICARE network. Generally, the cost-share is 15 percent 

of negotiated rates for within network care, and 20 percent for out-of-network 

care.115

 

110 National Defense, 32 CFR 199.24(a)(1). Department of Defense, TRICARE Choices at a Glance, 4, accessed June 20, 

2014, http://www.tricare.mil/~/media/Files/TRICARE/Publications/BrochuresFlyers/Choices_Glance_BR.pdf. 111 Department of Defense, TRICARE Choices at a Glance, 4, accessed June 20, 2014, 

http://www.tricare.mil/~/media/Files/TRICARE/Publications/BrochuresFlyers/Choices_Glance_BR.pdf. 112 National Defense, 32 CFR 199.24(a)(5)(iv). 113 Department of Defense, TRICARE Choices at a Glance, 11, accessed June 20, 2014, 

http://www.tricare.mil/~/media/Files/TRICARE/Publications/BrochuresFlyers/Choices_Glance_BR.pdf. 114 “TRICARE Reserve Select,” Department of Defense, accessed June 20, 2014, 

http://www.tricare.mil/Plans/HealthPlans/TRS.aspx. 115 “TRICARE Reserve Select Costs,” Department of Defense, accessed June 20, 2014, 

http://www.tricare.mil/Costs/HealthPlanCosts/TRS.aspx. 
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4.1.5. TRICARE RETIRED RESERVE

TRICARE Retired Reserve is a premium-based plan available worldwide for purchase 

by qualified retired Reserve members, their families, and qualified survivors.116

Beneficiaries 

The following beneficiaries are eligible for TRICARE Retired Reserve:117

 retired Reserve members who meet the following criteria:

- members of the retired Reserve of a Reserve Component who are qualified 

for nonregular retirement under 10 U.S.C. Chapter 1223

- younger than age 60

- not eligible for, or enrolled in, a health benefits plan under chapter 89 of 

title 5, U.S.C. (e.g., FEHBP) 

 family members of qualified Retired Reserve members

 survivors of retired Reserve members if they meet the following criteria:

- the sponsor was covered by TRICARE Retired Reserve when he or she died

- survivors are immediate family members of the deceased sponsor (spouses 

cannot have remarried)

- TRICARE Retired Reserve coverage began before the date the deceased 

sponsor would have turned 60 years old

Retired Reserve Component personnel who elect to participate in TRICARE Retired 

Reserve become eligible for the same TRICARE Standard, TRICARE Extra, or TRICARE 

Prime options as active component retirees when the Service member reaches 

age 60.118

Financial Summary 

Premium rates are established annually for a calendar year.119 The government does 

not subsidize these premiums, and current monthly premium rates are $390.99 for 

individuals or $956.65 for families.120 Cost shares vary based on services obtained and 

whether or not providers are in the TRICARE network. Generally, the cost share is 

20 percent of negotiated rates within network and 25 percent outside the network.121

4.1.6. TRICARE FOR LIFE

Considered a Medicare wrap-around option, TRICARE for Life (TFL) offers secondary 

coverage to Medicare.122 All beneficiaries must have Medicare Part A and Medicare 

Part B.123 For services covered by both Medicare and TRICARE, in the United States

and U.S. territories, Medicare pays first and TFL pays the remaining coinsurance for 

 

116 National Defense, 32 CFR 199.25(b). “TRICARE Retired Reserve Costs,” Department of Defense, accessed June 20, 

2014, http://www.tricare.mil/Costs/HealthPlanCosts/TRR.aspx. 117 National Defense, 32 CFR 199.25(b). National Defense, 32 CFR 199.25(d)(1)(iv). 118 Armed Forces, 10 U.S.C. § 1076e(b). 119 “TRICARE Retired Reserve Costs,” Department of Defense, accessed June 20, 2014, 

http://www.tricare.mil/Costs/HealthPlanCosts/TRR.aspx. 120 Ibid. 121 “TRICARE Retired Reserve Costs,” Department of Defense, accessed June 20, 2014, 

http://www.tricare.mil/Costs/HealthPlanCosts/TRR.aspx. 122 Armed Forces, 10 U.S.C. § 1086(d)(3). 123 Armed Forces, 10 U.S.C. § 1086(d).
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TRICARE-covered services.124 This benefit is available worldwide. In overseas 

locations, TRICARE is the only payer.125 TFL beneficiaries may see Medicareparticipating, nonparticipating, or opt-out providers, though they will incur out-ofpocket expenses when they are treated by opt-out providers.126

Beneficiaries 

Retirees and their families are eligible for TRICARE for Life when they have Medicare 

Part A and are enrolled in Medicare Part B.127 When members and their families are 

covered by both Medicare and TRICARE, Medicare is the first payer, and TFL is the 

second payer, assuming remaining coinsurance responsibility for services are also 

covered by TFL. Providers file their claims with Medicare, and after Medicare pays, 

providers subsequently forward the claim to TFL for processing.128 When services are 

not covered by Medicare, TFL is the only payer, and Medicare pays nothing.129

Before TRICARE benefits commence, the beneficiary must pay the annual TRICARE 

deductible and then is responsible for cost shares. When services are covered only by 

Medicare, Medicare is the only payer, and TFL pays nothing.130 In such cases, the 

beneficiary must first meet the Medicare deductible and then pay the appropriate 

coinsurance. The beneficiary must pay the entire bill if neither Medicare nor TRICARE 

covers services provided.131

Financial Summary 

There are no enrollment fees for TFL.132 TFL beneficiaries must pay Medicare Part B 

monthly premiums to maintain health care coverage through TFL.133 Beneficiaries will 

pay out-of-pocket expenses if they seek care from VA providers or providers who opt 

out of Medicare, because neither is permitted to bill Medicare.134

Medicare 

Health Insurance for the Aged and Disabled—more commonly known as Medicare—

falls under Title XVIII of the Social Security Act.135 The Medicare Program became law 

in July 1965.136 Medicare has five parts: Part A – Hospital Insurance Benefits for the 

Aged and Disabled;137 Part B – Supplementary Medical Insurance Benefits for the Aged 

and Disabled;138 Part C – Medicare+Choice Program;139 Part D – Voluntary Prescription 

Drug Benefits;140 and Part E – Miscellaneous Provisions.141

 

124 Ibid. 125 Department of Defense, TRICARE for Life, 5, accessed June 20, 2014, 

http://www.tricare.mil/~/media/Files/TRICARE/Publications/FactSheets/TFL_FS.pdf. 126 Department of Defense, TRICARE Choices at a Glance, 4, accessed June 20, 2014, 

http://www.tricare.mil/~/media/Files/TRICARE/Publications/BrochuresFlyers/Choices_Glance_BR.pdf. 127 Armed Forces, 10 U.S.C. § 1086(d). “Retired Service Members and Families,” Department of Defense, accessed 

April 14, 2014, http://www.tricare.mil/welcome/eligibility/RSMandFamilies.aspx. 128 “TRICARE for Life,” Department of Defense, accessed June 20, 2014, 

http://www.tricare.mil/Plans/HealthPlans/TFL.aspx. 129 Ibid. 130 Ibid. 131 Ibid. 132 Ibid. 133 Ibid. 134 Ibid. “Using TRICARE for Life at Veterans Affairs Facilities,” Department of Defense, accessed June 20, 2014, 

http://www.tricare.mil/Plans/HealthPlans/TFL/TFL_VA.aspx. 135 The Public Health and Welfare, 42 U.S.C., Chapter 7, subchapter XVIII. 136 Social Security Amendments of 1965, Pub. L. No. 89-97, 79 Stat. 286 (1965). 137 The Public Health and Welfare, 42 U.S.C. § 1395c. 138 The Public Health and Welfare, 42 U.S.C. § 1395j. 
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Medicare Part A protects those eligible for Medicare (usually age 65 and older) against 

hospital, home health services, and hospice care costs.142 Medicare Part A receives 

funding through the Federal Hospital Insurance Trust Fund, which is sourced from

employment taxes and other sources such as income taxes paid on Social Security 

benefits, interest earned on the trust fund investments, and Medicare Part A 

premiums from people who are required to pay for Part A services.143 Service members 

pay FICA-Medicare taxes by receiving individual income; therefore, they are, in 

general, entitled to the same benefits and are subject to the same eligibility criteria 

and rules as any civilian employee with regard to Medicare. 144

Medicare Part B is a voluntary insurance program, funded through premium 

payments by enrollees and Federal Government appropriated funds.145

Medicare Part C allows eligible beneficiaries a choice to receive benefits through 

Medicare+Choice available plans.146 Following the Medicare Prescription Drug, 

Improvement, and Modernization Act of 2003, Medicare+Choice plans were 

subsequently known by their current moniker, Medicare Advantage.147 A private 

organization that contracts with Medicare provides Medicare Advantage plans, and 

includes the benefits of Medicare Parts A, B, and sometimes D within one single 

plan.148

Medicare Part D is further divided into Subpart 1 – Eligible Individuals and 

Prescription Drug Benefits;149 Subpart 2 – Prescription Drug Plans; PDP Sponsors; 

Financing;150 Subpart 3 – Application to Medicare Advantage Program and Treatment 

of Employer-Sponsored Programs and Other Prescription Drug Plans;151 Subpart 4 –

Medicare Prescription Drug Discount Card and Transitional Assistance Program;152

and Subpart 5 – Definitions and Miscellaneous Provisions.153

Medicare Part E contains a variety of provisions, including exclusions from coverage, 

agreements with States, advisory councils, and demonstration programs.154

 139 The Public Health and Welfare, 42 U.S.C. § 1395w–21. 140 The Public Health and Welfare, 42 U.S.C. §§ 1395w-101-1395w-154. 141 The Public Health and Welfare, 42 U.S.C. §§ 1395x-1395kkk-1. 142 The Public Health and Welfare, 42 U.S.C. § 1395c. 143 “How is Medicare Funded?” Medicare.gov, accessed April 14, 2014, http://www.medicare.gov/about-us/howmedicare-is-funded/medicare-funding.html. The Public Health and Welfare, 42 U.S.C. § 1395i. 26 U.S.C. §§ 1401, 

3101, and 3111. 144 The Servicemen’s and Veterans’ Survivor Benefits Act, ch. 837, Pub. L. No. 84-881, § 401, 70 Stat. 857, 869–70 

(1956). 145 The Public Health and Welfare, 42 U.S.C. § 1395j. “How is Medicare Funded?” Medicare.gov, accessed April 14, 

2014, http://www.medicare.gov/about-us/how-medicare-is-funded/medicare-funding.html. 146 The Public Health and Welfare, 42 U.S.C. § 1395w–21. 147 Medicare Prescription Drug, Improvement, and Modernization Act of 2003, Pub. L. No. 108-173, 117 Stat. 2066 

(2003).

148 Public Health, 42 CFR 422.4. 149 The Public Health and Welfare, 42 U.S.C. §§ 1395w-101-1395w-104. 150 The Public Health and Welfare, 42 U.S.C. §§ 1395w-111-1395w-116. 151 The Public Health and Welfare, 42 U.S.C. §§ 1395w-131-1395w-134. 152 The Public Health and Welfare, 42 U.S.C. § 1395w-141. 153 The Public Health and Welfare, 42 U.S.C. §§ 1395w-151-1395w-154. 154 The Public Health and Welfare, 42 U.S.C. § 1395x-42. The Public Health and Welfare, 42, U.S.C. § 1395kkk-1.
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4.1.7. TRICARE YOUNG ADULT 

TRICARE Young Adult (TYA) is a premium-based program for qualified military 

dependents younger than 26.155 Enrollees pay 100 percent of the premium.156 Eligible 

beneficiaries include unmarried, adult children who are no longer eligible for regular 

TRICARE coverage due to age. The plan meets the minimal essential coverage 

requirement of The Affordable Care Act.157 TYA requires enrollment, and includes 

medical and pharmacy benefits, but excludes dental benefits.158 There is only 

individual coverage available under TYA.159

TYA offers Prime and Standard options worldwide, with costs based on which program 

is selected, where medical care is received, and status of the military sponsor.160 TYA 

coverage corresponds with the benefits of the TRICARE program selected (Prime or 

Standard), including access to MTFs and pharmacies as the plan permits.161 Access to 

MTFs is based on the program selected (Prime or Standard), the corresponding access 

priority, and status of the military sponsor.162

Beneficiaries 

To qualify for TYA, an individual must meet the following criteria:163 

 be an unmarried, adult child of an eligible sponsor

 be at least 21 years old but not yet 26 years old

- if enrolled in a full course of study at an approved institution of higher 

learning and your sponsor provides more than 50 percent of your financial 

support, your eligibility may not begin until age 23 or upon graduation, 

whichever comes first

 not be eligible to enroll in an employer-sponsored health plan based on the 

adult child’s own employment

 not otherwise be eligible for TRICARE coverage

Financial Summary 

Premiums for TYA coverage represent the full cost of the program, to include

administrative costs associated with providing TRICARE benefits for those eligible for 

TYA.164 The monthly cost-share for the program must equal the cost of coverage.165

TYA premiums and costs are based on which program is selected, the sponsor’s 

military status (active duty or retired), and where the care is received.166

 

155 National Defense, 32 CFR 199.26. 156 National Defense, 32 CFR 199.26(c). “TRICARE Young Adult,” Department of Defense, accessed June 20, 2014, 

http://www.tricare.mil/Plans/HealthPlans/TYA.aspx. 157 Armed Forces, 10 U.S.C. § 1110b. National Defense, 32 CFR 199.26(a). 158 National Defense, 32 CFR 199.26(a)(4)(i)(B). Department of Defense, TRICARE Choices at a Glance, 5, accessed 

June 20, 2014, 

http://www.tricare.mil/~/media/Files/TRICARE/Publications/BrochuresFlyers/Choices_Glance_BR.pdf. 159 National Defense, 32 CFR 199.26(a)(4)(ii). 160 “TRICARE Young Adult,” Department of Defense, accessed June 20, 2014, 

http://www.tricare.mil/Plans/HealthPlans/TYA.aspx. 161 National Defense, 32 CFR 199.26(a)(4)(iv). 162 Ibid. 163 Armed Forces, 10 U.S.C. § 1110b(b). National Defense, 32 CFR 199.26(a)(4)(i). “TRICARE Young Adult,” Department 

of Defense, accessed June 20, 2014, http://www.tricare.mil/Plans/HealthPlans/TYA.aspx. 164 National Defense, 32 CFR 199.26(c). 165 Armed Forces, 10 U.S.C. § 1110b(c)(2). 166 National Defense, 32 CFR 199.26(a)(4)(iv). National Defense, 32 CFR 199.26(c).
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Currently, the premium for the TYA Standard program is $156 per month.167 TYA 

Standard enrollees pay a deductible that varies, according to sponsor’s pay grade, 

from $50 to $150 per year, with a $300 per family maximum.168

The premium for TYA Prime is $180 per month.169 For dependents of active-duty 

sponsors there are no out-of-pocket costs unless beneficiaries use the point-of-service 

(POS) option (no referral authorization).170 Adult children of retired sponsors pay 

copayments ranging from $0 to $40, depending on the care obtained.171

4.1.8. TRICARE PRIME REMOTE

TRICARE Prime Remote (TPR) provides TRICARE Prime benefits to certain eligible 

beneficiaries who both live and work in designated remote locations that are generally 

more than 50 miles or an hour drive from an MTF.172 Enrollment is required.173

Beneficiaries 

TPR beneficiaries include active-duty Service members and Reserve and National 

Guard members who are on active-duty orders for more than 30 consecutive days, and 

their family members, whose permanent duty assignment and residence are more 

than 50 miles or approximately one hour from an MTF or military clinic designated 

adequate by the Executive Director, Defense Health Agency (DHA).174 If a member dies 

while on active duty for 30 days or more, and the death occurred on or after October

7, 2001, the surviving spouse may retain coverage for three years.175 Surviving 

dependent children of a member who dies under these same conditions may continue 

enrollment for three years from the active-duty sponsor’s death, until they reach their 

21st birthday, or until they are 23 years old and are no longer pursuing full-time

education prior to turning 23 years old [following the same eligibility requirements for 

surviving dependent children as TRICARE Prime].176 If TRICARE network providers are 

unavailable in the remote location, then care may be received from non-network 

TRICARE-authorized providers.177 Although the beneficiary cost sharing requirements 

under TPR remain the same as those under TRICARE Prime, when TRICARE network 

 

167 Department of Defense, TRICARE Choices at a Glance, 5, accessed June 20, 2014, 

http://www.tricare.mil/~/media/Files/TRICARE/Publications/BrochuresFlyers/Choices_Glance_BR.pdf. 168 “TRICARE Young Adult-Standard Option Costs,” Department of Defense, accessed June 20, 2014, 

http://www.tricare.mil/Costs/HealthPlanCosts/TYA/StandardOption.aspx. 169 “TRICARE Young Adult Prime Costs,” Department of Defense, accessed June 20, 2014, 

http://www.tricare.mil/Costs/HealthPlanCosts/TYA/PrimeOption.aspx. 170 Ibid. 171 Ibid. 172 National Defense 32 CFR 199.17(g). National Defense, 32 CFR 199.16(e). “TRICARE Prime Remote,” Department of 

Defense, accessed June 20, 2014, http://www.tricare.mil/Plans/HealthPlans/TPR.aspx. 173 National Defense, 32 CFR 199.17(g)(4). National Defense, 32 CFR 199.16(e)(3). 174 National Defense, 32 CFR 199.17(g)(3). National Defense, 32 CFR 199.16(e)(2). Department of Defense, TRICARE 

Prime Remote Fact Sheet, accessed June 20, 2014, 

http://www.tricare.mil/~/media/Files/TRICARE/Publications/FactSheets/TPR_FS.pdf. Note: 32 CFR 199 refers to 

TRICARE Management Authority, which was disestablished and transferred functions to the Defense Health Agency 

effective 1 October 2013 per DODD 5136.13.

175 National Defense, 32 CFR 199.16(e). 176 National Defense, 32 CFR 199.17(g)(3)(i)(E). “TRICARE Prime Remote,” Department of Defense, accessed June 20, 

2014, http://www.tricare.mil/Plans/HealthPlans/TPR.aspx. 177 Ibid.
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providers are not available in a remote location, routine primary health care services 

will not be subject to the higher POS cost sharing and deductible.178

TPR is also available in designated remote overseas locations (TRICARE Prime Remote 

Overseas (TPRO)) to active-duty Service members and activated National Guard and 

Reserve members, and their command-sponsored family members.179

Financial Summary 

Similar to TRICARE Prime for active-duty Service members and their eligible family 

members, TPR has no enrollment fees or cost shares as long as care is managed 

through a PCM or with a referral.180 Care received without preauthorization generally 

falls under fee-for-service costs. The higher point-of-service option cost sharing and 

deductible do not, however, apply to routine primary health care services when the 

beneficiary resides in a remote location and the beneficiary is not assigned a PCM. 

Additionally, the higher cost-sharing and deductible do not apply if it is determined 

beneficiaries cannot receive care from a TRICARE network provider within the 

TRICARE access standards.181 Any TPR for active-duty family members who fail to 

obtain appropriate referral/preauthorization, as required under TRICARE Prime when 

receiving specialty health care services, will be subject to the higher point-of-service 

option cost sharing and deductible.182

4.1.9. TRICARE PRIME OVERSEAS

TRICARE Prime Overseas (TPO) is available overseas near MTFs. Similar to TRICARE 

Prime, TPO beneficiaries have an assigned PCM.183 The PCM refers beneficiaries to 

specialists for care unavailable through the MTF, and when appropriate, coordinates 

with the overseas managed care support contractor for authorization.184

Beneficiaries 

The following beneficiaries are eligible for TPO: 

 active-duty Service members

 command-sponsored, active-duty family members

 activated Reserve and National Guard members

 command-sponsored family members of activated Reserve and National Guard 

members

Retirees and their family members may not enroll in TPO.185

 

178 National Defense, 32 CFR 199.17(g)(6). Department of Defense, TRICARE Choices at a Glance, 3, accessed June 20, 

2014, http://www.tricare.mil/~/media/Files/TRICARE/Publications/BrochuresFlyers/Choices_Glance_BR.pdf. 179 “TRICARE Prime Remote Overseas,” Department of Defense, accessed June 20, 2014, 

http://www.tricare.mil/Plans/HealthPlans/TPRO.aspx. 180 “TRICARE Prime Remote,” Department of Defense, accessed June 20, 2014, 

http://www.tricare.mil/Plans/HealthPlans/TPR.aspx. 181 National Defense, 32 CFR 199.17(g)(6). 182 Ibid. 183 “TRICARE Prime Remote Overseas,” Department of Defense, accessed June 20, 2014, 

http://www.tricare.mil/Plans/HealthPlans/TPRO.aspx. “TRICARE Prime Overseas,” Department of Defense, accessed 

June 20, 2014, http://www.tricare.mil/Plans/HealthPlans/TPO.aspx.aspx. 184 Ibid. 185 Ibid.
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Financial Summary 

There are no enrollment fees or copayments associated with TPO, as long as care is 

received from a PCM or with referral.186 POS fees apply if beneficiaries seek care 

without a referral.187

4.1.10. US FAMILY HEALTH PLAN

In six areas of the United States, TRICARE Prime offers another option, The US Family 

Health Plan (USFHP), which offers care through networks of community-based, notfor-profit health care systems.188 Members must live in a designated USFHP service 

area to enroll.189 Enrollment is required.190 Primary care providers, selected from the 

network of approved physicians within the not-for-profit health systems, provide all 

care, including prescription drug coverage.191 Beneficiaries must receive care through 

designated providers, and they may not receive care from MTFs or other TRICARE 

network providers when enrolled in USFHP.192

Beneficiaries 

The following beneficiaries are eligible to enroll when living in a designated USFHP 

area:193

 active-duty family members

 retired Service members and their family members

 family members of activated Reserve and National Guard members

 nonactivated Reserve and National Guard members, and their family members, 

who qualify for care under TAMP (see Section 4.1.13.3) 

 retired Reserve and National Guard members (age 60 and receiving retired pay) 

and their family members

 survivors

 Medal of Honor recipients and their family members

 qualified former spouses

Before October 1, 2012, USFHP was also available to all Medicare-eligible beneficiaries 

age 65 and older.194 As of October 1, 2012, Medicare-eligible beneficiaries age 65 and 

older can no longer enroll in USFHP.195 Beneficiaries younger than age 65 and using 

 

186 Ibid. 187 Ibid. 188 “US Family Health Plan,” Department of Defense, accessed June 20, 2014, 

http://www.tricare.mil/Plans/HealthPlans/USFHP.aspx. 189 Ibid. 190 Ibid. 191 Ibid. 192 Ibid. 193 “US Family Health Plan,” Department of Defense, accessed June 20, 2014, 

http://www.tricare.mil/Plans/HealthPlans/USFHP.aspx. 194 Congressional Budget Office, Proposal to Place Certain Limitations on Enrollment in the Uniformed Services Family 

Health Plan, 2, accessed April 14, 2014, 

https://www.cbo.gov/sites/default/files/cbofiles/ftpdocs/121xx/doc12170/usfhpletter.pdf. 195 Office of Budget Management, Fiscal Year 2012 Budget of the U.S. Government, 189, accessed April 14, 2014, 

http://www.gpo.gov/fdsys/pkg/BUDGET-2012-BUD/pdf/BUDGET-2012-BUD.pdf. Congressional Budget Office, 

Proposal to Place Certain Limitations on Enrollment in the Uniformed Services Family Health Plan, 2, accessed April 14, 

2014, https://www.cbo.gov/sites/default/files/cbofiles/ftpdocs/121xx/doc12170/usfhpletter.pdf.
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Medicare due to a disability or other reason can remain enrolled in USFHP until their 

65th birthday, at which time they can transition to TFL.196

Historical Context 

In 1981, the Congress redesignated former U.S. Public Health facilities as Uniformed 

Services Treatment Facilities (USTFs) to be used to provide medical care for uniformed 

services beneficiaries.197 In 1993, DoD reorganized the USTFs into the Uniformed 

Services Family Health Plan, the first DoD sponsored full-risk managed health care 

plan and the first to serve military beneficiaries ages 65 and older.198 USFHP echoed

the benefit for TRICARE Prime active-duty family members.199 As part of the 

implementation of TRICARE in the mid-1990s, USFHP became an authorized 

TRICARE Prime provider. After noting USFHP’s success in health care delivery in the 

NDAA for FY 1996,200 the Congress made designated providers a permanent part of 

the military health care system in the subsequent authorization act.201

Financial Summary 

USFHP costs are the same as those for TRICARE Prime.202

4.1.11. DENTAL BENEFITS

TRICARE dental care plan options are considered separate from the TRICARE health 

care plans.203 Dental plans are available for active-duty Service members, 

Reserve/Guard members, their families, and retirees through three dental plan 

options: TRICARE Active Duty Dental Program, TRICARE Dental Program (TDP), and 

TRICARE Retiree Dental Program.204 These programs provide coverage for most 

preventive and diagnostic services.205

 

196 National Defense Authorization Act for FY 2012, Pub. L. No. 112-81, § 708, 125 Stat. 1298, 1474 (2011). “US Family 

Health Plan and Medicare,” Department of Defense, accessed June 20, 2014, 

http://www.tricare.mil/Plans/HealthPlans/USFHP/Medicare.aspx. Congressional Budget Office, Proposal to Place 

Certain Limitations on Enrollment in the Uniformed Services Family Health Plan, 2, accessed April 14, 2014, 

https://www.cbo.gov/sites/default/files/cbofiles/ftpdocs/121xx/doc12170/usfhpletter.pdf.

197 Military Construction Authorization Act, 1982, Pub. L. No. 97-99, § 911, 95 Stat. 1359, 1386 (1981). 198 Congressional Budget Office, Proposal to Place Certain Limitations on Enrollment in the Uniformed Services Family 

Health Plan, 2, accessed April 14, 2014, 

https://www.cbo.gov/sites/default/files/cbofiles/ftpdocs/121xx/doc12170/usfhpletter.pdf. 199 US Family Health Plan, US Family Health Plan, Member Handbook, 1, accessed April 14, 2014, 

http://www.usfhp.net/pdfs/Member_Handbook.pdf. 200 National Defense Authorization Act for FY 1996, Pub. L. No. 104-106, § 724(b), 110 Stat. 186, 378 (1996). 201 National Defense Authorization Act for FY 1997, Pub. L. No. 104-201, §§ 722-723, 110 Stat. 2422, 2428 (1996). 

“History of the US Family Health Plan,” US Family Health, accessed April 14, 2014, 

http://www.usfhp.net/history_of_usfhp.asp. 202 National Defense Authorization Act for FY 1997, Pub. L. No. 104-201, § 726, 110 Stat. 2422, 2596 (1996). “How 

does the US Family Health Plan compare to TRICARE Prime?” US Family Health Care, accessed April 14, 2014, 

http://www.usfhp.net/ask.asp#1. “TRICARE USFHP Enrollment Fees,” US Family Health Plan, accessed June 20, 

2014, http://www.tricare.mil/Costs/HealthPlanCosts/USFHP/EnrollmentFees.aspx. “TRICARE USFHP Copayments,” 

US Family Health Plan, accessed June 20, 2014, http://www.tricare.mil/Costs/HealthPlanCosts/USFHP/

NetworkCopayments.aspx. “TRICARE Prime Enrollment Fees,” Department of Defense, accessed June 20, 2014, 

http://www.tricare.mil/Costs/HealthPlanCosts/PrimeOptions/EnrollmentFees.aspx. “TRICARE Prime Network 

Copayments,” Department of Defense, accessed June 20, 2014, http://www.tricare.mil/Costs/HealthPlanCosts/

PrimeOptions/Copayments.aspx. 203 National Defense, 32 CFR 199.13. Department of Defense, TRICARE Choices at a Glance, 8, accessed June 20, 

2014, http://www.tricare.mil/~/media/Files/TRICARE/Publications/BrochuresFlyers/Choices_Glance_BR.pdf. 204 Armed Forces, 10 U.S.C. § 1076a. “Dental Plans,” Department of Defense, accessed June 20, 2014, 

http://www.tricare.mil/Plans/DentalPlans.aspx. 205 Department of Defense, TRICARE Choices at a Glance, 8, accessed June 20, 2014, 

http://www.tricare.mil/~/media/Files/TRICARE/Publications/BrochuresFlyers/Choices_Glance_BR.pdf. 
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Beneficiaries 

Active-duty Service members generally receive care at military dental clinics.206 Family 

members of active-duty Service members and nonactivated Reserve and National 

Guard and their family members may enroll in TDP.207 Retirees and their family 

members may enroll in the TRICARE Retiree Dental Program.208 Reserve and National 

Guard members may receive active-duty dental benefits when on active duty or if 

covered by TAMP.209

Historical Context 

Prior to 1956, Service components provided dental care to all active-duty Service 

members.210 The family members of Army and Air Force members received dental care 

by the Service when dentists were available to provide the care.211 The Dependents’ 

Medical Care Act generally prohibited the provision of dental care to dependents, 

except for emergency care to relieve pain and suffering “but not to include any 

permanent restorative work or dental prosthesis, care as a necessary adjunct to 

medical or surgical treatment,” and in OCONUS and remote CONUS locations where 

civilian dental facilities were not available.212 The Military Medical Benefits 

Amendments of 1966 authorized dependent use of MTFs for dental care upon request 

and subject to availability of space, facilities, and dental staff.213 The 1966 

amendments expanded the scope of dependent dental care by including “emergency 

dental care worldwide, routine dental care outside the United States and at stations in 

the United States where adequate civilian facilities [were] unavailable, and dental care 

worldwide as a necessary adjunct of medical, surgical, or preventive treatment.”214 The 

current TDP is a voluntary dental insurance program available to eligible active-duty

family members, Select Reserve, and Individual Ready Reserve (IRR) members, and 

their eligible family members.215 Limited adjunctive dental care is authorized under 

certain circumstances.216

Financial Summary 

Active-duty Service members do not pay a premium for their own dental benefits.217

Premiums and cost shares apply to family members of active duty, Reserve/Guard 

Service members, retirees, and their family members.218 Monthly premiums range 

from $10.96 for one family member (excluding active-duty sponsor) to $109.63 for IRR 

 

206 Armed Forces, 10 U.S.C. § 1074(a). Department of Defense, TRICARE Choices at a Glance, 8, accessed June 20, 

2014, http://www.tricare.mil/~/media/Files/TRICARE/Publications/BrochuresFlyers/Choices_Glance_BR.pdf. 207 Ibid. Armed Forces, 10 U.S.C. § 1076a. 208 Armed Forces, 10 U.S.C. § 1076a. “Dental Plans,” Department of Defense, accessed June 20, 2014, 

http://www.tricare.mil/Plans/DentalPlans.aspx. 209 National Defense, 32 CFR 199.13(c)(3)(ii)(E). “Dental Options,” Department of Defense, accessed June 20, 2014,

http://www.tricare.mil/Plans/SpecialPrograms/TAMP/DentalOptions.aspx. 210 Act of July 5, 1884, Pub. L. No. 23 Stat. 107, 112 (1884). P. I. Robinson, “Medicare: Uniformed Services Program for 

Dependents,” Social Security Bulletin, July (1957): 9. 211 P. I. Robinson, “Medicare: Uniformed Services Program for Dependents,” Social Security Bulletin, July (1957): 9, 16. 212 Dependents’ Medical Care Act, Pub. L. No. 84-569, § 103(h)(4), 70 Stat. 250, 252 (1956). 213 Military Medical Benefits Amendments of 1966, Pub. L. No. 89-614, § 2(3), 80 Stat. 862 (1966). 214 Military Medical Benefits Amendments of 1966, Pub. L. No. 89-614, § 2(4), 80 Stat. 862, 863 (1966). 215 Armed Forces, 10 U.S.C. § 1076s. National Defense, 32 CFR 199.13(c). TRICARE Dental Program, 

DoD FMR 7000.14-R, Chapter 54: 540101, accessed April 14, 2014, 

http://comptroller.defense.gov/Portals/45/documents/fmr/current/07a/Volume_07a.pdf. Department of Defense, 

TRICARE Policy Manual 6010.57-M, accessed April 10, 2014, http://manuals.tricare.osd.mil. 216 National Defense, 32 CFR 199.4(e)(10)(i). Department of Defense, TRICARE Policy Manual 6010.57-M, Chapter 8 

§ 13.1, accessed April 10, 2014, http://manuals.tricare.osd.mil.

217 Department of Defense, TRICARE Choices at a Glance, 8, accessed June 20, 2014, 

http://www.tricare.mil/~/media/Files/TRICARE/Publications/BrochuresFlyers/Choices_Glance_BR.pdf. 218 Ibid.
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members and their families.219 Cost shares range from 0 percent for preventative and 

diagnostic services (excluding sealants) to 50 percent for other procedures to $1750 

per person/per lifetime for the orthodontic services maximum.220 TDP has no annual 

deductible.221 TRICARE Retiree Dental Program has an annual deductible of $50 per 

person, per benefit year, and a $150 cap per family.222

4.1.12. PHARMACY BENEFITS

The TRICARE pharmacy benefit costs are based on the type of prescription and where 

it is dispensed.223

Beneficiaries 

Prescription drug coverage is available to the following groups:224

 active-duty Service members and families

 activated Reserve and National Guard members and families

 retired Service members and families

 retired Reserve and National Guard members (age 60+ and receiving retirement 

pay) and families

 survivors, widows/widowers, and certain former spouses

 Medal of Honor recipients and families

 beneficiaries using the following plans:

- TRICARE Reserve Select

- TRICARE Retired Reserve

- TRICARE Young Adult

- Continued Health Care Benefit Program

 other beneficiaries including foreign force members and families

Historical Context 

As previously discussed, the Military Medical Benefits Amendments of 1966 created 

CHAMPUS.225 Retirees, their family members, and certain surviving family members of 

deceased military sponsors were brought into CHAMPUS on January 1, 1967.226 The 

1966 act amended 10 U.S.C. § 1077 authorizing dispensing of drugs to dependents.227

In 1999, the Congress directed DoD to establish a uniform formulary process.228 As 

part of this process, DoD was also directed to establish a Pharmacy and Therapeutics 

(P&T) Committee “for the purpose of developing the uniform formulary ... reviewing 

such formulary on a periodic basis, and making additional recommendations 

 

219 Ibid. 220 Ibid. 221 Ibid. 222 Ibid. 223 National Defense, 32 CFR 199.21. Department of Defense, TRICARE Choices at a Glance, 10, accessed June 20, 

2014, http://www.tricare.mil/~/media/Files/TRICARE/Publications/BrochuresFlyers/Choices_Glance_BR.pdf. 224 National Defense, 32 CFR 199.21. “Eligibility,” Department of Defense, accessed June 20, 2014, 

http://www.tricare.mil/CoveredServices/Pharmacy/Eligibility.aspx. 225 Military Medical Benefits Amendments of 1966, Pub. L. No. 89-614, 80 Stat. 862, 863 (1966). 226 Ibid. 227 Military Medical Benefits Amendments of 1966, Pub. L. No. 89-614, § 2(4); 80 Stat. 862 (1966) (amending 

10 U.S.C. § 1077). 228 National Defense Authorization Act for FY 2000, Pub. L. No. 106-65, § 701(a), 113 Stat. 512, 677 (1999), (codified at 

10 U.S.C. § 1074g).
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regarding the formulary.”229 The committee comprises “representatives of pharmacies 

of the uniformed services facilities, contractors responsible for the TRICARE retail 

pharmacy program, contractors responsible for the national mail-order pharmacy 

program, providers in facilities of the uniformed services, and TRICARE network 

providers,” who must also have “expertise in identifying the medical and 

pharmaceutical needs of the populations served throughout the MHS.”230 The P&T 

Committee systematically reviews and evaluates Food and Drug Administration (FDA)-

approved drugs to determine their relative clinical and cost effectiveness.231 DoD is not 

authorized to exclude a drug from its formulary based on cost effectiveness alone.232

The VA develops its formulary through a different process, therefore VA and DoD 

formularies are not the same.233 Section 4.2.1.1 discusses the differences in the 

formularies.

Since 2008, the TRICARE Retail Pharmacy Program has been treated as a DoD

element for the purposes of federal drug pricing arrangements.234 This arrangement

has allowed TRICARE to enjoy federally negotiated drug prices.235 DoD is required to 

make clinically appropriate pharmaceutical agents available to members of the 

uniformed services, including, when medically necessary, agents that are not included 

on the uniform formulary.236 As stated above, the VA formulary is developed through a 

different process and does not contain all FDA-approved drugs.237

In 2013, DoD increased copayments for brand name and nonformulary drugs that are 

not filled at MTF pharmacies, depending on the pharmacy option used.238 DoD also 

increased copayments for prescriptions for brand-name and nonformulary drugs filled 

through the mail-order pharmacy or through retail pharmacies.239

Under a pilot program for maintenance medication refills for TFL beneficiaries, 

beneficiaries must now receive refills of all such drugs through mail-order or MTF 

pharmacies for at least one year, after which time they may opt out of the pilot.240

Financial Summary 

Costs range from $0 for any type of prescription filled in an MTF to $44 or 20 percent 

of the total cost (whichever is greater) or up to 50 percent of the total cost (if POS

deductible is met) for a nonformulary prescription filled at a retail network 

 

229 Ibid. 230 Ibid. U.S. Department of Defense Pharmacy and Therapeutics Committee, Committee Charter (May 2009), 

http://pec.ha.osd.mil/files/Charter%20DoD%20P&T%20Committee%20May%202009%20-%20signed.pdf. 231 Ibid. 232 National Defense, 32 CFR 199.21(c)(3)(ii). 233 “VA National Formulary,” U.S. Department of Veterans Affairs Pharmacy Benefits Management Services, accessed 

April 14, 2014, http://www.pbm.va.gov/nationalformulary.asp. “Defense Health Agency Pharmacoeconomic Branch, 

Basic Core Formulary,” Department of Defense, accessed April 14, 2014, 

http://pec.ha.osd.mil/bcf.php?submenuheader=1. 234 National Defense Authorization Act for FY 2008, Pub. L. No. 110-181, § 703, 122 Stat. 3, 188 (codified at 10 U.S.C. 

§ 1074g(f)). 235 Veterans’ Benefits, 38 U.S.C. § 8126. 236 Armed Forces, 10 U.S.C. § 1074g. National Defense, 32 CFR 199.4(g). National Defense, 32 CFR 199.21(h)(3)(iii). 237 “VA National Formulary,” Department of Veterans Affairs Pharmacy Benefits Management Services, accessed 

April 14, 2014, http://www.pbm.va.gov/nationalformulary.asp. “Basic Core Formulary,” Department of Defense, 

accessed April 14, 2014, http://pec.ha.osd.mil/bcf.php?submenuheader=1 238 National Defense Authorization Act for FY 2013, Pub. L. No. 112-239, § 712, 126 Stat. 1632, 1802 (2013) (codified 

at 10 U.S.C. § 1074g(a)(6)) 239 Ibid. 240 National Defense Authorization Act for FY 2013, Pub. L. No. 112-239, § 716, 126 Stat. 1632, 1804 (2013).
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pharmacy.241 The TRICARE Pharmacy Plan options have varying cost shares for 

prescriptions filled at non-network pharmacies.242

The TRICARE retail pharmacy program serves as a function of DoD and, like any other 

Federal agency, receives pricing standards.243 DoD began receiving refunds from 

manufacturers when ordering most brand-name drugs starting in FY 2008.244

4.1.13. OTHER PROGRAMS AND BENEFITS

4.1.13.1. LINE OF DUTY CARE

Members of the Reserve and National Guard receive treatment through direct care 

channels for injury, illness, or disease incurred or aggravated in the line of duty.245

Coverage includes periods when traveling directly to or from the place of duty.246

4.1.13.2. CONTINUED HEALTH CARE BENEFIT

The Continued Health Care Benefit (CHCB)247 provides a premium-based temporary 

continuation of health care benefits for uniformed services beneficiaries who lose 

TRICARE eligibility because of separation from active duty (under nonadverse 

conditions).248 CHCB is not a TRICARE health program.249 The rules governing the 

program, however, are similar to those of TRICARE Standard.250 A major difference 

from TRICARE Standard, however, is that CHCB requires an enrollment fee and 

enrollees must pay premium costs before receiving any care.251 Former uniformed 

services members and their families may receive CHCB benefits for as many as 

18 months from the date the Service member becomes eligible for the program.252 In

certain qualifying conditions, benefits may be extended to 36 months.253 Beneficiaries 

may elect CHCB coverage within 60 days of losing TRICARE eligibility.254

Beneficiaries 

The following beneficiaries may qualify to purchase CHCB:255

 former active-duty Service members and their family members when they meet 

the following criteria:

 

241 Department of Defense, TRICARE Choices at a Glance, 10, accessed June 20, 2014, 

http://www.tricare.mil/~/media/Files/TRICARE/Publications/BrochuresFlyers/Choices_Glance_BR.pdf. 242 Ibid. 243 National Defense, 32 CFR 199.21(q). 244 National Defense Authorization Act for FY 2008, Pub. L. No. 110-181, § 703, 122 Stat. 3, 188 (codified at 10 U.S.C. 

§ 1074g(f)). 245 National Defense, 32 CFR 564.38. “Line of Duty Care,” Department of Defense, accessed June 20, 2014, 

http://www.tricare.mil/Plans/Eligibility/NGRMandFamilies/LODCare.aspx. 246 Ibid. 247 Armed Forces, 10 U.S.C. § 1145. National Defense, 32 CFR 199.20. 248 Ibid. “Continued Health Care Benefit Program,” Department of Defense, accessed June 20, 2014, 

http://www.tricare.mil/Plans/SpecialPrograms/CHCBP.aspx. 249 National Defense, 32 CFR 199.20(a). 250 Ibid. 251 Ibid. 252 National Defense, 32 CFR 199.20(d)(7). 253 National Defense, 32 CFR 199.20(d)(7)(i). 254 National Defense, 32 CFR 199.20(d)(7). 255 National Defense, 32 CFR 199.20. “Continued Health Care Benefit Program,” Department of Defense, accessed 

June 20, 2014, http://www.tricare.mil/Plans/SpecialPrograms/CHCBP.aspx. 
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- no adverse conditions are associated with the sponsor’s active-duty release 

or discharge 

- sponsor was eligible for medical care under a military health plan

- active-duty Service members or their family members are not eligible for any 

benefits under TRICARE or TAMP

 members of the selected Reserve of the Ready Reserve, Retired Reserve, and 

their family members

 former spouses who have not remarried when

- they are covered under TRICARE or TAMP on the day before the date of final 

decree

- they are not eligible for TRICARE as a former spouse or former member of 

the uniformed services

 dependent spouses and children when

- they do not meet requirements as dependents of members or former 

members of the uniformed services

- they were covered under TRICARE, TAMP, or TYA as dependents of a 

member or former member of the uniformed services on the day before 

ceasing to meet the requirements of being considered dependents

- they do not otherwise meet eligibility requirements for benefits under 

TRICARE

Financial Summary 

CHCB provides both individual and family coverage.256 CHCB coverage is purchased in 

90-day increments.257 The sponsor, a former spouse who has not remarried, or an 

adult child can be covered under an individual policy for $1,193 per quarter.258

Former service members and their dependents are eligible for family coverage, which is 

$2,682 per quarter.259 A sponsor must enroll for a family to be covered.260 Each fiscal 

year, CHCB costs and premiums may be adjusted.261 Annual deductibles and cost 

shares also apply, based on sponsor status and type of provider seen.262

4.1.13.3. TRANSITIONAL ASSISTANCE MANAGEMENT PROGRAM

Certain separating active-duty members and their eligible family members may receive 

transitional care through the Transitional Assistance Management Program (TAMP) for 

180 days.263 The sponsor’s Service branch and information in DEERS are used to 

determine TAMP eligibility.264

TAMP-eligible sponsors and family members are automatically enrolled in TRICARE 

Standard and Extra, USFHP (if they live in an area where this plan is offered), or 

 

256 U.S. Department of Defense Military Health System, Continued Health Care Benefit Program Fact Sheet, 3, accessed 

June 20, 2014, http://www.tricare.mil/~/media/Files/TRICARE/Publications/FactSheets/CHCBP_FS.pdf. 257 National Defense, 32 CFR 199.20(q)(1). Department of Defense Military Health System, Continued Health Care 

Benefit Program Fact Sheet, 3, accessed June 20, 2014, 

http://www.tricare.mil/~/media/Files/TRICARE/Publications/FactSheets/CHCBP_FS.pdf. 258 Department of Defense, Continued Health Care Benefit Program Fact Sheet, 3, accessed June 20, 2014, 

http://www.tricare.mil/~/media/Files/TRICARE/Publications/FactSheets/CHCBP_FS.pdf. 259 Ibid. 260 Ibid. 261 Ibid. 262 Ibid. 263 National Defense, 32 CFR 199.3(e)(3). 264 Ibid. 
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TRICARE Overseas program (if residing overseas).265 Where available, beneficiaries 

also may enroll in a TRICARE Prime option.266

Beneficiaries 

Sponsors and their families may be covered by TAMP if the sponsor meets one of the 

following criteria:267

 involuntarily separates from active duty under honorable conditions

 is a Reserve or National Guard member separating from a period of active duty 

that was more than 30 consecutive days in support of a contingency operation

 separates from active duty following involuntary retention (stop-loss) in support 

of a contingency operation

 separates from active duty following a voluntary agreement to stay on active 

duty for less than one year in support of a contingency operation

 separates from active duty with an agreement to become a member of the 

Selected Reserve of the Ready Reserve

 separates from active duty due to a sole survivorship discharge

Financial Summary 

Under TAMP, sponsor and family coverage is based on active-duty rates, and all 

pertinent rules, deductibles, cost shares, and copayments apply to the applicable 

program.268

4.1.13.4. EXTENDED CARE HEALTH OPTION

The Extended Care Health Option (ECHO)269 provides supplemental benefits through 

TRICARE.270 ECHO’s benefits go beyond acute care or benefits available through the 

TRICARE program.271 ECHO provides an additional financial resource intended to 

provide integrated services and supplies to help reduce the disabling effects of 

qualifying conditions of ECHO–eligible dependents.272 ECHO offers coverage for 

services needed to maintain, minimize or prevent deterioration of function for eligible 

dependents.273 The ECHO benefit comprises a range of services and equipment 

including assistive and rehabilitative services, respite care, transportation, and 

durable medical equipment.274

Beneficiaries 

To receive ECHO benefits for their family members, active-duty sponsors must enroll 

in their Service’s Exceptional Family Member Program (EFMP).275 EFMP eligibility 

 

265 Ibid. 266 Ibid. 267 National Defense, 32 CFR 199.3(e). 268 National Defense, 32 CFR 199.4(f)(2)(vi). 269 “Extended Care Health Option,” Department of Defense, accessed June 20, 2014, 

http://www.tricare.mil/Plans/SpecialPrograms/ECHO.aspx. 270 National Defense, 32 CFR 199.5(a)(1). 271 Ibid. U.S. Department of Defense Military Health System, Extended Care Health Option Fact Sheet, accessed 

June 20, 2014, http://www.tricare.mil/~/media/Files/TRICARE/Publications/FactSheets/ECHO_FS.pdf. 272 National Defense, 32 CFR 199.5(a)(2). 273 Ibid. 274 National Defense, 32 CFR 199.5(c). 275 National Defense, 32 CFR 199.5(h)(2). “Extended Care Health Option,” Department of Defense, accessed June 20, 

2014, http://www.tricare.mil/Plans/SpecialPrograms/ECHO.aspx. 
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criteria vary across Services.276 (See Section 5.1.10.8 for additional details.) TRICARE 

beneficiaries (with a qualifying condition) who are eligible for ECHO coverage include 

members of TRICARE-eligible, active-duty families; family members of Reserve/Guard 

activated for more than 30 consecutive days; family members covered under TAMP; 

children or spouses of former Service members who are victims of abuse and 

qualify for the Transitional Compensation Program; and family members of deceased, 

active-duty sponsors while they are considered transitional survivors.277

Qualifying conditions include the following:278

 moderate to severe mental retardation

 serious physical disability

 extraordinary physical or psychological condition

 neuromuscular developmental condition or other condition in a child younger 

than three years of age that is expected to precede a diagnosis of moderate or 

severe mental retardation or serious physical disability

 the cumulative effect of multiple disabilities

For TRICARE beneficiaries diagnosed with Autism Spectrum Disorder (ASD), there is 

an Autism Services Demonstration Project for care in this arena. Beneficiaries receive 

care under the ECHO Program. This program received an extension for one-year and is 

in effect until December 2014. The extension allows for evaluation of the effectiveness 

of the delivery model, and recognizes that it is in the best interest of TRICARE 

beneficiaries diagnosed with an ASD.279

Financial Summary 

ECHO benefits are not subject to a deductible.280 Beneficiaries pay a monthly cost 

share, which is determined by the sponsor’s pay grade.281 Cost share amounts range 

from $25 per month for pay grades E-1 through E-5 up to $250 per month for pay 

grade O-10.282

4.1.13.5. TRICARE COMBAT-RELATED SPECIAL COMPENSATION 

TRAVEL BENEFIT

Eligible retired Service members whose Combat-Related Special Compensation (CRSC) 

Board has awarded them CRSC, who are not TRICARE Prime enrollees, may receive 

the CRSC Travel Benefit.283 They may receive reimbursement for travel-related 

 

276 Exceptional Family Member Program, OPNAVINST 1754.2D (2010). Exceptional Family Member Program, AR 608-

75 (2011). Medical Support to Family Member Relocation and Exceptional Family Member Program, AFI 40-701 (2012). 

Exceptional Family Member Program (EFMP), MCO 1754.4B (2010). Special Needs Program, COMDTINST 1754.7B 

(2013).

277 National Defense, 32 CFR 199.5(b)(1). “Extended Care Health Option,” Department of Defense, accessed June 20, 

2014, http://www.tricare.mil/Plans/SpecialPrograms/ECHO.aspx. 278 National Defense, 32 CFR 199.5(b)(2). “Extended Care Health Option,” Department of Defense, accessed June 20, 

2014, http://www.tricare.mil/Plans/SpecialPrograms/ECHO.aspx. 279 Armed Forces, 10 U.S.C. § 1092. The Federal Register, Extension of Autism Services Demonstration Project for 

TRICARE Beneficiaries Under the Extended Care Health Option, accessed June 2, 2014, 

https://www.federalregister.gov/articles/2013/12/26/2013-30670/extension-of-autism-services-demonstrationproject-for-tricare-beneficiaries-under-the-extended-care. 280 National Defense, 32 CFR 199.5(f)(1). “Extended Care Health Option,” Department of Defense, accessed June 20, 

2014, http://www.tricare.mil/Plans/SpecialPrograms/ECHO.aspx. 281 National Defense, 32 CFR 199.5(f)(2). “Extended Care Health Option,” Department of Defense, accessed June 20, 

2014, http://www.tricare.mil/Plans/SpecialPrograms/ECHO.aspx. 282 Ibid. 283 Special Circumstances Travel and Transportation, JFTR, Volume 1, U7175 (2014).
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expenses when they must travel more than 100 miles from the referring provider’s 

location to get medically necessary, nonemergency specialty care, services, and 

supplies for a combat-related disability.284 Members enrolled in TRICARE Prime, 

including those enrolled in USFHP, can take advantage of the TRICARE Prime Travel 

Benefit.285

4.1.13.6. PRE-ACTIVATION BENEFIT

The Pre-Activation Benefit is for National Guard and Reserve members who are issued 

delayed-effective-date active-duty orders for more than 30 consecutive days in support 

of a contingency operation.286 These members may qualify for early eligibility for 

TRICARE.287 During this “pre-activation” period, members and their families qualify 

for the same level of coverage as they do when the sponsor is activated.288

4.1.13.7. WOMEN, INFANTS, AND CHILDREN OVERSEAS PROGRAM

The Women, Infants, and Children (WIC) Overseas Program provides members 

assigned to overseas duty stations with supplemental foods and nutrition 

education.289 WIC Overseas is not a program to deliver medical care, rather it is 

designed to improve participants’ health, wellness, and overall quality of life.290

Eligible participants include Service members and eligible civilians who are serving 

with, employed by, or accompanying the Military Services overseas.291 WIC Overseas 

counselors evaluate income, family size, and certain other criteria to determine 

eligibility for the program.292

4.1.13.8. FEDERAL LONG-TERM CARE INSURANCE

This program provides a long-term care insurance option for Federal and U.S. Postal 

employees and annuitants, active and retired members of the uniformed services, and 

their qualified family members.293 The program does not provide coverage for members 

of the Individual Ready Reserve.294 Premiums are based on the enrollee’s age at the 

time the application is submitted.295

 

284 Ibid. “Combat-Related Special Compensation Travel Benefit,” Department of Defense, accessed June 20, 2014, 

http://www.tricare.mil/Plans/SpecialPrograms/CRSCTravelBenefit.aspx. 285 “Combat-Related Special Compensation Travel Benefit,” Department of Defense, accessed June 20, 2014, 

http://www.tricare.mil/Plans/SpecialPrograms/CRSCTravelBenefit.aspx. 286 Armed Forces, 10 U.S.C. § 1074(d). 287 “Pre-Activation Benefit for National Guard and Reserve,” Department of Defense, accessed June 20, 2014, 

http://www.tricare.mil/Plans/Eligibility/NGRMandFamilies/Activated/PreActBenefits.aspx. 288 Ibid. 289 Armed Forces, 10 U.S.C. § 1060a. “Women, Infants, and Children Overseas Program,” Department of Defense, 

accessed June 20, 2014, http://www.tricare.mil/Plans/SpecialPrograms/WICOverseas.aspx. 290 Department of Defense, Policy Memo for WIC Overseas Program (Feb. 4, 2009), accessed April 14, 2014, 

http://www.health.mil/~/media/MHS/Policy%20Files/Import/09-004.ashx. 291 Armed Forces, 10 U.S.C. § 1060a. 292 “Women, Infants, and Children Overseas Program,” Department of Defense, accessed June 20, 2014, 

http://www.tricare.mil/Plans/SpecialPrograms/WICOverseas.aspx. 293 5 CFR 875.201-205. “What is the Federal Long Term Care Insurance Program?” Department of Defense, accessed 

April 14, 2014, http://www.ltcfeds.com. 294 Administrative Personnel, 5 CFR 875.204(c). 295 Administrative Personnel, 5 CFR 875.406. “Program Costs and Payment Options, Department of Defense, accessed 

April 14, 2014, http://www.ltcfeds.com/programdetails/cost.html. 
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4.1.13.9. OTHER PROGRAMS OFFERED AT MTFS 

 TRICARE Plus

TRICARE Plus allows beneficiaries who normally can get care at MTFs only on a 

space-available basis to enroll at the MTF for primary care only.296 TRICARE 

Plus is only available at some MTFs, by local Commander discretion.297

TRICARE Plus is not a “health plan option” nor does it guarantee access to 

specialty care at an MTF; rather, it is a way to access primary care at an 

MTF.298 Eligible beneficiaries are dependent parents or parents-in-law and 

TRICARE Standard, Extra, TRICARE Standard Overseas, and TFL users.299

There are no costs if seen within an MTF; however, normal cost shares apply if 

the MTF refers the beneficiary outside the MTF for further care.300

 Secretarial Designee

Individuals without a specific statutory entitlement or eligibility may receive 

DoD health care eligibility through the Secretarial Designee Program.301 This 

program can apply, under certain circumstances, to foreign military personnel 

and their dependents, foreign diplomatic or other senior officials, other foreign 

nationals, invited persons accompanying the overseas Force, U.S. nationals 

overseas, U.S. government civilian employees and contractors, research subject 

volunteers, recipients of continuity of care extensions of eligibility, and other 

various personnel.302 Care provided under this authority, unless otherwise 

designated, is reimbursable unless nonreimbursable care is authorized or 

waived by the Under Secretary of Defense for Personnel and Readiness or the 

Secretaries of the Military Departments in circumstances where they are the 

approving authority.303

4.2. DEPARTMENT OF VETERANS AFFAIRS

PROGRAMS

The U.S. Department of Veterans Affairs (VA) is a government-run veteran benefit 

system headed by the U.S. Secretary of Veterans Affairs.304 It provides Federal benefits 

and services to veterans and their families.305 The VA is the U.S. Government’s 

second-largest department, after the DoD, and operates nationwide programs for 

health care, financial assistance, and burial benefits.306

 

296 TRICARE Operations Manual, 6010.56-M, Chapter 6, Section 4 (2008), TRICARE Operations Manual, 6010.56-M 

Appendix B (2008). 297 Ibid. 298 Ibid. 299 Ibid. 300 Ibid. 301 Armed Forces, 10 U.S.C. § 1074(c). Health Care Eligibility Under the Secretarial Designee (SECDES) Program and 

Related Special Authorities, DODI 6025.23 (2013). 302 Health Care Eligibility Under the Secretarial Designee (SECDES) Program and Related Special Authorities, 

DODI 6025.23 (2013). 303 Ibid. Armed Forces, 10 U.S.C. § 2559. 304 Veterans’ Benefits, 38 U.S.C. §§ 301, 303. 305 Veterans’ Benefits, 38 U.S.C. § 301. Department of Veterans Affairs, Facts About the Department of Veterans Affairs, 

accessed April 14, 2014, http://www.va.gov/opa/publications/factsheets/fs_department_of_veterans_affairs.pdf. 306 Ibid.
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The Department comprises three main service lines: the Veterans Health 

Administration (VHA), the Veterans Benefit Administration (VBA), and the National 

Cemetery Administration.307 The VA provides myriad benefits including disability, 

education and training, vocational rehabilitation and employment, home loan 

guaranty, dependent and survivor benefits, medical treatment, life insurance, and 

burial benefits.308

Historical Context 

Assistance to disabled veterans dates back to 1636, when a law was passed stating

disabled soldiers would be supported by the colony.309 Continuing this tradition, State 

veterans homes were established after the Civil War. Because veterans could receive 

domiciliary care at all State veterans’ homes, they received incidental medical and 

hospital treatment for all injuries and diseases, regardless of whether they originated 

from service activities.310 These homes provided care for indigent and disabled 

veterans of the Civil War, the Indian Wars, the Spanish-American War, and the 

Mexican Border period, as well as discharged regular members of the Armed Forces.311

In 1917, shortly after the United States entered World War I, the Congress established 

a new system of veterans’ benefits.312 Three different Federal agencies administered 

the programs by the 1920s: the Veterans Bureau, the Bureau of Pensions of the 

Interior Department, and the National Home for Disabled Volunteer Soldiers.313

A decade later, in July 1930, The Veterans Administration was created to consolidate 

agencies administrating veterans’ benefits.314 At that time, there were 54 hospitals, 

4.7 million living veterans, and 31,600 employees.315 In 1946, the Department of 

Medicine & Surgery was established, followed by the Department of Veterans Benefits 

in 1953.316 During the next several decades, the VA health care delivery system 

restructured and expanded benefits. In 1973, the Civilian Health and Medical Program 

of the Department of Veterans Affairs (CHAMPVA) became the health benefits program 

for dependents of permanently and totally disabled veterans; survivors of veterans who 

died from service-connected conditions; and survivors of veterans, who, at the time of 

death, were rated permanently and totally disabled from a service-connected condition 

and not otherwise eligible for TRICARE.317 When the passage of the Veterans Health 

Care Amendments Act of 1979 was passed, the VA created Vet Centers across the 

 

307 Department of Veterans Affairs, Organization Chart, accessed April 14, 2014, 

http://www.va.gov/ofcadmin/docs/vaorgchart.pdf.

308 See generally Veterans’ Benefits, 38 U.S.C. §§ 1101-7907. 309 David Pulsifer, ed., Records of the Colony of New Plymouth in New England (Boston: William White, 1861), 13. 

“VA History,” Department of Veterans Affairs, accessed April 14, 2014, http://www.va.gov/about_va/vahistory.asp. 310 “New to VA,” Department of Veterans Affairs, accessed April 14, 2014, http://www.va.gov/opa/newtova.asp. 311 Ibid. 312 War Risk Insurance Act Amendments: Pub. L. No. 65-20, 40 Stat. 102 (1917) and Pub. L. No. 65-90, 40 Stat. 398 

(1917). Department of Veterans Affairs, VA Disability Compensation Program: Legislative History, 33-35, accessed April 

14, 2014, http://www.va.gov/op3/docs/ProgramEvaluations/DisCompProgram/Disability_Comp_Legislative_Histor_

Lit_Review.pdf. “VA History,” Department of Veterans Affairs, accessed April 14, 2014, 

http://www.va.gov/about_va/vahistory.asp.

313 “VA History,” Department of Veterans Affairs, accessed April 14, 2014, http://www.va.gov/about_va/vahistory.asp. 314 World War Veterans’ Act of 1930, Pub. L. No. 71-536, 46 Stat. 1016 (1930). Consolidation and Coordination of 

Government Activities Affecting Veterans, Exec. Order No. 5398 (1930). Department of Veterans Affairs, VA History In 

Brief, 12, accessed April 14, 2014, http://www.va.gov/opa/publications/archives/docs/history_in_brief.pdf. 315 Department of Veterans Affairs, Fact Sheet (January 2009), accessed April 14, 2014,

http://www.va.gov/opa/publications/factsheets/fs_department_of_veterans_affairs.pdf. 316 Ibid. 317 Department of Veterans Affairs, Health Administration Center, CHAMPVA Policy Manual, Chapter 1, Section 1.1, at 

http://www.va.gov/hac/forbeneficiaries/champva/policymanual/index.asp. 
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country, which were separate from other VA facilities.318 By 2005, more than 200 Vet 

Centers provided various counseling services and treated post-traumatic stress 

disorder.319 In 1988, the VA was elevated to Cabinet status and in 1989 it became the 

Department of Veterans Affairs.320 Under its reorganized structure, the department 

included the Veterans Health Administration (formerly the Veterans Health Services 

and Research Administration), the Veterans Benefits Administration, and the National 

Cemetery System.321

The Omnibus Budget Reconciliation Act of 1990 placed limitations on eligibility for 

disability pensions.322 Under this law, to be determined totally disabled, veterans of 

any age must be considered unemployable as a result of a disability that is expected to 

continue throughout the disabled prospective pensioner’s life.323 The Agent Orange Act 

of 1991, enacted to assist Vietnam era veterans, provided for presumptive service 

connection for disabilities resulting from exposure to herbicides used in Vietnam.324

The Veterans Health Care Act of 1992 provided authority for a variety of genderspecific services and programs to care for female veterans.325 In 1994, the Congress 

authorized compensation for veterans who have chronic disabilities as a result of 

undiagnosed illnesses that appeared during active duty in the Persian Gulf or within a 

presumptive period after Gulf service.326

In 1995, the VA reorganized its hospitals into 22 Veterans Integrated Service Networks 

(VISNs).327 “Critical elements of this transformation included population-based 

planning, decentralization, universal availability of primary care, a shift to outpatient 

care from inpatient care, and an emphasis on measuring health care performance on 

the outcome of patient treatment.”328 As a result of the Veterans’ Health Care 

Eligibility Reform Act of 1996, the VA enrolled most veterans in the VA health care 

system and standardized criteria for inpatient and outpatient care.329 In 1997, the VA 

instituted a program to provide health care benefits, vocational training, and a 

monthly allowance based on severity of illness for Vietnam veterans’ children with 

spina bifida.330 This program was amended in 2003 to include Korea veterans’ 

 

318 Department of Veterans Affairs, VA History In Brief, 23, accessed at April 14, 2014,

http://www.va.gov/opa/publications/archives/docs/history_in_brief.pdf. 319 Ibid. 320 Department of Veterans Affairs Act, Pub. L. No. 100-527, 102 Stat. 2635 (1988) (codified at Title 38, U.S. Code). 

Department of Veterans Affairs, VA History In Brief, 26, accessed April 14, 2014, 

http://www.va.gov/opa/publications/archives/docs/history_in_brief.pdf. 321 Ibid, 26. 322 Omnibus Budget Reconciliation Act of 1990, Pub. L. No. 101-508, title VIII, 104 Stat. 1388, 1388-341 (1990). 

Department of Veterans Affairs, VA History In Brief, 25, accessed April 14, 2014,

http://www.va.gov/opa/publications/archives/docs/history_in_brief.pdf. 323 Omnibus Budget Reconciliation Act of 1990, Pub. L. No. 101-508, § 8002, 104 Stat. 1388, 1388-342 (1990). 

Department of Veterans Affairs, VA History In Brief, 25, accessed April 14, 2014, 

http://www.va.gov/opa/publications/archives/docs/history_in_brief.pdf. 324 Agent Orange Act of 1991, Pub. L. No. 102-4, § 2, 105 Stat. 11 (1991). Department of Veterans Affairs, VA History In 

Brief, 20, accessed April 14, 2014, http://www.va.gov/opa/publications/archives/docs/history_in_brief.pdf. 325 Department of Veterans Affairs, VA History In Brief, 28, accessed April 14, 2014, 

http://www.va.gov/opa/publications/archives/docs/history_in_brief.pdf. Veterans Health Care Act of 1992, Pub. L. 

No. 102-585, 106 Stat. 4943 (1992). 326 Department of Veterans Affairs, VA History In Brief, 27, accessed April 14, 2014, 

http://www.va.gov/opa/publications/archives/docs/history_in_brief.pdf. Veterans’ Benefits Improvements Act of 

1994, Pub. L. No. 103-446, § 106, 108 Stat. 4645, 4650 (1994). 327 Department of Veterans Affairs, VA History In Brief, 29, accessed April 14, 2014, 

http://www.va.gov/opa/publications/archives/docs/history_in_brief.pdf.

328 Ibid, 20. 329 Ibid, 30. Veterans’ Health Care Eligibility Reform Act of 1996, Pub. L. No. 104-262, 110 Stat. 3177 (1996). 330 Department of Veterans Affairs, VA History In Brief, 20, accessed April 14, 2014, 

http://www.va.gov/opa/publications/archives/docs/history_in_brief.pdf. Departments of Veterans Affairs and 
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children diagnosed with spina bifida.331 The Veterans’ Mental Health and Other Care 

Improvements Act of 2008 expanded covered benefits beyond the spina bifida 

condition.332

Department of Veterans Affairs Costs to Provide Health Benefits 

The VA’s budget exceeded $130 billion in FY 2013. The two largest elements of this 

budget were for the health care system and the disability compensation system. As 

identified in Section 6, the VA health care system budget was approximately 

$53 billion in FY 2013.333 Disability and related payments were approximately 

$56 billion in FY 2013 and, when combined with all other non-health care funding for 

VA, accounted for approximately 15.5 percent of compensation funding.334 

VA patients treated from 2000 to 2013 increased 59 percent; however, the associated 

costs to care for these patients almost tripled at a 153 percent increase (see 

Figure 18). 

Figure 18. VA Health Care Funding and Patients335

 Housing and Urban Development, and Independent Agencies Appropriations Act, 1997, Pub. L. No. 104-204, § 421, 

110 Stat. 2874, 2923 (1996).

331 Department of Veterans Affairs, Spina Bifida Policy Manual, Chapter 1, Section 1, accessed April 14, 2014, 

http://www4.va.gov/hac/forbeneficiaries/spina/policymanual/index.asp. Veterans Benefits Act of 2003, Pub. L. No. 

108-183, § 102, 117 Stat. 2651, 2653 (2003). 332 Department of Veterans Affairs, Spina Bifida Policy Manual, Chapter 1, Section 1, accessed April 14, 2014, 

http://www4.va.gov/hac/forbeneficiaries/spina/policymanual/index.asp. Veterans’ Mental Health and Other Care 

Improvements Act of 2008, Pub. L. No. 110-387, § 408, 122 Stat. 4110, 4130 (2008). 333 Appropriated Budget Data, presented in Section 6.2 of this report. 334 Ibid. 335 VA annual benefits reports 2000–2013 and Appropriated Budget Data, presented in Section 6.2 of this report.

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

VHA $B $19 $21 $22 $24 $26 $30 $29 $34 $37 $42 $45 $49 $51 $53

VHA patients (M) 3.7 4.1 4.5 4.8 5 5.2 5.2 5.23 5.29 5.4 5.6 5.8 5.9 6

0

2

4

6

8

10

 $-

 $10

 $20

 $30

 $40

 $50

 $60

$0
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As shown in Figure 19, the cost for disability compensation increased 193 percent 

between 2000 and 2013, and the number of beneficiaries receiving a disability 

compensation benefit increased 52.2 percent during this time period.

Figure 19. Veterans Disability Compensation336

As an example, Figure 20 depicts the growth in the degree of disability percentage 

categories applies to Service members in a specific body system, in this case, mental 

disorders. Increased disability percentage results in higher disability compensation 

payments. See further detail in Section 4.2.2.1.

 

336 Ibid.

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

VBA $B $19 $20 $23 $26 $26 $29 $30 $35 $37 $39 $57 $49 $46 $56

VBA recipients (M) 2.3 2.32 2.4 2.5 2.6 2.63 2.7 2.8 3 3.07 3.2 3.4 3.5 3.6

0

2

4

6

8

10

 $-

 $10

 $20

 $30

 $40

 $50

 $60

$0
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Figure 20. Mental Disorders by Disability Percent337

Except for the 0 percent and 10 percent rating categories from 1999–2004, the 

number of conditions per rating under the mental disorders disability category has 

increased. The greatest percentage increase was from in the 70 percent rating category 

from 1999–2004, at a 148 percent increase. The next highest was in the same 

70 percent rating category, from 2008–2012, at a 75 percent increase, followed closely 

in the 50 percent rating category also from 2008–2012 at a 74 percent increase.

4.2.1. HEALTH BENEFITS

The Veterans Health Administration (VHA) provides all health services for the VA.338

With more than 150 medical centers, nearly 1,400 community-based outpatient 

clinics, community-living centers, Vet Centers, and domiciliary facilities, the VHA is 

the largest integrated health care system in the United States.339

4.2.1.1. VETERANS

The VHA provides health services to eligible veterans through an annual patient 

enrollment system.340 Standard benefits include the following:341

 

337 VBA annual benefits reports for 1999–2012; table titled “Total Service-Connected Disabilities for Veterans Receiving 

Compensation at the end of the Fiscal Year ## by percent and Body System” (Mental Disorders–sub table). 338 “VA Structure,” Department of Veterans Affairs, accessed April 14, 2014, http://www.va.gov/opa/newtova.asp. 339 “About VHA,” Department of Veterans Affairs, accessed April 14, 2014, http://www.va.gov/health/aboutVHA.asp. 340 Department of Veterans’ Affairs, Health Care Benefits Overview Brochure, 2012, 1, accessed April 14, 2014,

http://www.va.gov/healthbenefits/resources/epublications.asp. Pensions, Bonuses, and Veterans’ Relief, 

38 CFR 17.36-17.38. 341 Ibid, 25. Pensions, Bonuses, and Veterans’ Relief, 38 CFR 17.38.

0

50,000

100,000

150,000

200,000

250,000

300,000

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

1999

2004

2008

2012

# of 

conditions

Percentage of Disability Rating
MILITARY COMPENSATION AND RETIREMENT MODERNIZATION COMMISSION

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Preventive Care Services342

 immunizations

 physical examinations (including eye and hearing examinations)

 health care assessments

 screening tests

 health education programs

Ambulatory (outpatient) and Hospital (inpatient) Diagnostic and Treatment Services343

 medical

 surgical (including reconstructive/plastic surgery as a result of disease or 

trauma)

 mental health

 substance abuse

Prescription Drugs344

Long-Term Care345

 geriatric evaluation

 adult day health care

 respite care

 hospice/palliative care

Limited Benefits (which may have special eligibility criteria) including:

 ambulance services346

 dental care347

 eyeglasses348

 hearing aids349

 home health care350 

 maternity and childbirth services351

 non-VA health care service352

Prescription Drugs

In general, medications provided through the VA pharmacy benefit must be prescribed 

by a VA provider, filled through a VA pharmacy, and listed on the Veterans Affairs 

National Formulary (VANF).353 The VANF is a list of drugs, grouped by class, that VA 

 

342 Veterans’ Benefits, 38 U.S.C. § 1701(9). Pensions, Bonuses, and Veterans’ Relief, 38 CFR 17.38(a)(2). 343 Pensions, Bonuses, and Veterans’ Relief, 38 CFR 17.38(a)(1). 344 Pensions, Bonuses, and Veterans’ Relief, 38 CFR 17.38(a)(1)(iii). Pensions, Bonuses, and Veterans’ Relief, 

38 CFR 17.96. 345 Veterans’ Benefits, 38 U.S.C. § 1710A. 38 U.S.C. § 1710B. Pensions, Bonuses, and Veterans’ Relief,

38 CFR 17.38(a). 346 Pensions, Bonuses, and Veterans’ Relief, 38 CFR 17.52(a)(8). Pensions, Bonuses, and Veterans’ Relief, 

38 CFR 17.101(k). 347 Veterans’ Benefits, 38 U.S.C. § 1712. 348 Pensions, Bonuses, and Veterans’ Relief, 38 CFR 17.38 (a)(1)(viii), 17.149. 349 Ibid. 350 Veterans’ Benefits, 38 U.S.C. § 1717. 351 Pensions, Bonuses, and Veterans’ Relief, 38 CFR 17.38 (a)(1)(xiv). Maternity and childbirth services are usually 

provided in non-VA contracted hospitals at VA expense. Care is limited to the mother and newborn. VA may furnish 

health care services to a newborn child of a woman veteran who is receiving maternity care furnished by VA beginning 

with the date of birth plus the first seven calendar days after birth. 352 Veterans’ Benefits, 38 U.S.C. § 1703. Pensions, Bonuses, and Veterans’ Relief, 38 CFR 17.52. 353 See VA Health Benefits, Prescriptions, http://www.va.gov/healthbenefits/access/prescriptions.asp. See also 

Government Accountability Office, VA Drug Formulary, GAO-10-776 (2010), 1, 
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providers are expected to use when prescribing drugs for veterans.354 Providers can 

request access to medications not listed on the national formulary when it is clinically 

necessary to do so,355 and all VA medical centers are required to have a non-formulary 

drug request process.356

VA Dental Insurance Program

The VA Dental Insurance Program (VADIP) began as a three-year, national pilot 

program mandated to assess the feasibility and advisability of providing a dental 

insurance plan to enrolled veterans and eligible beneficiaries of the VA’s Civilian 

Health and Medical Program.357 The VADIP offers enrolled veterans and beneficiaries 

the opportunity to purchase dental insurance at a reduced cost on an annual basis.358

Coverage under VADIP began on January 1, 2014.359 Participation is voluntary and 

purchasing a dental plan does not affect a veteran’s eligibility for VA dental services 

and treatment.360 Covered services include diagnostic, preventive, surgical, emergency, 

and endodontic/restorative treatment services.361 Each participant pays the fixed 

monthly premiums for coverage and any copayments required, depending on the type 

of plan selected.362

Beneficiaries 

Veterans eligible to receive VA health care benefits include honorably discharged or 

released individuals who served in the Active Component of the uniformed services.363

Reservists and National Guard members called to active duty (other than for training 

only) by a Federal order who completed the full period for which they were called or 

ordered to active duty, may also qualify.364 Veterans who enlisted after September 7, 

1980, or who entered active duty after October 16, 1981, must have served 

24 continuous months or the full period for which they were called to active duty to 

receive benefits.365 Veterans discharged for hardship, early out, or a disability incurred 

or aggravated in the line of duty may be exempt from the minimum-service 

 http://www.gao.gov/new.items/d10776.pdf. (In certain limited circumstances, however, the VA does fill prescriptions 

for drugs prescribed by non-VA providers. See 38 CFR 17.96 for details.) 354 U.S. Department of Veterans Affairs, Veterans Health Administration, VHA Handbook 1108.08: Formulary 

Management Process (February 26, 2009), 3, accessed June 20, 2014, 

http://www.pbm.va.gov/directive/vhadirective.pdf. 355 Ibid, 11. 356 Ibid, 8. 357 Caregivers and Veterans Omnibus Health Services Act of 2010, Pub. L. No. 111-163, § 510, 124 Stat. 1130, 1162 

(2010).

358 Ibid. Pensions, Bonuses, and Veterans’ Relief, 38 CFR 17.169. 359 “VA Dental Insurance Program,” Department of Veterans Affairs, accessed June 20, 2014, 

http://www.va.gov/healthbenefits/vadip/. Department of Veterans Affairs, VA Dental Insurance Program (VADIP) Fact 

Sheet, accessed June 20, 2014, http://www.va.gov/healthbenefits/vadip/VADIP_fact_sheet_v15.pdf. 360 Pensions, Bonuses, and Veterans’ Relief, 38 CFR 17.169(a). “VA Dental Insurance Program,” Department of 

Veterans Affairs, accessed June 20, 2014, http://www.va.gov/healthbenefits/vadip/. 361 Pensions, Bonuses, and Veterans’ Relief, 38 CFR 17.169(c)(2). 362 Pensions, Bonuses, and Veterans’ Relief, 38 CFR 17.169(c). “VA Dental Insurance Program,” Department of 

Veterans Affairs, accessed June 20, 2014, http://www.va.gov/healthbenefits/vadip/. 363 Veterans’ Benefits, 38 U.S.C. § 1710. Pensions, Bonuses, and Veterans’ Relief, 38 CFR 17. 364 Department of Veterans Affairs, Federal Benefits for Veterans Dependents and Survivors, 2013 Edition, VA Pamphlet 

80-13-01, P94663, 1, accessed April 14, 2014, http://www.va.gov/opa/publications/benefits_book.asp, “Veterans 

Eligibility,” Department of Veterans Affairs, accessed April 14, 2014, 

http://www.va.gov/healthbenefits/apply/veterans.asp. 365 Pensions, Bonuses, and Veterans’ Relief, 38 CFR 3.12(c)(1)(2).
MILITARY COMPENSATION AND RETIREMENT MODERNIZATION COMMISSION

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requirement.366 Certain veterans may receive enhanced eligibility status when 

applying and enrolling in the VA health care system.367

Enrollment 

During enrollment, the VA assigns veterans to priority groups to balance demand for 

VA health care enrollment with resources.368 Changes in available resources may 

affect the number of priority groups VA can enroll.369 The priority groups range from 

1-8 with 1 being the highest priority for enrollment.370 VA will publicize any changes to 

enrollment priority groups through a Federal Register notification of eligible 

enrollees.371 Qualifications for each group are described below:372

 Group 1: Veterans with service-connected disabilities rated 50 percent or more 

and veterans determined by VA to be unemployable due to service-connected 

conditions373

 Group 2: Veterans with service-connected disabilities rated 30 or 40 percent374

 Group 3:375

- Veterans who are former POWs

- Veterans awarded the Purple Heart Medal

- Veterans awarded the Medal of Honor

- Veterans discharged for a disability incurred or aggravated in the line of 

duty

- Veterans with service-connected disabilities rated 10 or 20 percent

- Veterans awarded special eligibility classification under 38 U.S.C. § 1151, 

“benefits for individuals disabled by treatment or vocational rehabilitation” 

- Veterans whose entitlement to disability compensation is suspended 

pursuant to 38 U.S.C. § 1511, but only to the extent that such veterans’ 

continuing eligibility for that care is provided for in the judgment or 

settlement described in 38 U.S.C. § 1511

- Veterans whose entitlement to disability compensation is suspended 

because of the receipt of military retired pay

- Veterans receiving compensation at the 10 percent rating level based on 

multiple noncompensable service-connected disabilities that clearly interfere 

with normal employability

 

366 Ibid. 367 “Veterans Eligibility,” Department of Veterans Affairs, accessed April 14, 2014, 

http://www.va.gov/healthbenefits/apply/veterans.asp. Pensions, Bonuses, and Veterans’ Relief, 38 CFR 17.36. 368 Department of Veterans Affairs, Federal Benefits for Veterans Dependents and Survivors, 2013 Edition, VA Pamphlet 

80-13-01, P94663, 1, accessed April 14, 2014, http://www.va.gov/opa/publications/benefits_book.asp. Pensions, 

Bonuses, and Veterans’ Relief, 38 CFR 17.36. 369 Ibid. 370 Ibid. 371 Department of Veterans Affairs, Federal Benefits for Veterans Dependents and Survivors, 2013 Edition, VA Pamphlet 

80-13-01, P94663, 1, accessed April 14, 2014, http://www.va.gov/opa/publications/benefits_book.asp. 372 Ibid, 2-4. Pensions, Bonuses, and Veterans’ Relief, 38 CFR 17.36. 373 Ibid, 2-4. Pensions, Bonuses, and Veterans’ Relief, 38 CFR 17.36(b)(1). 374 Ibid, 2-4. Pensions, Bonuses, and Veterans’ Relief, 38 CFR 17.36(b)(2). 375 Ibid, 2-4. Pensions, Bonuses, and Veterans’ Relief, 38 CFR 17.36(b)(3).
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 Group 4:376

- Veterans receiving increased pension because they need regular aid and 

attendance or because they are permanently housebound

- Veterans identified as catastrophically disabled

 Group 5:377

- Non-service-connected veterans and noncompensable, service-connected 

veterans rated 0 percent, whose annual income and/or net worth are not 

greater than the VA financial thresholds

- Veterans receiving VA pension benefits

- Veterans eligible for Medicaid benefits

 Group 6:378

- Veterans of the Mexican border period or of World War I

- Compensable 0 percent service-connected Veterans

- Veterans exposed to ionizing radiation during atmospheric testing or during 

the occupation of Hiroshima and Nagasaki

- Project 112/Shipboard Hazard and Defense (SHAD) participants379

- Veterans who served in the Republic of Vietnam between January 9, 1962, 

and May 7, 1975

- Veterans who served in the Southwest Asia theater of operations from 

August 2, 1990, through November 11, 1998

- Veterans who served in a theater of combat operations after November 11, 

1998, as follows:

• Veterans discharged from active duty on or after January 28, 2003, for 

five years post discharge

• Veterans who served on active duty at Camp Lejeune for not fewer than 

30 days beginning January 1, 1957, and ending December 31, 1987

 Group 7: Veterans with incomes less than geographic means test income 

thresholds and who agree to pay the applicable copayment.380 This category is 

further prioritized into the following subcategories:

- Non-compensable 0 percent service-connected veterans who are in an 

enrolled status on a specified date announced in a Federal Register 

document and who subsequently do not request disenrollment

- Nonservice-connected veterans who are in an enrolled status on a specified 

date announced in a Federal Register document and who subsequently do 

not request disenrollment

- Non-compensable 0 percent service-connected veterans

- Nonservice-connected veterans

 Group 8: Veterans with gross household incomes greater than the VA national 

income threshold and the geographically-adjusted income threshold for their 

 

376 Ibid, 2-4. Pensions, Bonuses, and Veterans’ Relief, 38 CFR 17.36(b)(4). 377 Ibid, 2-4. Pensions, Bonuses, and Veterans’ Relief, 38 CFR 17.36(b)(5). 378 Ibid, 2-4. Pensions, Bonuses, and Veterans’ Relief, 38 CFR 17.36(b)(6). 379 “Project 112/Project SHAD,” Department of Veterans Affairs, accessed June 2, 2014, 

http://www.publichealth.va.gov/exposures/shad/index.asp. 380 Department of Veterans Affairs, Federal Benefits for Veterans Dependents and Survivors, 2013 Edition, VA Pamphlet

80-13-01, P94663, 1, accessed April 14, 2014, http://www.va.gov/opa/publications/benefits_book.asp. Pensions, 

Bonuses, and Veterans’ Relief, 38 CFR 17.36(b)(7).
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resident location and who agree to pay copayments.381 This category is further 

prioritized into the following subcategories:

- Veterans eligible for enrollment: Noncompensable, 0-percent serviceconnected and:

• Subpriority A – Enrolled as of January 16, 2003, and who have remained 

enrolled since that date and/or placed in this subpriority due to changed 

eligibility status

• Subpriority B – Enrolled on or after June 15, 2009, whose income 

exceeds the current VA national income thresholds or VA national 

geographic income thresholds by 10 percent or less382

- Veterans eligible for enrollment: Nonservice-connected and: 

• Subpriority C – Enrolled as of January 16, 2003, and who remained 

enrolled since that date and/or placed in this subpriority due to changed 

eligibility status

• Subpriority D – Enrolled on or after June 15, 2009, whose income 

exceeds the current VA national income thresholds or VA national 

geographic income thresholds by 10 percent or less383

- Veterans NOT eligible for enrollment: Veterans not meeting the criteria 

above:

• Subpriority E – Non-compensable 0 percent service-connected

• Subpriority F – Nonservice-connected

As shown in Figure 21, from FY 2002 to FY 2012, and during sustained conflict 

throughout the period, there was a 29.4 percent increase of veterans enrolled in the 

VA health care system and a 79.8 percent increase of outpatient visits.

 

381 Ibid, 2-4. Pensions, Bonuses, and Veterans’ Relief, 38 CFR 17.36(b)(8). 382 Ibid, 2-4. Pensions, Bonuses, and Veterans’ Relief, 38 CFR 17.36(b)(8), 17.36(c). 383 Ibid.
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Figure 21. Trends in Healthcare Enrollees and Outpatient Visits,

FY 2002–FY 2012384

Financial Summary 

Although many veterans qualify for free healthcare services based on a VA 

compensable service-connected condition or other qualifying factor, most veterans, 

who are not receiving VA disability compensation or pension payment, are asked to 

complete a financial assessment at the time of enrollment to determine if they qualify 

for free services.385 Veterans whose income exceeds the established VA income 

thresholds, as well as those who choose not to complete the financial assessment, 

must agree to pay required copays to become eligible for VA healthcare services.386

Outpatient copays consist of $15 for primary care services and $50 for specialty care 

services.387 The copayment amount is limited to a single charge per visit regardless of 

the number of health care providers seen in a single day, and the amount is based on 

the highest level of service received.388 There is no copayment requirement for 

preventive care services, such as screenings and immunizations.389

 

384 Department of Veterans Affairs, National Center for Veterans Analysis and Statistics, Quick Facts, Trends in the 

Utilization of VA Programs and Services, 6, accessed April 14, 2014,

http://www.va.gov/vetdata/docs/QuickFacts/Utilization_trends_2012.pdf. Department of Veteran’s Affairs, Selected 

Veterans Health Administration Characteristics: FY 2002 to FY 2012, accessed April 14, 2014, 

http://www.va.gov/vetdata/docs/Utilization/VHAStats.xls. 385 Department of Veterans Affairs, Federal Benefits for Veterans Dependents and Survivors, 2013 Edition, VA Pamphlet 

80-13-01, P94663, 8, accessed April 14, 2014, http://www.va.gov/opa/publications/benefits_book.asp. 386 Ibid. Veterans’ Benefits, 38 U.S.C. § 1710. 387 Ibid. Pensions, Bonuses, and Veterans’ Relief, 38 CFR 17.108(c)(2). 388 Ibid. Pensions, Bonuses, and Veterans’ Relief, 38 CFR 17.108(c). 389 Department of Veterans Affairs, Health Care Benefits Overview 2012, 21, accessed April 14, 2014,

http://www.va.gov/healthbenefits/resources/epublications.asp. Pensions, Bonuses, and Veterans’ Relief, 

38 CFR 17.108(e)(11).

6.8 7.1 7.3 7.7 7.9 7.8 7.8 8.1 8.3 8.6 8.8
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While many veterans are exempt from medication copays, nonservice-connected 

veterans in Priority Groups 7 and 8 are charged $9 for each 30-day-or-less supply of 

medication provided on an outpatient basis for the treatment of a nonserviceconnected condition.390 Veterans enrolled in Priority Groups 2 through 6 are charged 

$8 for each 30-day-or-less supply of medication.391 Veterans in Priority Group 1 do not 

pay for medications.392

For inpatient care, Priority Group 7 and certain other veterans are responsible for 

paying 20 percent of VA’s inpatient copay or $236.80 for the first 90 days of inpatient 

hospital care during any 365-day period and a $2 per day charge.393 For each 

additional 90 days, the charge is $118.40.394 Priority Group 8 and certain other 

veterans are responsible for VA’s full inpatient copay of $1,184 for the first 90 days of 

care during any 365-day period and a $10 per diem charge.395 For each additional 90 

days, the charge is $592.396

Long-term care copays are based on three levels of care: Inpatient: Up to $97 per day 

(Nursing Home, Institutional Respite Care, Institutional Evaluation); Outpatient: $15 

per day (Adult Day Health Care, Non-institutional Respite Care, Non-institutional 

Geriatric Evaluation); and Domiciliary: $5 per day.397 Copayments for long-term care 

services start on the 22nd day of care during any 12-month period; there is no 

copayment requirement for the first 21 days.398 Actual copayment charges will vary 

from veteran to veteran depending upon financial information submitted.399

Services exempt from inpatient and outpatient copays include:

 special registry examinations offered by VA to evaluate possible health risks 

associated with military service400

 counseling and care for military sexual trauma401

 compensation and pension examinations402 

 care that is part of a VA research project403

 care related to a VA-rated service-connected disability404

 

390 Department of Veterans Affairs, Federal Benefits for Veterans Dependents and Survivors, 2013 Edition, VA Pamphlet 

80-13-01, P94663, 9, accessed April 14, 2014, http://www.va.gov/opa/publications/benefits_book.asp. Pensions, 

Bonuses, and Veterans’ Relief, 38 CFR 17.110. 391 Ibid. 392 “Health Benefits Copay Rates,” Department of Veterans Affairs, accessed April 14, 2014,

http://www.va.gov/healthbenefits/cost/copay_rates.asp. Pensions, Bonuses, and Veterans’ Relief, 38 CFR 17.110(c). 393 See also Pensions, Bonuses, and Veterans’ Relief, 38 CFR 17.108. “Health Benefits Copays,” Department of 

Veterans Affairs, accessed April 14, 2014, http://www.va.gov/HEALTHBENEFITS/cost/copays.asp. 394 Ibid. 395 Ibid. 396 Ibid. 397 “Health Benefits Copay Rates,” Department of Veterans Affairs, accessed April 14, 2014, 

http://www.va.gov/healthbenefits/cost/copay_rates.asp. Pensions, Bonuses, and Veterans’ Relief, 38 CFR 17.111(b). 398 Pensions, Bonuses, and Veterans’ Relief, 38 CFR 17.111(b)(1). “Health Benefits Copays,” Department of Veterans 

Affairs, accessed April 14, 2014, http://www.va.gov/HEALTHBENEFITS/cost/copays.asp. 399 Pensions, Bonuses, and Veterans’ Relief, 38 CFR 17.111(d). “Health Benefits Copays,” Department of Veterans 

Affairs, accessed April 14, 2014, http://www.va.gov/HEALTHBENEFITS/cost/copays.asp. 400 Pensions, Bonuses, and Veterans’ Relief, 38 CFR 17.108(a)(3). “Health Benefits Copays,” Department of Veterans 

Affairs, accessed April 14, 2014, http://www.va.gov/HEALTHBENEFITS/cost/copays.asp. 401 Pensions, Bonuses, and Veterans’ Relief, 38 CFR 17.111(f)(6). “Health Benefits Copays,” Department of Veterans 

Affairs, accessed April 14, 2014, http://www.va.gov/HEALTHBENEFITS/cost/copays.asp. 402 Pensions, Bonuses, and Veterans’ Relief, 38 CFR 17.108(e)(5). “Health Benefits Copays,” Department of Veterans 

Affairs, accessed April 14, 2014, http://www.va.gov/HEALTHBENEFITS/cost/copays.asp. 403 Pensions, Bonuses, and Veterans’ Relief, 38 CFR 17.108(e)(6). “Health Benefits Copays,” Department of Veterans 

Affairs, accessed April 14, 2014, http://www.va.gov/HEALTHBENEFITS/cost/copays.asp. 404 Pensions, Bonuses, and Veterans’ Relief, 38 CFR 17.111(f)(1). “Health Benefits Copays,” Department of Veterans 

Affairs, accessed April 14, 2014, http://www.va.gov/HEALTHBENEFITS/cost/copays.asp.
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 readjustment counseling and related mental health services405

 care for cancer of head or neck caused by nose or throat radium treatments 

received while in the military406

 individual or group smoking cessation or weight reduction services407

 publicly announced VA public health initiatives, for example, health fairs408

 care potentially related to combat service for veterans that served in a theater of 

combat operations after November 11, 1998409

 laboratory and electrocardiograms410

 hospice care411

4.2.1.2. FAMILY MEMBERS OF VETERANS

Veterans’ family members under certain circumstances may be eligible for health 

benefits.412 Some of the programs offered include the Civilian Health and Medical 

Program of the Department of Veterans Affairs (CHAMPVA), Spina Bifida (SB), 

Children of Women Vietnam Veterans (CWVV), Foreign Medical Program (FMP), and 

Program of Comprehensive Assistance for Family Caregivers. Using these programs 

may reduce or eliminate the family member’s cost for medical supplies, office visits, or 

prescriptions.413

4.2.1.2.1. Civilian Health and Medical Program of the VA

Civilian Health and Medical Program (CHAMPVA) allows qualified dependents and 

survivors to receive reimbursement for most medical expenses: inpatient, outpatient, 

mental health, prescription medication, skilled nursing care, and durable medical 

equipment.414

Beneficiaries 

To be eligible for CHAMPVA, an individual cannot be eligible for TRICARE and must be 

one of the following:415

 the spouse or child of a veteran whom VA has rated permanently and totally 

disabled due to a service-connected disability

 

405 Pensions, Bonuses, and Veterans’ Relief, 38 CFR 17.111(f)(9). “Health Benefits Copays,” Department of Veterans 

Affairs, accessed April 14, 2014, http://www.va.gov/HEALTHBENEFITS/cost/copays.asp. 406 Pensions, Bonuses, and Veterans’ Relief, 38 CFR 17.111(f)(7). “Health Benefits Copays,” Department of Veterans 

Affairs, accessed April 14, 2014, http://www.va.gov/HEALTHBENEFITS/cost/copays.asp. 407 Pensions, Bonuses, and Veterans’ Relief, 38 CFR 17.108(e)(12). Pensions, Bonuses, and Veterans’ Relief, 38 CFR 

17.108(e)(13). “Health Benefits Copays,” Department of Veterans Affairs, accessed April 14, 2014, 

http://www.va.gov/HEALTHBENEFITS/cost/copays.asp. 408 Pensions, Bonuses, and Veterans’ Relief, 38 CFR 17.108(e)(11). “Health Benefits Copays,” Department of Veterans 

Affairs, accessed April 14, 2014, http://www.va.gov/HEALTHBENEFITS/cost/copays.asp. 409Pensions, Bonuses, and Veterans’ Relief, 38 CFR 17.108(e)(2). “Health Benefits Copays,” Department of Veterans 

Affairs, accessed April 14, 2014, http://www.va.gov/HEALTHBENEFITS/cost/copays.asp. 410 Pensions, Bonuses, and Veterans’ Relief, 38 CFR 17.108(e)(14). “Health Benefits Copays,” Department of Veterans 

Affairs, accessed April 14, 2014, http://www.va.gov/HEALTHBENEFITS/cost/copays.asp. 411 Ibid. Pensions, Bonuses, and Veterans’ Relief, 38 CFR 17.108(e)(15). “Health Benefits Copays,” Department of 

Veterans Affairs, accessed April 14, 2014, http://www.va.gov/HEALTHBENEFITS/cost/copays.asp. 412 Veterans’ Benefits, 38 U.S.C. § 1781. 413 “Family Members of Veterans,” Department of Veterans’ Affairs, accessed April 14, 2014, 

http://www.va.gov/healthbenefits/apply/family_members.asp. 414 See generally Pensions, Bonuses, and Veterans’ Relief, 38 CFR 17.270-17.278. Department of Veterans Affairs,

Federal Benefits for Veterans Dependents and Survivors, 2013 Edition, VA Pamphlet 80-13-01, P94663, 108, accessed 

April 14, 2014, http://www.va.gov/opa/publications/benefits_book.asp.

415 Pensions, Bonuses, and Veterans’ Relief, 38 CFR 17.271. Department of Veterans Affairs, Federal Benefits for 

Veterans Dependents and Survivors, 2013 Edition, VA Pamphlet 80-13-01, P94663, 109, accessed April 14, 2014, 

http://www.va.gov/opa/publications/benefits_book.asp. 
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 the surviving spouse or child of a veteran who died from a VA-rated, serviceconnected disability, or who, at the time of death, was rated permanently and 

totally disabled

 the surviving spouse or child of a veteran who died on active-duty service and 

in the line of duty, not due to misconduct (however, in most of these cases, 

these family members are eligible for TRICARE, not CHAMPVA)

 an approved Primary Family Caregiver under the Comprehensive Assistance for 

Family Caregivers program who is not eligible for health care under another 

health insurance plan

Financial Summary 

The beneficiary cost-share is 25 percent of the CHAMPVA-determined allowable 

amount in excess of the annual calendar year deductible.416 The beneficiary cost-share 

is waived for services received through VA facilities, including services provided by the 

CHAMPVA In-House Treatment Initiative, the Meds by Mail program, and durable 

medical equipment purchased through the VA.417 Hospice services are not subject to a 

beneficiary cost-share.418 CHAMPVA has an outpatient deductible of $50 per 

beneficiary per calendar year or a maximum of $100 per family per calendar year.419

The deductible is applicable to outpatient services, pharmacy, durable medical 

equipment, transportation, dental, prosthetics, and medical supplies and waived for 

services received through VA facilities.420 There is no deductible requirement for 

inpatient hospital services to include individual professional services.421 To provide 

financial protection against the impact of a long-term illness or injury, an annual cost 

limit or catastrophic cap has been placed on the beneficiary cost share amount for 

covered services and supplies.422 The annual cap on catastrophic cost sharing is 

$3,000 per CHAMPVA-eligible family in a calendar year.423

4.2.1.2.2. Spinal Bifida 

The Spina Bifida (SB) Program provides comprehensive health benefits for individuals 

diagnosed with spina bifida (except spina bifida occulta) who are biological children of 

certain Vietnam and Korea Veterans.424 Program participants are reimbursed for 

inpatient and outpatient medical services, pharmacy, durable medical equipment, and 

supplies.425

 

416 Department of Veterans Affairs, Health Administration Center, CHAMPVA Policy Manual, Chapter 3, Section 2.1, 

accessed April 14, 2014, http://www4.va.gov/hac/forbeneficiaries/champva/policymanual/index.asp. Pensions, 

Bonuses, and Veterans’ Relief, 38 CFR 17.274. 417 Ibid. Pensions, Bonuses, and Veterans’ Relief, 38 CFR 17.274(a). 418 Department of Veterans Affairs, Health Administration Center, CHAMPVA Policy Manual, Chapter 3, Section 2.1, 

accessed April 14, 2014, http://www4.va.gov/hac/forbeneficiaries/champva/policymanual/index.asp. 419 Ibid, Section 2.2. Pensions, Bonuses, and Veterans’ Relief, 38 CFR 17.274(b). 420 Ibid. 421 Ibid. 422 Department of Veterans Affairs, Health Administration Center, CHAMPVA Policy Manual, Chapter 3, Section 3.1, 

accessed April 14, 2014, http://www4.va.gov/hac/forbeneficiaries/champva/policymanual/index.asp. Pensions, 

Bonuses, and Veterans’ Relief, 38 CFR 17.274(c). 423 Ibid. 424 Department of Veterans Affairs, Spina Bifida Health Care Program, accessed April 14, 2014,

http://www4.va.gov/hac/forbeneficiaries/spina/brochure/SpinaBifidaBrochure.pdf. Veterans’ Benefits, 38 U.S.C. 

§§ 1802-1803, 1821. Pensions, Bonuses, and Veterans’ Relief, 38 CFR 17.901. 425 Federal Benefits for Veterans Dependents and Survivors, 2013 Edition, VA Pamphlet 80-13-01, P94663, 109, 

http://www.va.gov/opa/publications/benefits_book.asp. Veterans’ Benefits, 38 U.S.C. § 1803. Pensions, Bonuses, and 

Veterans’ Relief, 38 CFR 17.901-17.905
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Beneficiaries 

To be eligible for VA SB health care benefits, participants must meet one the following 

criteria:426

 be a birth child of a Korea Veteran, regardless of age or marital status, who was 

conceived after the date on which the Korea Veteran first served in or near the 

Korean demilitarized zone during the period beginning on April 1, 1968, and 

ending on August 31, 1971

 be a birth child of a Vietnam Veteran, regardless of age or marital status, who 

was conceived after the date on which the Vietnam Veteran first entered the 

Republic of Vietnam during the period beginning on January 9, 1962, and 

ending on May 7, 1975

Historical Context 

In 1997, the VA instituted a program that provides health care benefits, vocational 

training, and a monthly allowance, based on how severe the illness is, for Vietnam 

Veterans’ children with SB.427 This program was amended in 2003 to include Korea 

Veterans’ children diagnosed with SB.428 The Veterans’ Mental Health and Other Care 

Improvements Act of 2008 expanded covered benefits beyond the SB condition.429

4.2.1.2.3. Children of Women Vietnam Veterans

The Children of Women Vietnam Veterans (CWVV) Health Care Program is a Federal 

health benefits program administered by the Department of Veterans Affairs for 

children with certain birth defects born to women Vietnam Veterans.430 CWVV is a feefor-service (indemnity plan) program that provides reimbursement for medical-carerelated conditions associated with certain birth defects, except SB, which is covered 

under the VA’s SB Program.431 Beneficiaries may be eligible for a monthly monetary 

allowance, vocational training and rehabilitation, and health care benefits if they 

suffer from certain covered birth defects as determined by the VBA.432

Eligibility 

Participants must be children born to women who served in the Republic of Vietnam 

during the period beginning February 28, 1961, and ending May 7, 1975.433 Qualifying 

 

426 Department of Veterans Affairs, Spina Bifida Health Care Program, accessed April 14, 2014, 

http://www4.va.gov/hac/forbeneficiaries/spina/brochure/SpinaBifidaBrochure.pdf. Veterans’ Benefits, 38 U.S.C. 

§§ 1802-1803, 1821. Pensions, Bonuses, and Veterans’ Relief, 38 CFR 17.901. 427 Department of Veterans Affairs, Spina Bifida Health Care Program, 20, accessed April 14, 2014, 

http://www4.va.gov/hac/forbeneficiaries/spina/brochure/SpinaBifidaBrochure.pdf. Departments of Veterans Affairs 

and Housing and Urban Development, and Independent Agencies Appropriations Act, 1997, Pub. L. No. 104-204, 

§ 421, 110 Stat. 2874, 2923 (1996).

428 Department of Veterans Affairs, Spina Bifida Policy Manual, Chapter 1, Section 1, accessed April 14, 2014,

http://www4.va.gov/hac/forbeneficiaries/spina/policymanual/index.asp. Veterans Benefits Act of 2003, Pub. L. No. 

108-183, § 102, 117 Stat. 2651, 2653 (2003). 429 Department of Veterans Affairs, Spina Bifida Policy Manual, Chapter 1, Section 1, accessed April 14, 2014,

http://www4.va.gov/hac/forbeneficiaries/spina/policymanual/index.asp. Veterans’ Mental Health and Other Care 

Improvements Act of 2008, Pub. L. No. 110-387, § 408, 122 Stat. 4110, 4130 (2008). 430 Veterans’ Benefits, 38 U.S.C. § 5301(a)(1). Office of Public and Intergovernmental Affairs, Federal Benefits for 

Veterans, Dependents, and Survivors, Chapters 12 and 13, accessed April 14, 2014, 

http://www.va.gov/opa/publications/benefits_book.asp. 431 Department of Veterans Affairs, Health Administration Center, Fact Sheet (01-26): The CWVV Health Care Program, 

accessed April 14, 2014, http://www.va.gov/hac/factsheets/spina/FactSheet01-26.pdf. Veterans’ Benefits, 38 U.S.C. 

§§ 1811-1816. Pensions, Bonuses, and Veterans’ Relief, 38 CFR 3.815. 432 “Health Benefits Copay Rates,” Department of Veterans Affairs, accessed April 14, 2014, 

http://www.va.gov/healthbenefits/cost/copay_rates.asp. Pensions, Bonuses, and Veterans’ Relief, 38 CFR 17.110(c). 

Pensions, Bonuses, and Veterans’ Relief, 38 CFR 17.108.

433 Veterans’ Benefits, 38 U.S.C. § 1831.
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birth defects include those associated with the service of the mother in Vietnam that 

resulted in permanent physical or mental disability.434 Conditions due to familial 

disorders, birth-related injuries, or fetal or neonatal infirmities with well-established 

causes are not covered.435

4.2.1.2.4. Bereavement Counseling

VA Vet Centers provide bereavement counseling to all family members including 

spouses, children, parents, and siblings of Service members who die while on active 

duty.436

Bereavement counseling is also available through any VA medical center to immediate 

family members of veterans who die unexpectedly or while participating in a VA 

hospice or similar program, as long as the immediate family members had been 

receiving family support services in connection with or in furtherance of the veteran’s 

treatment.437 This limited-duration bereavement counseling is generally authorized for 

up to 60 days; however, VA medical center directors may approve a longer period of 

time when medically indicated.438

4.2.1.2.5. Services and Supports for Family Caregivers

• VA Comprehensive Assistance Family Caregiver’s Program

Family caregivers of eligible, seriously injured post-9/11 veterans may receive a 

stipend and access to health care coverage if they are not already entitled to 

care or services under a health plan contract, including Medicare, Medicaid, or 

worker’s compensation.439 Mental health counseling, including marriage and 

family counseling, will also be provided.440 Caregivers may also be eligible for 

travel, lodging, and per diem when they accompany the veteran for care or 

attend training.441

• In-Home and Community-Based Care

This program includes skilled home health care, homemaker home health aide 

services, community adult day health care, and home-based primary care.442

• Respite Care

This program is designed to relieve the family caregiver from the constant 

challenge of caring for a chronically ill or disabled veteran at home.443 Respite 

 

434 Veterans’ Benefits, 38 U.S.C. § 1812. 435 Office of Public and Intergovernmental Affairs, Federal Benefits for Veterans, Dependents, and Survivors, Chapters 

12 and 13, accessed April 14, 2014, http://www.va.gov/opa/publications/benefits_book.asp. Veterans’ Benefits, 

38 U.S.C. § 1812. 436 “Health Benefits, Family Members of Veterans Caregiver Program,” Department of Veterans Affairs, accessed 

April 14, 2014, http://www.va.gov/healthbenefits/apply/family_members.asp. Veterans’ Benefits, 38 U.S.C. § 1712A. 

Pensions, Bonuses, and Veterans’ Relief, 38 CFR 17.2000. 437 Ibid. Veterans’ Benefits, 38 U.S.C. § 1783. 438 Ibid. Pensions, Bonuses, and Veterans’ Relief, 38 CFR 17.98. 439 “Health Benefits, Family Members of Veterans, Caregiver Program,” Department of Veterans Affairs, accessed 

April 14, 2014, http://www.va.gov/healthbenefits/apply/family_members.asp. Veterans’ Benefits, 38 U.S.C. § 1720G. 440 Ibid. Pensions, Bonuses, and Veterans’ Relief, 38 CFR 71.40. 441 Ibid. 442 Pensions, Bonuses, and Veterans’ Relief, 38 CFR 71.40. “Caregiver Services,” Department of Veterans Affairs, 

accessed April 14, 2014, http://www.va.gov/healthbenefits/apply/Caregiver_Services.asp. 443 “Caregiver Services,” Department of Veterans Affairs, accessed April 14, 2014, 

http://www.va.gov/healthbenefits/apply/Caregiver_Services.asp.
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services can include in-home care, a short stay in one of the VA’s community 

living centers, or an environment designed for adult day health care.444

• Caregiver Education and Training Programs

The VA currently provides multiple training opportunities to include predischarge care instruction and specialized caregiver programs in multiple severe 

traumas such as traumatic brain injury, spinal cord injury/disorders, and 

blind rehabilitation.445

• Caregiver Support Groups and Other Services

Family caregiver support groups, offered in a face-to-face setting or on the 

telephone, provide emotional and peer support and information.446 Family 

caregiver services include family counseling, spiritual and pastoral care, family 

leisure and recreational activities, and temporary lodging.447

• Other Services

The VA provides durable medical equipment and prosthetic and sensory aides 

to improve function, financial assistance with home modification to improve 

access and mobility, and transportation assistance for some veterans to 

facilitate travel to and from medical appointments.448

4.2.2. DISABILITY BENEFITS

4.2.2.1. DISABILITY COMPENSATION

The tax-free449 basic disability compensation benefit is applied toward care for any 

injury or illness incurred or aggravated while in the line of duty in the active military 

during a period of war or during an active-duty assignment during peacetime, after 

which the veteran was not discharged or released under dishonorable conditions.450

Such illness or injury must not have been caused by willful misconduct of the veteran 

or alcohol or drug abuse.451 The injuries and illnesses meeting these criteria are 

deemed service connected.452 The rates are generally based on the “average 

impairments of earning capacity resulting from such injuries in civilian

occupations.”453 Disability compensation is awarded by rate.454

 

444 Pensions, Bonuses, and Veterans’ Relief, 38 CFR 71.40. “Caregiver Services,” Department of Veterans Affairs, 

accessed April 14, 2014, http://www.va.gov/healthbenefits/apply/Caregiver_Services.asp.

445 Pensions, Bonuses, and Veterans’ Relief, 38 CFR 71.25. “Caregiver Services,” Department of Veterans Affairs, 

accessed April 14, 2014, http://www.va.gov/healthbenefits/apply/Caregiver_Services.asp.

446 Pensions, Bonuses, and Veterans’ Relief, 38 CFR 71.40. “Caregiver Services,” Department of Veterans Affairs, 

accessed April 14, 2014, http://www.va.gov/healthbenefits/apply/Caregiver_Services.asp.

447 Pensions, Bonuses, and Veterans’ Relief, 38 CFR 71.25. 448 “Caregiver Services,” Department of Veterans Affairs, accessed April 14, 2014, 

http://www.va.gov/healthbenefits/apply/Caregiver_Services.asp. 449 Internal Revenue Code, 26 U.S.C. § 104(a)(4).Veterans’ Benefits, 38 U.S.C. § 5301(a)(1). 450 Veterans’ Benefits, 38 U.S.C. §§ 1110, 1113. 451 Ibid. 452 Veterans’ Benefits, 38 U.S.C. § 101(16). 453 Ibid. Veterans’ Benefits, 38 U.S.C. §§ 1114, 1134. 454 Veterans Benefits, 38 U.S.C. §§ 1114, 1134.
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Historical Context 

Veterans’ disability benefits predate the American Revolutionary War era. In 1636, 

Plymouth Colony ordered that any disabled soldier wounded while defending the 

colony would be maintained by the colony for life.455

In 1776, the Continental Congress established disability pensions (now called 

Disability Compensation) for veterans who became disabled during military service.456

Such disability compensation was based on a number of factors, to include the 

military rank of the veteran, degree of disability, and its impact on the veterans’ ability 

to earn a livelihood.457 In 1862, a general pension act allowed disability payments to 

Union troops to be based on rank and degree of disability.458 In 1873, pension policies 

were revised to include disability pay based on the degree of disability.459 The 

Dependent Pension Act of 1890 expanded benefits to eligible dependents under certain 

conditions.460

In 1917, legislation called for a rating schedule for disabilities that was “based on 

average impairment of the veteran’s earnings capacity and compensation for serviceconnected aggravation of a condition that existed prior to military service.”461 In the 

Administrative Procedure Act of 1946, the Congress directed the VA to reevaluate 

disability ratings pursuant to the VA Revised Schedule for Rating Disabilities, 1945.462

Disability Rating Schedule463

Veterans’ disability compensation benefit is based the severity of the disability using a 

percentage schedule.464 “The schedule assigns percentages for varying levels of 

severity associated with individual medical diagnoses, the ratings for which vary from 

0 percent to 100 percent in gradations of 10.”465 Rating schedules date back to the 

War Risk Insurance Act of 1917, which called for their implementation.466 “This 

schedule was to be based on the impairment in earning capacity caused by the 

disability.”467

 

455 David Pulsifer, ed., Records of the Colony of New Plymouth in New England (Boston: William White, 1861), 13. “VA 

History,” Department of Veterans Affairs, accessed April 14, 2014, http://www.va.gov/about_va/vahistory.asp. 456 Department of Veterans Affairs, VA History In Brief, accessed April 14, 2014, 

http://www.va.gov/opa/publications/archives/docs/history_in_brief.pdf. “History—VA History,” Department of 

Veteran Affairs, accessed April 14, 2014, http://www.va.gov/about_va/vahistory.asp. 457 Ibid. 458 An Act to Grant Pensions, 37 Stat. 566-568 (1862). 459 An Act to Revise, Consolidate, and Amend the Laws Relating to Pensions, 42 Stat. 567-569 (1873). 460 Act of June 27, 1890, 26 Stat. 182 (1890). 461 War Risk Insurance Act Amendments: Pub. L. No. 65-20, 40 Stat. 102 (1917) and Pub. L. No. 65-90, 40 Stat. 398 

(1917). VA Department of Veteran Affairs, Disability Compensation Program: Legislative History, 33-35, accessed 

April 14, 2014, http://www.va.gov/op3/docs/ProgramEvaluations/DisCompProgram/Disability_Comp_Legislative_

Histor_Lit_Review.pdf. 462 Administrative Procedure Act, Pub. L. No. 79-458, 60 Stat. 319 (1946). 463 Department of Veterans Affairs, VA Disability Compensation Program Legislative History, accessed April 14, 2014, 

http://www.va.gov/op3/docs/ProgramEvaluations/DisCompProgram/Disability_Comp_Legislative_Histor_Lit_ 

Review.pdf. 464 Veterans’ Benefits, 38 U.S.C. § 1155. 465 Veterans’ Benefits, 38 U.S.C. § 1114. 466 War Risk Insurance Act Amendments: Pub. L. No. 65-20, 40 Stat. 102 (1917) and Pub. L. No. 65-90, 40 Stat. 398 

(1917). Department of Veterans Affairs, Disability Compensation Program: Legislative History, 33-35, accessed April 14, 

2014, http://www.va.gov/op3/docs/ProgramEvaluations/DisCompProgram/Disability_Comp_Legislative_Histor_

Lit_Review.pdf. 467 Ibid.
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Beneficiaries 

Any veteran rated at least 10 percent for disability resulting from a service-connected 

illness or injury or an illness or injury that was aggravated as a result of service, who 

has been discharged under other than dishonorable conditions, is eligible for 

benefits.468

4.2.2.2. COMBAT-RELATED SPECIAL COMPENSATION

Combat-related Special Compensation is a tax-free, monetary benefit for veterans with 

disabilities determined by the member’s respective service to be related to combat 

service.469 More information on Combat-Related Special Compensation can be found 

in Section 3.5.2.

4.2.2.3. DEPENDENCY AND INDEMNITY COMPENSATION 

Surviving spouses, children, or parents of Service members who died while on active 

duty, active duty for training, or inactive-duty training, or survivors of veterans or who 

died from their service-connected disabilities may receive dependency and indemnity 

compensation, a tax-free monetary benefit.470 More information on Dependency and 

Indemnity Compensation can be found in Section 3.6.1.

4.2.2.4. SPECIAL MONTHLY COMPENSATION 

When veterans require aid and attendance by another person or experience special 

circumstances such as the loss of a leg or a hand, their spouses, surviving spouses, 

and parents may receive Special Monthly Compensation.471 This benefit is paid based 

on the need of the veteran to receive aid and attendance by another person.472

4.2.2.5. INDIVIDUAL UNEMPLOYABILITY 

Veterans who fall in the Individual Unemployability (IU) category, and the VA deems 

unable to engage in substantial work,473 may receive supplemental disability 

compensation provided to veterans.474 Eligibility is based on disability rating and 

unemployability.475 To be eligible, if the veteran has only one qualifying disability, it 

must be ratable at 60 percent or more.476 If the veteran has two or more disabilities, 

one disability must be ratable at 40 percent or more, and the combined rating must be 

70 percent or more.477 A veteran must also be “unable to secure or follow a 

 

468 Summary of VA Benefits brochure, September 2012 - VA PAM 27-12-2. Veterans’ Benefits, 38 U.S.C. §§ 1110, 1131. 469 “Combat Related Special Compensation,” Defense Finance and Accounting Service, accessed April 14, 2014, 

http://www.dfas.mil/retiredmilitary/disability/crsc.html. Armed Forces, 10 U.S.C. § 1413a. 470 “Types of Compensation,” Department of Veterans Affairs, accessed April 14, 2014, 

http://www.benefits.va.gov/compensation/types-compensation.asp. Veterans’ Benefits, 38 U.S.C. § 1310. 471 Ibid. National Defense, 38 U.S.C. § 1114. Pensions, Bonuses, and Veterans’ Relief, 38 CFR 3.350. 472 “Types of Compensation,” Department of Veterans Affairs, accessed April 14, 2014, 

http://www.benefits.va.gov/compensation/types-compensation.asp. Veterans’ Benefits, 38 U.S.C. §§ 1310, 1114. 

Pensions, Bonuses, and Veterans’ Relief, 38 CFR 3.350, 3.351. 473 “Special Claims,” Department of Veterans Affairs, accessed April 14, 2014, 

http://www.benefits.va.gov/COMPENSATION/claims-special-index.asp. Pensions, Bonuses, and Veterans’ Relief, 

38 CFR 4.18. 474 Pensions, Bonuses, and Veterans’ Relief, 38 CFR 4.16. 475 Pensions, Bonuses, and Veterans’ Relief, 38 CFR 4.16, 4.18. 476 Pensions, Bonuses, and Veterans’ Relief, 38 CFR 4.16. 477 Ibid.
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substantially gainful occupation as a result of service-connected disabilities.”478

Marginal employment is not considered substantially gainful employment.479 A veteran 

is deemed to be marginally employed when his/her earned annual income is below 

Federal poverty guidelines for one person.480

4.3. PROGRAMS IN OTHER UNIFORMED SERVICES

As defined and described above, members of the uniformed services and their families 

are eligible for the TRICARE benefit.481 Primarily, the members of the uniformed 

services receive the health care benefit from MTFs.482 The USCG, NOAA, and PHS also 

deliver limited health care for their members as outlined below.

4.3.1. U.S. COAST GUARD

The U.S. Coast Guard (USCG) provides care to its members through USCG clinics, 

dental clinics, “sick bay” facilities, and regional practices.483

 USCG health care facilities include clinics, which provide outpatient medical 

services for ambulatory patients. Clinics must provide “nontherapeutic 

activities related to the health of the personnel which are necessary to support 

the operational mission of the unit,” including, but not limited to, physical 

examinations, preventive medicine, immunizations, and periodic health 

assessments.484

 USCG dental clinics provide care for active-duty personnel.485

 “Sick Bays” are small medical treatment facilities, either afloat or ashore, for the 

care and treatment of active-duty personnel.486

 Regional practices have multisite responsibility for delivering health, safety, and 

work-life programs within an area of responsibility.487

 Public Health Service personnel provide medical care to Service members in the 

USCG clinics.488 The PHS personnel detailed to the USCG wear the USCG 

uniform and are subject to USCG regulations and the Uniformed Code of 

Military Justice.489

 

478 Ibid. Pensions, Bonuses, and Veterans’ Relief, 38 CFR 4.18. 479 Pensions, Bonuses, and Veterans’ Relief, 38 CFR 4.16. 480 Ibid. 481 See generally Armed Forces, 10 U.S.C. ch. 55. “Defense Health Agency,” Military Health System and Defense Health 

Agency, http://health.mil/About-MHS/Defense-Health-Agency. Department of Defense, Evaluation of the TRICARE 

Program: Access, Cost, and Quality, Fiscal Year 2013 Report to Congress, 4, accessed June 20, 2014, 

http://tricare.mil/tma/dhcape/program/downloads/TRICARE2013%2002_28_13%20v2.pdf. 482 Armed Forces, 10 U.S.C. § 1074. “Eligibility,” Department of Defense, accessed June 20, 2014, 

http://www.tricare.mil/Plans/Eligibility.aspx. 483 Coast Guard Facilities, Coast Guard Medical Manual, COMDTINST M6000.1E, Chapter 2.I, 1 (2011). 484 Ibid. 485 Ibid. 486 Ibid. 487 Ibid. 488 The Public Health and Welfare, 42 U.S.C. § 253. 489 Health, Safety, and Work-Life Service Center, Coast Guard Medical Manual, COMDTINST M6000.1E, Chapter 1.A., 

3 (2011).
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4.3.2. U.S. PUBLIC HEALTH SERVICE

The U.S. Public Health Service (USPHS) Commissioned Corps provides public health 

professionals to serve in principal health care positions, both in leadership and clinical 

services, within Federal Government agencies.490

For delivery of care to USPHS Officers, if their duty station lies within the catchment 

area of an MTF, they must use that facility as their source of primary care.491 If 

outside a catchment area, then healthcare is available in accordance with the Public 

Health Services Act (Title 42, U.S. Code) and other applicable laws and regulations.492

4.3.3. NATIONAL OCEANIC AND ATMOSPHERIC

ADMINISTRATION

The National Oceanic and Atmospheric Administration’s (NOAA’s) Office of Marine and 

Aviation Operations, Office of Medical Services oversees the administration and 

delivery of health care services to NOAA Corps officers, Wage Marine employees, 

Aircraft Operations personnel, and other embarked personnel aboard NOAA vessels 

and aircraft.493 The staff comprises USPHS officers.494

The NOAA Safety and Environment Compliance Office administers occupational health 

services for the National Capital Region.495 This office provides blood pressure 

screenings, allergy shot clinics, annual influenza shot clinics, preventive health 

screenings, physical examinations, special examinations as required by the 

Occupational Safety and Health Administration, and travel immunizations.496

 

490 “About the U.S. Health Service Commissioned Corps,” Commissioned Corps of the U.S. Health Service, accessed 

April 14, 2014, http://www.usphs.gov/aboutus/. 491 The Public Health and Welfare, 42 U.S.C. § 253. Public Health, 42 CFR 31. Officers’ Health Care, Section B, PHS 

Personnel Instruction 7, CC29.3 (1997). 492 Ibid. 493 “Office of Medical Services,” National Oceanic and Atmospheric Administration, accessed April 14, 2014, 

http://www.omao.noaa.gov/medical.html. 494 Ibid. 495 “Health Services Unit,” National Oceanic and Atmospheric Administration, accessed April 14, 2014, 

http://www.corporateservices.noaa.gov/rpflo/facilities_operations/ncr/facility_services/health-services-unit.html. 496 Ibid. 
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5. QUALITY OF LIFE BENEFITS

Quality of Life (QoL) programs across the Federal Government ease the stress of 

military life, enhance well-being, improve readiness, and sustain recruiting and 

retention for Service members, veterans, retirees, and their families.1 These programs 

support opportunities to relax, promote fitness, encourage esprit de corps, support a 

strong sense of community, and provide a higher overall quality of life for all members 

of a military community.2

A number of programs that can promote quality of life for Service members and their 

families are not addressed in this report because they are considered outside the 

Commission’s scope of study. These programs and benefits include: 

 education and training obtained while on duty, education and training in 

connection with military service, and Professional Military Education 

 chaplain services such as religious rites, worship services, confidential 

counseling, and advice to commanders on religious, spiritual and moral matters

 legal services provided through the Judge Advocate General’s Corps such as 

wills, notary services, and review of rental agreements 

 benefits provided and funded by the States

The QoL section of this report is organized by the Federal department or agency that 

administers each program. Each section provides a summary of the benefits and 

services provided by that agency. Cross-Agency Benefits, those administered by 

multiple agencies, are covered in the final QoL section. 

5.1. DEPARTMENT OF DEFENSE PROGRAMS

5.1.1. COMMISSARIES

Military commissaries are grocery stores operated by DoD3 that sell merchandise at 

reduced prices.4 As specified in 10 U.S.C. § 2484, “commissary stores are intended to 

be similar to commercial grocery stores and may sell merchandise similar to that sold 

in commercial grocery stores.”

5 Eligible patrons include Active Duty, Guard, Reserve, 

and retired uniformed Service members, their dependents, and other specifically

authorized groups.6 The Defense Commissary Agency (DeCA) operates 

246 commissaries in 13 countries and 2 U.S. territories.7

 

1 Military Family Readiness, DoDI 1342.22, 2 (2012). 2 Ibid. 3 Armed Forces, 10 U.S.C. § 2481 (2014). 4 Ibid. See also Armed Forces, 10 U.S.C. § 2484 (2014). 5 Armed Forces, 10 U.S.C. § 2484. 6 Ibid. See also Armed Forces, 10 U.S.C. §§ 1061-1064. DoD implementing instruction can be found at Armed Services 

Commissary Operations, Enclosure, DoDI 1330.17, 4 (2008). 7 Defense Commissary Agency, Annual Financial Report, Fiscal Year 2013, 7, accessed May 24, 2014, 

http://www.commissaries.com/documents/whatsnew/afr/afr-2013.pdf. 
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Commissaries provide name-brand products that are regularly sold outside of 

commissary stores (under the same brand name).8 These name-brand products may 

be purchased by DeCA using other than competitive procedures.9 Commissaries do 

not currently offer generic or private-label brands, but for some products they offer 

low-price, alternative brands known as Best Value Items.10

The Principal Deputy Under Secretary of Defense for Personnel and Readiness 

(PDUSD(P&R)) serves as the principal point of contact for all commissary matters 

within the DoD.11 Among other responsibilities, the PDUSD(P&R) chairs the DoD 

Executive Resale Board. This board provides advice on the complementary operation of 

the Defense commissary system and the Armed Services’ Exchange systems.

12 The 

board reviews, not less than annually, the resale information system standards, joint 

or combined commissary and exchange store operations, joint construction projects, 

commissary and exchange cooperative efforts, and merchandise, goods, and services 

authorized for sale.13 The board also works to resolve disagreements between elements 

of the military resale system.14 Additionally, the PDUSD(P&R) receives advice from the 

DoD DeCA Board of Directors on the prudent operation of the commissary system.15

According to DoD Instruction 1330.17, “Commissary stores may be established and 

maintained at installations and locations that have an active-duty mission and 

significant active-duty populations. As a general rule, commissary operations are 

discontinued when an installation is completely closed and no Active or Reserve 

Component personnel remain on the installation.”

16

“The commissary program is an integral element of the military pay and benefits 

package for active-duty personnel. An income benefit is provided through savings on 

purchases of food and household items necessary to subsist and maintain the 

household of the military member for the inclusive period of compensated duty or 

service.”

17 DoD Instruction 1330.17 directs DeCA to “maintain 30 percent average 

savings on commissary purchases as compared to the commercial stores in the United 

States” and “track savings by using an annual price comparison assessment 

conducted in accordance with standard industry practices.”

18 According to DeCA, the 

FY 2013 price comparison assessed average commissary prices to be 30.5 percent 

lower than commercial prices.19 Actual savings vary by region, individual shopping 

patterns, and local alternatives. In general, OCONUS savings (including Alaska and 

Hawaii) are higher than savings in the 48 contiguous states.20

 

8 Armed Forces, 10 U.S.C. § 2484(f). 9 Ibid. See also Armed Forces, 10 U.S.C. § 2304(c)(5). 10 Defense Commissary Agency, DeCA Fiscal Year 2005 President’s Budget, Defense Overview, February 2004, 4, 

accessed May 24, 2014, http://www.mcrmc.gov/public/docs/library/qol/DeCA_FY_2005_PB.pdf. 11 Armed Services Commissary Operations, DoDI 1330.17, Enclosure 2, 6 (2008). 12 Ibid, 10. 13 Ibid. 14 Ibid. 15 Ibid, 9. 16 Armed Services Commissary Operations, DoDI 1330.17, Section 4.c (2008). 17 Ibid. 18 Armed Services Commissary Operations, DoDI 1330.17 (2008). 19 Defense Commissary Agency, New Price Study Validates 30% Savings, January 9, 2014, accessed June 11, 2014, 

http://www.commissaries.com/press_room/press_release/2014/DeCA_01_14.cfm 20 Congressional Budget Office, The Costs and Benefits of Retail Activities at Military Bases, October 1997, accessed 

June 12, 2014, http://www.cbo.gov/publication/10457. 2013 Price Comparison Survey, Worldwide Savings Using All 

Outlets Combined (AOC) Database, provided by Defense Commissary Agency, e-mail to MCRMC, May 20, 2014.
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In addition to savings, commissaries provide other benefits to patrons, the DoD, and 

the country, including the following:

 Employment opportunities and continuity for Service members’ families as they 

are moved from one duty assignment to another. In FY 2013, of 13,115 

U.S. civilian employees, approximately 64 percent had a military affiliation, 

including 3,711 military spouses (28 percent), 990 dependents (8 percent), 

1,598 retirees (12 percent), 256 guard and reserve (2 percent), and 1,825 other 

veterans (14 percent).21

 Shopping convenience for Service members living on or near military 

installations, particularly those in remote or isolated areas where commercial 

shopping alternatives are limited or unavailable.

 Familiar and consistent U.S. products, brands, and prices for Service members 

assigned to overseas installations, offering insulation, when desired, from local 

tastes, health concerns, labeling differences, and currency exchange rate 

fluctuations.22

 Support of U.S. socio-economic policies through preferential contracting with 

the National Industries for the Blind,23 AbilityOne,24 and small and 

disadvantaged businesses.25

 Reductions in Cost of Living Allowance (COLA) levels in areas served by 

commissaries.26

 Savings that stretch the value of Supplemental Nutrition Assistance Program 

(SNAP) and Women, Infants and Children (WIC) coupons.

 Participation in community support efforts such as the “Scholarships for 

Military Children Program,” funded by manufacturers and suppliers whose 

products are sold at commissaries.27

 Support for the DoD Healthy Base Initiative, promoting improved health among 

Service members.28

Using the American Customer Satisfaction Index, in FY 2013, the commissary system 

received a score of 82. The industry average for the same period was 77.29 

Unlike prices at commercial grocery stores, the prices of commissary merchandise are 

restricted by law.30 The price paid by commissary patrons is the cost of groceries to 

DeCA from vendors, plus a 1 percent increase in price for costs associated with 

 

21 Ibid. 22 Armed Services Commissary Operations, DoDI 1330.17, Enclosure 7, 33 (2008). 23 “Chicago Lighthouse Produces Five Millionth Clock,” Opportunity, A Publication of National Industries for the Blind, 6, 

no. 1 (2013): 19, http://www.nib.org/sites/default/files/Opportunity/OpportunityWinter2013_508.pdf. 24 AbilityOne Commission, U.S. AbilityOne Annual Report 2011, 18, 21, accessed May 24, 2014, 

http://www.abilityone.gov/media_room/documents/AbilityOne-Annual_Report_2011_508%20FINAL.pdf. 25 Defense Commissary Agency, Annual Financial Report, Fiscal Year 2013, 34, accessed May 24, 2014, 

http://www.commissaries.com/documents/whatsnew/afr/afr-2013.pdf. 26 Armed Services Commissary Operations, DoDI 1330.17, Enclosure 3 (2008) for calculation of CONUS COLA. See also

“Calculation of Local Costs,” Defense Travel Management Office, accessed May 14, 2014, 

http://www.defensetravel.dod.mil/site/conusCostCalc.cfm, for calculation of overseas COLA. See also “Overseas Cost 

of Living Allowances (COLA) Frequently Asked Questions,” Defense Travel Management Office, accessed May 14, 2014,

http://www.defensetravel.dod.mil/site/faqcola.cfm. 27 “Fact Sheet: Scholarships for Military Children,” Scholarships for Military Children, accessed Feb. 8, 2014, 

http://www.militaryscholar.org. 28 “Healthy Base Initiative,” Military OneSource, accessed March 18, 2014, http://www.militaryonesource.mil/hbi. 29 Defense Commissary Agency, Annual Financial Report, Fiscal Year 2013, 19, accessed May 24, 2014, 

http://www.commissaries.com/documents/whatsnew/afr/afr-2013.pdf. 30 Armed Forces, 10 U.S.C. §§ 2481 and 2484.
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shrinkage, theft, or deterioration, adjustments to reconcile internal records, and other 

costs,31 plus a uniform 5 percent surcharge that is reinvested back into the stores and 

supporting systems.32 Unlike most commercial grocers, the cost of transporting 

products to the commissary and the cost of stocking products on the commissary 

shelves are included in the cost of goods, paid by DeCA to vendors. In the commissary 

pricing model, these distribution and stocking costs are passed on to commissary 

patrons. Figure 22 illustrates this model. The entries are for illustrative purposes only 

and do not represent a particular product or supplier.

Figure 22. Commissary Cost to Patron Example

Some suppliers/manufacturers offer discounts (e.g., credits, promotions) on their 

products based on factors such as purchase volumes, favorable store displays, store 

efficiency, pricing strategies, available merchandise, and shelf life. With the 

commissary pricing model, unlike commercial grocery stores, these discounts are 

always passed directly to patrons through lower prices or “military only” coupons.33

Another potential cost for commissary patrons is voluntary gratuities paid to grocery 

baggers. Baggers are licensed, but they are not employees/contractors employed by 

the installation, DeCA, DoD, or the Federal Government.34 They are permitted to 

provide this service for tips to “enhance the quality of life of military families.”

35

 

31 Cost Recoup Policy and Procedure, DeCA Policy Letter 40-70 (1999). 32 Armed Forces, 10 U.S.C. § 2484. 33 Armed Services Commissary Operations, DoDI 1330.17, Enclosure 7, para 1.g. 34 Ibid. 35 Ibid. 
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Beneficiaries 

The following individuals, organizations, and activities are authorized commissary 

patrons and have unlimited commissary privileges (unless prohibited by treaty or 

other international agreement in foreign countries):36

 uniformed personnel (Army, Marine Corps, Navy, Air Force, Coast Guard, 

U.S. Public Health Service (USPHS), and National Oceanic and Atmospheric 

Administration (NOAA)), including National Guard and Reserves

 retired uniformed personnel

 recipients of the Congressional Medal of Honor

 honorably discharged veterans when hospitalized or certified 100 percent 

disabled by the Department of Veterans Affairs (VA) 

 authorized family members

 cadets and midshipmen of the Armed Services academies

 noncommissioned ship’s officers and crew members of NOAA

 retired noncommissioned ship’s officers and crew members of NOAA

 U.S. civilian DoD employees when stationed outside the United States and 

U.S. territories and possessions

 official DoD and Military Services organizations and activities

 involuntarily separated uniformed personnel (with restrictions)

 dependents of uniformed personnel who have been separated for dependent 

abuse (with restrictions)37

The following individuals, organizations, and activities may be permitted access to 

make purchases at the commissary (unless prohibited by treaty or other international 

agreement in foreign countries):

 hospitalized veterans (discharged under honorable conditions from the 

uniformed services)

 DoD civilian employees assigned to the U.S. territories and possessions (and 

authorized family members) under a valid transportation agreement

 military personnel of foreign nations when on duty with a U.S. military service 

(if specifically authorized)

 non-DoD U.S. Government departments or agencies in overseas areas (bulk 

sales)

 civilian employees of non-DoD U.S. Government departments or agencies 

outside the United States and outside the U.S. territories and possessions (if 

specifically authorized)

 American Red Cross (ARC) personnel (if specifically authorized)

 United Service Organizations (USO), specific representatives and clubs 

(overseas only, if specifically authorized)

 United Seamen’s Service (if specifically authorized)

 Armed Services Young Men’s Christian Association (ASYMCA) (overseas only, if 

specifically authorized)

 personal agents or personal representatives (if specifically authorized)

 

36 Ibid. 37 Armed Forces, 10 U.S.C. § 1059. 
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 DeCA employees (within the United States, with restrictions, for personal 

consumption during meals and other authorized breaks within their scheduled 

working hours)

 those affected by Federally declared disasters (on a temporary basis, with 

restrictions, if specifically authorized)

Additional details on authorized patrons can be found in DoD Instruction 1330.17.38

Historical Context

Sales of goods from commissary department storehouses to U.S. military personnel 

began in 1825, when Army officers at specified posts could make purchases for their 

personal use, paying at-cost prices. By 1841, officers could also purchase items for 

members of their immediate families. In 1867, enlisted personnel received the same 

at-cost purchasing privileges as officers. No geographic restrictions were placed upon 

these sales; the commissary warehouses at every Army post could become a sales 

location, whether they were located on the frontier or near a large city with private 

sector alternatives.39 

A shift to military owned and operated commissaries minimized the dependence on 

private sector merchants (sutlers) and post traders who had sometimes exploited 

military personnel.40 The military stores provided food beyond that supplied in official 

rations and the savings supplemented military pay. The commissary retail function 

developed and grew, roughly paralleling the development of the retail grocery industry. 

The 82-item commissary stock list of 1868 was comparable to the stock assortment in 

a typical private sector dry goods grocery store at that time. Commissaries kept pace 

with developments in private sector supermarkets, and the average commissary today 

has more than 10,000 items.41

As overseas military presence grew, commissaries spread around the world. The first 

overseas stores opened in the Philippines and China in 1899 and 1900. They were 

soon followed by commissaries in the Caribbean and Panama. Eventually, all the 

Military Services adopted the Army’s concept of commissary sales stores and tailored 

the concept to their own needs. The Navy and Marine Corps opened their first 

commissaries in 1909 and 1910 respectively, and the Air Force inherited its stores 

from the Army Air Forces in 1947 and 1948. By the mid-1970s, each of the Services 

ran its own commissary agency, with differing procedures and systems: the Army 

Troop Support Agency, the Navy Resale System Support Office, the Commissary 

Section of the Marine Corps Services Command, and the Air Force Commissary 

Service.42

In 1989, the Congress directed DoD to conduct a study of the separate military 

commissary systems. The ensuing report by the Jones Commission recommended 

consolidating the Service systems into one agency to improve service and save 

 

38 Armed Services Commissary Operations, DoDI 1330.17 (2008). 39 “History of U.S. Military Commissaries,” Defense Commissary Agency, accessed February 24, 2014, 

https://www.commissaries.com/history.cfm. 40 Francis A. Lord, Civil War Sutlers and Their Wares. (New York: T. Yoseloff, 1969). 41 “History of U.S. Military Commissaries,” Defense Commissary Agency, accessed February 24, 2014, 

https://www.commissaries.com/history.cfm. 42 Ibid. 
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money.43 The Defense Commissary Agency (DeCA) was established in 1990 and 

assumed full control of all commissaries for the Armed Forces on October 1, 1991.44

Financial Summary

For FY 2013, commissary revenues totaled $5.9 billion.

45

In FY 2013, DeCA received $1.37 billion of appropriated funding46 to pay store 

operating costs, including employee salaries and wages, second destination 

transportation (SDT), reimbursable base operations support (e.g., utilities), 

communications, operating supplies and services, and indirect support of information 

technology and other systems.47 DeCA headquarters costs, “back-end” information 

technology costs, and costs associated with central processing facilities are also paid 

with appropriated funds.48 In 1998, DoD Reform Initiative Directive #37 transferred 

responsibility for requesting appropriated funds from DeCA to the Military Services.49

“The share of customer funding by each Service is based on a percentage of total 

active-duty personnel and military retirees by Service,” including the Guard and 

Reserve.50

For FY 2013, $152 million of the appropriated funding was spent on SDT costs.51 This 

covers the cost of transporting goods from domestic ports to overseas commissaries or 

commissary storage facilities,52 which is primarily accomplished through commercial 

shipping contracts.53 State-side, DeCA has outsourced the distribution of goods, 

requiring vendors to deliver directly to commissaries. These arrangements normally 

require vendors to stock items on commissary shelves, the cost of which is added to 

the wholesale cost of goods.54 Vendor stocking reduces the workload on government 

employees, thus reducing operating costs (paid for with appropriated funds). 

Commissary purchases are not subject to state or local taxes;55 however, by law, 

commissaries charge patrons a uniform 5 percent surcharge that is reinvested into the 

stores and supporting systems.56 In FY 2013, these surcharges generated 

approximately $294 million in funding.57 Surcharge funding is used to acquire 

(including acquisition by lease), construct, convert, expand, improve, repair, maintain, 

and equip the physical infrastructure of commissary stores and central product 

 

43 The Jones Commission, DoD Study of the Military Commissary System, Volume II, Appendices, accessed May 26, 

2014, http://www.dtic.mil/dtic/tr/fulltext/u2/a221313.pdf. 44 “History of U.S. Military Commissaries,” Defense Commissary Agency, accessed February 24, 2014, 

https://www.commissaries.com/history.cfm. 45 Defense Commissary Agency, Annual Financial Report, Fiscal Year 2013, 7, accessed May 24, 2014, 

http://www.commissaries.com/documents/whatsnew/afr/afr-2013.pdf. 46 Ibid, 47. 47 Armed Services Commissary Operations, DoDI 1330.17, Enclosure 7 (2008). 48 Ibid. 49 Ibid. 50 Defense Commissary Agency, DeCA Working Capital Fund, FY 2000/2001 Biennial Budget Estimates – Operating 

Budget, February 1999 accessed May 26, 2014, https://www.fas.org/man/docs/fy00/osd/cap/decafy00pb.pdf. 51 Information provided by DeCA, e-mail to MCRMC, May 6, 2014. 52 Transportation of Subsistence, Equipment, and Supplies Manual, DeCA Manual 40-11.1, Section 4.2.d (2010). 53 Information provided by United States Transportation Command, e-mail to MCRMC, February 13, 2014. 54 Cost Recoup Policy and Procedure, DeCA Policy Letter 40-70 (1999). 55 “Using the Commissary Benefit to Save Money,” Military OneSource, accessed March 8, 2014, 

http://www.militaryonesource.mil/shopping/using-the-commissary-benefit-to-save-money?content_id=266854. 56 Armed Forces, 10 U.S.C. § 2484. 57 Data provided by Defense Commissary Agency, e-mail to MCRMC, June 4, 2014.
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processing facilities of the defense commissary system.58 The surcharge also funds the 

costs of real property, utilities, and equipment (installed and free-standing, including 

computer equipment), necessary to provide a complete and usable commissary store 

or central product processing facility.59 Once constructed, using nonappropriated 

funds (patron funded surcharge money), commissaries become assets of the 

U.S. Government. Surcharge revenues are managed under the Commissary Trust 

Revolving Funds, as are funds received from the sale of recyclable materials, the sale 

of excess and surplus property, license fees, royalties, business-related management 

fees, amounts received for commercially valuable information, charges received for the 

collection of dishonored checks, discounts earned, restitution ordered for the theft or 

damage of commissary goods, and from such other sources as may be authorized by 

law.60 In FY 2013, the total contribution to the Commissary Trust Revolving Funds 

from all sources was $303 million.61 Although surcharge funding can pay for 

construction of new commissaries that are replacing existing ones, initial construction 

of commissaries is typically funded through military construction (MILCON) 

appropriations.62

DeCA purchases stock (groceries and other goods) using the DeCA Working Capital 

Fund (DWCF) and the revenue collected from patrons replenishes this fund. In 

addition to direct payments from patrons (i.e., cash, personal checks, credit or debit 

cards, traveler’s checks, gift certificates), the total revenue in FY 2013 ($5.9 billion) 

includes indirect payments based on manufacturer coupons ($91 million) and 

vouchers from the SNAP ($104 million) and WIC ($29 million) programs.63

5.1.2. DEPENDENT ELEMENTARY AND SECONDARY 

EDUCATION

The Department of Defense Education Activity (DoDEA) manages school systems and 

other services that provide primary and secondary education to children of military 

service families living on military installations worldwide.64 The authority for the 

Secretary of Defense to manage overseas and domestic school systems is provided in 

20 U.S.C. § 921 and 10 U.S.C. § 2164. The Department of Defense Dependents 

Schools (DoDDS) operates in Europe and the Pacific65 and Domestic Dependents 

Elementary and Secondary Schools (DDESS) serve the United States and its 

territories.66 In FY 2013, DoDEA operated more than 190 schools (including 1 virtual 

school)67 in 7 U.S. States, Guam, Puerto Rico, and 12 foreign countries,

68 enrolling 

 

58 Ibid. 59 Ibid. 60 Armed Services Commissary Operations, DoDI 1330.17 (2008). 61 Defense Commissary Agency, DeCA Annual Financial Report, 2013, 67, accessed June 4, 2014, 

http://www.commissaries.com/documents/whatsnew/afr/afr-2013.pdf. 62 Facilities Sustainment and Construction Program, DeCAD 20-9, administratively reissued in October, 2002, section 

3-1.c (2012). 63 Information provided by DeCA, e-mail to MCRMC, April 29, 2014. 64 “About DoDEA,” Department of Defense Education Activity, accessed March 17, 2014, 

http://dodea.edu/aboutDoDEA/demographics.cfm.

65 Department of Defense Education Activity, DoDD 1342.20, para 3 (2007). 66 Ibid, para 4. 67 Information provided by Department of Defense Education Activity Headquarters, e-mail to MCRMC, May 2, 2014. 68 Department of Defense Education Activity, Budget Book Fiscal Year 2013, 3, accessed June 1, 2014, 

http://www.dodea.edu/newsroom/publications/loader.cfm?csModule=security/getfile&pageid=363239.
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81,863 students.69 The FY 2013 cost of DoDEA was $1.82 billion, which does not 

include military construction or procurement costs.

70

DoDEA schools are established on military installations where there are significant 

numbers of military families but the local education options are not suitable 

(e.g., foreign countries, remote locations in the United States). All DoDEA schools are 

accredited through a comprehensive external review.71

Service members have approximately 1.2 million school-age children. In the United 

States, approximately 80 percent of those children attend public schools. DoDEA is 

able to share resources with military-connected public school districts through 

legislative direction. This support for children helps expand academic, emotional, and 

social endeavors.72

5.1.2.1. DEPARTMENT OF DEFENSE DEPENDENTS SCHOOLS 

The Department of Defense Dependents Schools (DoDDS) provide education to 

school-age dependents of DoD personnel assigned overseas and provides enrollment 

on a space-available, tuition-paying basis for other groups identified and prioritized by 

the Secretary of Defense.73 DoDEA schools overseas include Department of Defense

Dependents Schools—Europe (DoDDS-E) and Department of Defense Dependents 

Schools—Pacific (DoDDS-P). DoDDS operates more than 12074 schools for eligible 

dependents of active-duty military and DoD civilians 12 foreign countries.75 Schools 

are located in Bahrain, Belgium, Cuba, England (UK), Germany, Italy, Japan, South 

Korea, The Netherlands, Portugal, Spain, and Turkey.76 

5.1.2.2. DOMESTIC DEPENDENT ELEMENTARY AND SECONDARY 

SCHOOLS 

The Domestic Dependent Elementary and Secondary Schools (DDESS) are located in 

the United States and its territories. DDESS operates more than 60 schools located in 

7 states and 2 territories (Guam and Puerto Rico), for eligible dependents of 

active-duty military and DoD civilians who reside on military installations. DDESS 

 

69 Information provided by Department of Defense Education Agency Headquarters, e-mail to MCRMC, May 2, 1014. 70 Department of Defense Dependents Education, Fiscal Year 2015 Budget Estimates, March 2014, DoDDE-368, 

accessed June 19, 2014, 

http://comptroller.defense.gov/Portals/45/Documents/defbudget/fy2015/budget_justification/pdfs/01_Operation_an

d_Maintenance/O_M_VOL_1_PART_1/DoDDE_PB15.pdf. 71 Department of Defense, Annual Report to the Congressional Defense Committees on Plans for the Department of 

Defense for the Support of Military Family Readiness, Fiscal Year 2013, 12, received from Department of the Army, 

e-mail to MCRMC, May 22, 2014. 72 Ibid, 10. See also John Warner National Defense Authorization Act for FY 2007, Pub. L. No. 109-364 § 574, 120 Stat. 

2083, 2227 (2006) (authority transferred to DoDEA). 73 See generally Eligibility Requirements for Education of Elementary and Secondary School-Age Dependents in 

Overseas Areas, DoDEA 1342.13 (2006), Change 2 (2008). 74 Department of Defense Dependents Education, Fiscal Year 2015 Budget Estimates, March 2014, DoDDE-382, 

accessed June 19, 2014, 

http://comptroller.defense.gov/Portals/45/Documents/defbudget/fy2015/budget_justification/pdfs/01_Operation_an

d_Maintenance/O_M_VOL_1_PART_1/DoDDE_PB15.pdf. 75 Ibid. 76 Department of Defense, Annual Report to the Congressional Defense Committees on Plans for the Department of 

Defense for the Support of Military Family Readiness, Fiscal Year 2013, 12, received from Department of the Army, 

e-mail to MCRMC, May 22, 2014. 
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schools in the United States are located in Alabama, Georgia, Kentucky, New York, 

North Carolina, South Carolina, and Virginia. 77

5.1.2.3. NON-DOD SCHOOLS PROGRAM 

The Non-DoD Schools Program (NDSP) assists authorized, command-sponsored 

dependents of military members and DoD civilian employees assigned overseas who 

are attending non-DoD schools where no DoDEA schools are available within the 

commuting area. At these locations, DoDEA supports a variety of options for schoolage children including home-school programs, public schools, and private schools. 

Approval must be obtained from the DoDEA NDSP office prior to enrolling a child in a 

non-DoD school. The program covers the total cost of tuition and related 

transportation.78 NDSP supports approximately 2,974 military-connected children79 in 

more than 140 countries.

80 The average annual tuition per student, according to the 

DoDEA FY 2013 Budget Book, is $17,606 in Europe, $21,784 in the Pacific, and 

$12,218 in the Americas.81 These schools educate students at locations worldwide in 

three service regions: Americas Region, Pacific Region, and Europe Region.82

5.1.2.4. SPECIAL ARRANGEMENT CONTRACTS

The Secretary of Defense is authorized to enter into special arrangements to provide 

for elementary and secondary education for dependents of members of the Military 

Services and civilian Federal employees who reside in permanent quarters on military 

installations in the United States.83 These Special Arrangement Contracts (SACs) 

typically result in Federal funding being paid to the local public education agency to 

either partially or fully cover the cost of the educational services provided.84 The 

Secretary of Defense also has the authority to allow participation of dependents who 

reside off of the military installation.85

SACs currently exist in Dover, Delaware; Hanscom, Massachusetts; West Point, New 

York; and Puerto Rico.86 Justifications for the special arrangements vary from location 

to location.

The SACs began with schools at Dover Air Force Base in 1957, which at the time was 

considered a remote location. The SAC between DDESS and the Caesar Rodney School 

district provides education services for eligible dependents, in grades K-12, residing on 

Dover Air Force Base. The school district operates the on-installation schools (one 

elementary and one middle school), and educates high school students at a local 

community school. This contract costs approximately $7.5 million per year and 

 

77 Ibid. See also Department of Defense Education Activity, Budget Book Fiscal Year 2013, 15, accessed June 1, 2014, 

http://www.dodea.edu/newsroom/publications/loader.cfm?csModule=security/getfile&pageid=363239. 78 Use of Non-DoD Schools, Department of Defense Education Activity Regulation 1035.1, Change 3 (2003). 79 Information provided by Department of Defense Education Activity Headquarters, e-mail to MCRMC, May 2, 2014. 80 Department of Defense Education Activity, Budget Book Fiscal Year 2013, 17-18, accessed June 1, 2014, 

http://www.dodea.edu/newsroom/publications/loader.cfm?csModule=security/getfile&pageid=363239. 81 Ibid, 15. 82 Ibid, 17-18. 83 Armed Forces, 10 U.S.C. § 2164. 84 Eligibility Requirements for Minor Dependents to Attend Department of Defense Domestic Dependent Elementary 

and Secondary Schools, DoDI 1342.26, Enclosure E (1997). 85 Armed Forces, 10 U.S.C. § 2164. 86 “Special Arrangements,” Defense Department of Education Activity, accessed October 25, 2013,

http://www.dodea.edu/CEOA/arrangements.cfm. 
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persists partially because Delaware state law prohibits the use of state funds for 

educating students who reside in military housing.87

Similar arrangements exist for military dependents residing on Hanscom Air Force 

Base in Massachusetts. DoDEA contracts with Lincoln Public Schools to provide pre-K 

through grade 8 education services for the dependents of military personnel and DoD 

civilian employees residing on the installation. This education occurs in DoD-owned 

and maintained elementary and middle schools. The SAC covers only education 

services, at a cost of $11.3 million per year. High school students attend a local 

community school (Bedford High School).88 The Town of Bedford has been educating 

the high school students who live on Hanscom Air Force Base since the 1950s, when 

the Bedford schools were constructed with Federal Impact Aid pursuant to the Federal 

School Construction Assistance Program89 with an assurance to the Federal 

Government that these facilities would be available to military dependents; however, 

this assurance did not include transportation. DDESS contracts the transportation of 

high school students between the installation and the community school for 

approximately $202,000 per year.90

On the West Point Military Reservation in New York, DDESS operates an elementary 

school and middle school. The number of students in grades 9–12 did not justify the 

opening of a high school on the installation, therefore, a SAC was established in 1985 

with the Local Educational Agency (LEA) to educate these students. The $4.6 million

per year contract covers both educational services and transportation.91

A similar contract is in place for a small number of dependent students in Puerto Rico.

Table 4 provides a summary of SAC students by location, enrollment, cost per 

student, and the total cost for FY 2013 school year.

Table 4. Summary of Special Arrangement Contract Students92

Installation/State/Territory Enrollment Average Cost 

Per Student

Total Cost of Education 

and Transportation

Dover, Delaware 497 $16,002 $8.0M

Hanscom, Massachusetts 719 $15,940 $11.5M

West Point, New York 188 $24,330 $4.6M

Puerto Rico 63 $13,714 $.9M

 

87 Department of Defense Education Activity, DoDEA Facts, DDESS Special Arrangements, accessed April 7, 2014, 

http://www.dodea.edu/CEOA/upload/Special-Arrangements.pdf. 88 Ibid. 89 Ibid. Federal School Construction Assistance Program of Pub. L. No. 81-815, 64 Stat. 967 (1950) (codified as 

amended at Education, 20 U.S.C. §§ 631 et seq., repealed by Pub. L. No. 103-382, title III, § 331(a), 108 Stat. 3965 

(1994).

90 Department of Defense Education Activity, DoDEA Facts, DDESS Special Arrangements, accessed April 7, 2014, 

http://www.dodea.edu/CEOA/upload/Special-Arrangements.pdf. 91 Ibid. 92 Department of Defense Education Activity, Budget Book Fiscal Year 2013, 19, accessed June 1, 2014, 

http://www.dodea.edu/newsroom/publications/loader.cfm?csModule=security/getfile&pageid=363239
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5.1.2.5. PARTNERSHIP BRANCH (MILITARY K-12 PARTNERS) 

The DoDEA Educational Partnership Branch works with LEAs to increase their 

understanding of, and improve their support for, the unique needs of military 

children.93 The average child in a military family moves 6 to 9 times in a school 

career.94 They are also more likely than civilian families to move long distances, across 

state lines, or to foreign countries.95 DODEA’s Educational Partnership Branch works 

with the Department of Education (ED) in efforts to ease the transition of military 

children, providing expertise and resources to LEAs that educate these students. The 

branch maintains a collection of resource materials on the DoDEA website, manages 

the competitive grants program, and administers the DoD Supplement to Impact Aid.96

5.1.2.5.1. Competitive Grants Program

The Secretary of Defense provides defense-wide operations and maintenance funds to 

provide resources to eligible LEAs that educate military-affiliated students.97 DoDEA 

provides grants to support the expansion of educational opportunities for children 

from military families. Since 2008, DoDEA has awarded nearly $200 million in grants 

to more than 180 military-connected public school districts for academic and support 

programs through a competitive grant program.98 These three-year projects affect 

nearly 280,000 military-connected students and more than 670,000 students overall, 

in 900 schools.99

5.1.2.5.2. DoD Supplement to Impact Aid

The DoD Supplement to Impact Aid is paid to school districts heavily impacted by a 

military presence.100 It is paid in addition to the ED Federal Impact Aid Program 

payment, and is based on data provided by ED to DoD. There are three types of DoD 

Supplement funding: funding for “heavily impacted” LEAs, funding for Children with 

Severe Disabilities,101 and funding for Large-Scale Rebasing (also known as Base 

Realignment and Closure, or BRAC). The Congress annually designates the amount to 

be paid by DoD in the National Defense Authorization Act (NDAA) legislation. 

The DoD Supplement funding is divided among the most “heavily impacted” LEAs 

where military children make up at least 20 percent of the enrollment.102 Although this 

funding is not required to be spent specifically on military children, it helps to improve 

the overall quality of the impacted schools. In FY 2013, $36.6 million in DoD 

 

93 “The DoDEA Educational Partnership Program,” Department of Defense Education Activity, April 7, 2014, 

http://www.dodk12grants.org/about.aspx. 94 Ibid. 95 Ibid.

96 Ibid. 97 Education, 20 U.S.C. § 7703b. 98 Competitive Grants Program data provided by Department of Defense Education Activity Partnership Directorate, 

e-mail to MCRMC, December 13, 2013. “The DoDEA Educational Partnership Program,” Department of Defense 

Education Activity, accessed April 7, 2014, http://www.dodk12grants.org/about.aspx. 99 “The DoDEA Grant Program,” Department of Defense Education Activity, accessed March 18, 2014, 

http://www.militaryk12partners.dodea.edu/grants.cfm.

100 Education, 20 U.S.C. § 7703. 101 Education, 20 U.S.C. § 7703a. 102 Education, 20 U.S.C. § 7703b. 
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Supplement funding was distributed by DoD to 128 LEAs in 33 States, educating 

approximately 306,000 military-connected students. 103

Funding for Children with Severe Disabilities reimburses LEAs for money previously 

spent on military dependent children with severe disabilities through an application 

process.104 In FY 2013, $4.6 million was provided to support the education of militaryaffiliated children with severe disabilities to 49 LEAs in 21 states.105

When the Congress specifically appropriates funds for this purpose, the DoD Impact 

Aid for Large-Scale Rebasing Program provides financial assistance to LEAs that are 

heavily impacted by the increase or reduction in enrollment resulting from a 

significant change in military-affiliated students.106 To be eligible, the number of 

military dependent students must increase or decrease, as a result of the rebasing, by 

at least 20 percent (with a minimum of 250 students).107 This category has not been 

funded since FY 2007.108

Beneficiaries 

DoDDS (Overseas Schools) 

Qualified dependents may enroll in one of four enrollment categories.109 Detailed 

eligibility requirements are found in DoDEA Regulation 1342.13. A high-level 

summary of the enrollment categories is provided below: 

Category 1: Space-Required/Space-Guaranteed

This category has three sub-categories of students who are eligible to attend DoDDS:

 Space-Required, Tuition-Free 

Command-sponsored dependents of active-duty personnel and certain full-time 

DoD civilian employees.110 Special considerations are made for dependents of 

sponsors who are detained by a foreign power, declared missing in action, or 

transferred before the completion of the school year.111 If it is determined that 

no DoDDS school is available within the commuting area, command-sponsored 

DoD dependent students are eligible for education in other schools at 

U.S. Government expense. This is usually in that same foreign country, or in 

private boarding schools, or through correspondence courses.112

 

103 DoD Supplement to Impact Aid, provided by Department of Defense Education Activity Partnership Directorate, 

e-mail to MCRMC, December 13, 2013. 104 “Impact Aid for Children with Severe Disabilities Program,” Department of Defense Education Activity, accessed 

April 14, 2014, http://www.militaryk12partners.dodea.edu/impact.cfm?colId=disabilities. 105 DoD Supplement to Impact Aid data provided by Department of Defense Education Activity Partnership Directorate, 

e-mail to MCRMC, December 13, 2013. 106 “DoD Impact Aid for Large Scale Rebasing (BRAC),” Military K-12 Partners, accessed April 10, 2014, 

http://www.militaryk12partners.dodea.edu/impact.cfm?colId=brac. 107 Eligibility Requirements of Education of Elementary and Secondary School-age Dependents in Overseas Areas, 

Department of Defense Education Activity Regulation 1342.13 (2006), Change 2 (2008). See also “DoDDS,” 

Department of Defense Education Activity, accessed April 10, 2014, http://dodea.edu/aboutDoDEA/DoDDS.cfm. 108 DoD supplement to Impact Aid, provided by DODEA partnership directorate, e-mail to MCRMC, December 13, 2013. 109 Eligibility Requirements of Education of Elementary and Secondary School-age Dependents in Overseas Areas, 

Department of Defense Education Activity Regulation 1342.13 (2006), Change 2, 2 (2008). 110 Ibid, 2-3. 111 Ibid. 112 Ibid, 2.
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 Space-Required, Tuition-Paying 

Minor dependents of DoD sponsors who are assigned to a Military Assistance or 

Foreign Military Sales Program. Tuition is paid by the program, not the 

student’s sponsor.113

 Space-Created, Tuition-Paying

“Minor dependents of U.S. citizens who are full-time defense contractor 

personnel whose organization has executed contracts or other agreements with 

the DoD when the applicable contract or agreement authorizes dependent 

education on a tuition fee basis in the DoD dependents schools shall be 

enrolled on a space guaranteed, tuition-paying basis.”

114 

Category 2: Space-Available, Tuition-Paying (Federally-Connected)

If it is determined that space is available, various categories of students may attend 

DoDDS if they pay tuition. The tuition “may not be less than the rate necessary to 

cover the average cost of enrollment of children in the DoD dependents schools.”

115

These categories include noncommand sponsored dependents of Service members, as 

well as minor dependents of:

 other full-time U.S. Government Agency employees stationed overseas

 U.S. citizens who are full-time employees of organizations overseas that serve 

defense-related interests (meeting certain requirements)

 host-nation or third-country national military or civilian personnel 

accompanying or serving with the Military Services overseas

 other sponsors serving the national defense interest116

Category 3: Space-Available, Tuition-Free

Like Category 2, attendance under this category is only offered if it is determined that 

space is available. Category 3 includes students who are noncommand sponsored. It 

also provides special consideration for dependents of sponsors who die, are detained 

by a foreign power, declared missing in action, activated reservists, and certain 

diplomats.117

Category 4: Space-Available, Tuition-Paying (Non-Federally-Connected)

This category includes dependents of U.S. citizens residing in overseas areas, 

including dependents of retired personnel, or of deceased personnel (where not 

otherwise addressed), and foreign nationals, when there is no objection from the host 

nation and when such inclusion does not displace or prevent inclusion of U.S. citizensponsored minor dependents seeking admission on the same basis at the same

time.

118

 

113 Ibid, 3. 114 Ibid, 2-3. See also “About DoDEA,” Department of Defense Education Activity, accessed April 10, 2014, 

http://www.DoDEA.edu/AboutDoDEA/DoDDS.cfm. 115 Ibid, 4. 116 Ibid. 117 Ibid, 2-4. 118 Eligibility Requirements of Education of Elementary and Secondary School-age Dependents in Overseas Areas, 

Department of Defense Education Activity Regulation 1342.13 (2006), Change 2, 5 (2008).
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DDESS (Domestic Schools)

For DDESS locations in the continental United States (CONUS), dependent children of 

military members and civilian employees of DoD occupying permanent living quarters 

on a military installation served by a DDESS school program are eligible to attend.

119 

Within U.S. territories, possessions and commonwealths, dependent children of the 

following groups are eligible:

 military and DoD civilian employees living on the installation

 military members on active duty, stationed or home-ported in the territory, 

possession, or commonwealth and not residing in permanent quarters

 military members on active duty who have been assigned to a remote location 

or unaccompanied tour of duty and their dependents have been authorized by 

designated location move orders to reside in the territory, possession, or 

commonwealth

 full-time DoD civilian employees, occupying a position that is subject by policy 

and practice to transfer to a territory, possession, or commonwealth and not 

residing in government quarters

 full-time, permanent, professional excepted service employees of DDESS 

arrangements not residing in permanent quarters on a military installation120

DDESS Tuition-Paying

Also eligible are dependent children of full-time civilian employees of non-DoD Federal 

agencies (regardless of whether they reside in government quarters), if the employing 

agency certifies they occupy a position that is subject by policy and practice to 

transfer to a territory, possession, or commonwealth, and the employing agency agrees 

to reimburse the DoD for the educational services provided. DDESS schools are not 

authorized to accept tuition payments from individuals.121

Historical Context 

Since the days of Army frontier posts, U.S. military installations have established 

schools where public education was unavailable. These schools were managed by each 

of the military Services, but funding was sometimes inconsistent and unreliable. Over

time, the Services improved the standardization and oversight of these schools, and in 

the United States (and U.S. territories) they eventually became known as “Department 

of Defense Domestic Dependents Elementary and Secondary Schools (DDESS).” 

Shortly after the end of World War II, the U.S. military established similar schools for 

the children of its Service members stationed in Europe and the Pacific. Often referred 

to as “American Dependent Schools,” these overseas schools were eventually 

designated as “Department of Defense Dependents Schools (DoDDS).”

122

In 1950, Federal legislation consolidated the funding and operation of installation-run 

schools in the United States under the authority of Section 6 of Pub. L. No. 81-874. 

This legislation enabled the Secretary of Education (then the Commissioner of 

 

119 Eligibility Requirements for Minor Dependents to Attend Department of Defense Domestic Dependent Elementary 

and Secondary Schools, DoDI 1342.26, 2 (1997). 120 Ibid, 3. 121 “Eligibility to Attend DDESS Schools,” Department of Defense Education Activity, accessed April 11, 2014, 

http://www.dodea.edu/Americas/aboutAm/amEligibility.cfm. 122 “About DoDEA,” Department of Defense Education Activity, accessed February 26, 2014,

http://www.dodea.edu/aboutDoDEA/today.cfm.
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Education) to operate and maintain what became known as Section 6 schools. 

Section 6 schools continued to educate military children residing on Federal property 

if either:

State laws prohibited tax revenues of the state, or any political subdivision of the 

state, to be expended for the free public education of children residing on Federal 

property, or education systems within the local communities were judged unable to 

provide a suitable free public education for the children residing on Federal property.

The system of Section 6 schools expanded and contracted over the years. Following 

the consolidation effort in 1950, many schools were added to the system as a result of 

the racial integration of the military. These schools allowed military children to attend 

integrated schools where local, civilian schools remained segregated. Since that time, 

the trend has been to transfer Section 6 schools to LEAs largely as a result of:

 population and infrastructure growth near military installations

 integration of public schools

 pressure from the U.S. Department of Education on States and localities to 

accept responsibility for the education of military dependents123

At one point there were approximately 100 installations with Section 6 schools; 

however, by the early 1970s most of these schools had been transferred. The last 

transfer of a Section 6 school occurred in 1973, and three other Section 6 school 

systems have closed since then as a result of installation closures.124

Of note are the military schools on the Marine Corps base at Quantico, Virginia. 

Strong opposition to the transfer of these schools to the LEA resulted in an 

amendment to Section 6 commonly referred to as the “Quantico Amendment.” This 

amendment required the approval of both the Secretary of Education and the 

Secretary of the relevant military Service prior to transfer, which resulted in the 

transfer of the Quantico schools being blocked.125 

In 1981, Pub. L. No. 97-35 transferred responsibility for the Section 6 schools from the 

Secretary of Education to the Secretary of Defense. Budget authority for operation and 

maintenance of these schools was granted to DoD in 1982, and responsibility of the 

DoD school system was centralized in the Office of the Deputy Assistant Secretary for 

Personnel Support, Families, and Education in 1990. In 1994, Pub. L. No. 103-337 

replaced Section 6 legislation and renamed the domestic school system the 

“Department of Defense Domestic Dependent Elementary and Secondary Schools 

(DDESS).” 

In 1994, DoDDS, managing overseas schools, and DDESS, managing domestic 

schools, were brought together under an umbrella agency: the Department of Defense 

Education Activity (DoDEA).126

 

123 Ibid. 124 Ibid. 125 Ibid. 126 Ibid. 
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Financial Summary 

The DoDEA budget is funded by Operation and Maintenance (Defense-Wide), Military 

Construction (Defense-Wide), and Procurement appropriations.127 Of the $1.82 billion

in operations and maintenance cost, approximately 67 percent was attributable to 

personnel pay and benefits.128 Table 5 summarizes FY 2013 funding for DoDEA.

Table 5. Summary of FY 2013 DoDEA Funding129

Operations and 

Maintenance

($K)

Headquarters (HQ)/Consolidated School Support 

(CSS)/Educational Partnership Program (EPP)

$160.859

Europe $750,658

Pacific $399,251

Cuba $6,957

DDESS $507,158

Total (appropriated funding) $1,824,883 

Note: Individual costs may not sum to Totals and Subtotals due to rounding

The DoDEA system is supported by the Headquarters (HQ) and the Consolidated 

School Support (CSS) organizations. The HQ focuses on establishing policies and 

practices; identifying, securing, and providing resources; establishing standards; 

implementing accountability measures; and providing technical assistance. The CSS 

focuses on human resources, procurement, finances, logistics, and information 

technology.130

5.1.3. EDUCATION ASSISTANCE

Education Assistance benefits are provided to uniformed Service members by multiple 

agencies including DoD, the Department of Homeland Security (DHS), VA, ED, and the 

Department of Justice (DOJ).

DoD programs include:

 Tuition Assistance

 Voluntary Education Support

- Joint Services Transcript 

- Servicemembers Opportunity Colleges Degree Network System 

- Examinations Program

 College Loan Repayment Program 

These benefits are described in the Cross-Agency Benefits section of this report—

Section 5.8.1 Education Assistance.

 

127 Department of Defense Education Activity, Budget Book Fiscal Year 2013, 3, accessed June 1, 2014, 

http://www.dodea.edu/newsroom/publications/loader.cfm?csModule=security/getfile&pageid=363239. 128 Ibid, 8. 129 Department of Defense Education Activity, Budget Book Fiscal Year 2013, 8, accessed June 1, 2014, 

http://www.dodea.edu/newsroom/publications/loader.cfm?csModule=security/getfile&pageid=363239. 130 Ibid, 20.
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5.1.4. EXCHANGES

Multiple agencies provide exchange benefits for uniformed Service members.

The Military Services operate multiple exchange systems: Army and Air Force 

Exchange Service (AAFES) operates exchanges on Army and Air Force installations.131

AAFES is the largest of the exchange organizations. The Navy Exchange Service 

Command (NEXCOM) operates exchanges on Navy bases.132 The Marine Corps 

Community Services (MCCS) runs exchanges on Marine Corps installations. MCCS 

also operates the rest of Marine Morale, Welfare, and Recreation (MWR) operations.133

Similarly, the Coast Guard Exchange Service (CGES), which operates exchanges on 

Coast Guard installations, is part of the Coast Guard Community Services Command

(CSC).

134 The VA operates a separate retail system known as the Veteran Canteen 

Service (VCS).135 

This benefit is described in the Cross-Agency Benefits section of this report—

Section 5.8.2 Exchanges.

5.1.5. FAMILY SUBSISTENCE SUPPLEMENTAL ALLOWANCE

Family Subsistence Supplemental Allowance (FSSA) benefits are provided to members 

of the Military Services by multiple agencies, including DoD and DHS, and are 

described in the Cross-Agency Benefits section of this report—Section 5.8.3 Family 

Subsistence Supplemental Allowance.

5.1.6. HOMEOWNER ASSISTANCE PROGRAM 

The Homeowner Assistance Program (HAP) provides financial assistance to eligible 

individuals who suffer financial loss associated with the sale or foreclosure of their 

primary residence.136 Members of the Military Services and certain DoD civilian 

employees who fall into at least one of the following categories may receive this 

assistance:

 individuals determined to be impacted by BRAC

 wounded, injured or ill individuals and their spouses

 those reassigned during the specified mortgage crisis period137

Using the authority granted in Section 1013 of the Demonstration Cities and 

Metropolitan Development Act of 1966 (codified at 42 U.S.C. § 3374), the Secretary of 

Defense established HAP. The American Recovery and Reinvestment Act of 2009 

 

131 Army and Air Force Exchange Service Operations, AR 215-8 and AFI 34-211(I) (2012). 132 Responsibility and Authority for Navy Exchange Operations, OPNAVINST 5450.331A, ¶ 5(a) (2008). 133 MCCS Policy Manual, MCO P1700.27B, ¶ 1001 (2007). 134 Coast Guard Morale, Well-Being, and Recreation Manual, COMDTINST M1710.13C, Chapter 1, ¶ L (2010). 135 See generally Veterans’ Benefits, 38 U.S.C. §§ 7801-7810. 136 See generally Homeowner Assistance Program, DoDD 4165.50E (2014). See also The Public Health and Welfare, 

42 U.S.C. § 3374 (originally enacted in Section 1013, Demonstration Cities and Metropolitan Development Act of 1966, 

Pub. L. No. 89-754, § 1013, 80 Stat. 1255, 1290-1292 (1966)). 137 The Public Health and Welfare, 42 U.S.C. § 3374 (originally enacted in Section 1013, Demonstration Cities and 

Metropolitan Development Act of 1966, Pub. L. No. 89-754, § 1013, 80 Stat. 1255, 1290-1292 (1966)).
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temporarily expanded this underlying authority to allow for, among other things, 

assistance to Service members undergoing Permanent Change of Station (PCS) moves 

who bought their homes prior to July 1, 2006 and attempted to sell during the 

mortgage crisis, between July 1, 2006 and September 30, 2012.138 Support for Service 

members undergoing PCS moves expired on September 30, 2012.139 At this time, given 

there are no active authorizations for BRAC, HAP applications are only being accepted 

from wounded, injured or ill, and surviving spouse applicants.140

Under HAP, the government may assist wounded, injured, or ill homeowners 

(including surviving spouses) by either compensating them for financial losses 

associated with the sale (or foreclosure) of their home, or by actually purchasing their 

home. As found in 42 U.S.C. § 3374(a)(2), “Notwithstanding any other provision of law, 

the Secretary of Defense is authorized to acquire title to, hold, manage, and dispose of, 

or, in lieu thereof, to reimburse for certain losses upon private sale of, or foreclosure 

against, any property improved with a one- or two-family dwelling which was at the 

time of the relevant wound, injury, or illness, the primary residence.”

141 The amount of 

reimbursement or purchase payment is limited to a percentage of the fair market 

value of the home.142 When effective, similar options are also available to homeowners 

affected by BRAC. For those affected by BRAC, the fair market value of the home prior 

to the announcement of installation closure is taken into consideration.

143

Beneficiaries 

The groups listed below are eligible to apply for HAP. To receive the benefit, they must 

be approved through an application process.144

 individuals determined to be impacted by BRAC. Federal employees employed 

at or in connection with such bases or installations (other than a temporary 

employee serving under a time limitation), a nonappropriated fund 

instrumentality employee employed at a nonappropriated fund instrumentality 

operated in connection with such bases or installations, or a Service member

 wounded, injured or ill Service members, DoD and U.S. Coast Guard civilian 

employees, and their spouses

 Service members permanently reassigned during specified mortgage crisis (no 

longer available).145

Historical Context 

HAP was created pursuant to authority found in 42 U.S.C. § 3374. This statutory 

authority, as well as the program elements of HAP, were temporarily expanded by The 

American Recovery and Reinvestment Act of 2009 to include Service members who 

were permanently reassigned during the specified mortgage crisis period. HAP 

assistance was also extended as needed to cover those impacted by BRAC actions, the 

most recent being the 2005 round of defense base closures and realignments under 

 

138 The Public Health and Welfare, 42 U.S.C. § 3374, as amended by the American Recovery and Reinvestment Act of 

2009, Pub. L. No. 111-5, § 1001, 123 Stat. 115, 194-198 (2009). 139 See American Recovery and Reinvestment Act of 2009, Pub. L. No. 111-5, § 1001, 123 Stat. 115, 194-198 (2009). 140 “Homeowner Assistance Program,” Department of Defense, accessed April 2, 2014, http://hap.usace.army.mil/. 141 The Public Health and Welfare, 42 U.S.C. § 3374 (originally enacted in Section 1013, Demonstration Cities and 

Metropolitan Development Act of 1966, Pub. L. No. 89-754, § 1013, 80 Stat. 1255, 1290-1292 (1966)). 142 The Public Health and Welfare, 42 U.S.C. § 3374(c). 143 The Public Health and Welfare, 42 U.S.C. § 3374(c)(1)(A). 144 Homeowners Assistance Program, DoDD 4165.50E, 5 (2014). 145 The Public Health and Welfare, 42 U.S.C. § 3374. 
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the Defense Base Closure and Realignment Act of 1990 (part XXIX of Pub. L. 

No. 101-510; 10 U.S.C. § 2687).146

Financial Summary 

In FY 2013, although no funding was appropriated for HAP, $53 million was 

expended.147 This expenditure was funded from the Homeowners Assistance Fund, 

Defense (HOA), a nonexpiring revolving fund.148 The fund receives funding from several 

sources: appropriations, borrowing authority, reimbursable authority, prior fiscal year 

unobligated balances, appropriation transfers, revenue from sale of acquired 

properties, and recovery of prior-year obligations.149 As explained in the Department of 

Army FY 2015 Budget Estimates, 

The fund is not a profit-making endeavor. Although the proceeds from the sale 

of homes are returned to the fund, this revenue does not always replenish it 

nor totally fund projected requirements. Since the Homeowners Assistance 

Fund is not self-sustaining, periodic appropriations are required to maintain 

its solvency as a revolving fund. In the past, Congress has authorized the 

transfer of funds from the BRAC account to the Homeowners Assistance Fund 

when BRAC programs cause HAP activity.150

The balance carried forward in the HOA from FY 2013 was $320 million.

151

5.1.7. MILITARY HOUSING

Military housing provides long-term living accommodations for Service members and 

their families. The two categories of military housing are Military Family Housing and 

Unaccompanied Housing (UH), also known as Unaccompanied Personnel Housing 

(UPH). Military Family Housing may be provided through military housing (owned and 

constructed by DoD), privatized military housing, or leased housing,152 and may take 

the form of single or multi-family (e.g., duplex, townhouse) structures. UH is primarily 

provided to junior enlisted members. 

The current permanent party UH inventory includes a variety of configurations 

that provide a range of privacy, area, and amenities that span from UH built 

in the 1950s with 4-person rooms with central latrines, to private sector type 

‘market-style’ apartments with private bedrooms, bathrooms shared by no 

more than two people, full kitchens, living/dining rooms, and clothes washers 

and dryers.153

 

146 The American Recovery and Reinvestment Act of 2009, Pub. L. No. 111-5, 123 Stat. 194 (2009). 147 Department of the Army, Department of the Army Fiscal Year (FY) 2015 President’s Budget Submission, Military 

Construction, Family Housing & Homeowners Assistance Fund, Defense, March 2014, 4, accessed June 1, 2014, 

http://asafm.army.mil/Documents/OfficeDocuments/Budget/budgetmaterials/fy15/milcon/mca-afh-hoa.pdf. 148 Ibid, 2. 149 Ibid, 2. 150 Ibid, 2. 151 Ibid, 4. 152 DoD Housing Management, DoD Manual 4165.63, 10 (2010). 153 Department of Defense, Report to Congress on Government-Owned Unaccompanied Housing, February 2013, 5, 

accessed June 1, 2014, http://www.acq.osd.mil/ie/fim/library/HAP%20files/2013%20-

%20Report%20to%20Congress%20on%20Govt-Owned%20Unaccompanied%20Housing.pdf. 
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Each Military Service and installation separately manages its inventory of family 

housing and UH units within DoD guidelines.154 The Services establish “criteria to 

determine which Service members are required to live in military housing and which 

are authorized to receive a housing allowance and may choose where to live.”

155 These 

criteria may be based on factors such as rank, number of dependents, job function or 

criticality, militarization and/or mentoring, team building, operational and/or mission 

requirements, location (if outside the United States), availability of Governmentcontrolled housing, and quality of life.156 Those required to live in government housing 

can also include essential civilian employees, with dependents, who must reside on 

the installation for reasons of military necessity.157

To determine whether a local community can adequately accommodate the housing 

needs of the military at an installation, the Services perform a housing requirements 

and market analysis (HRMA). 

HRMA is a structured analytical process that assesses both the suitability and 

availability of the private sector’s rental market, assuming specific standards 

related to affordability, location, features, and physical condition, and the 

housing requirements of the installation’s total military population. HRMA is 

required at any base worldwide where Service members have the opportunity 

to live in the private off-base rental market, and when there is no antiterrorism 

or force protection restriction barring Service members from participating in 

that market.158

Also considered in this analysis is the on-installation military community presence 

needed to effectively accomplish installation missions.159

DoD Instruction 4165.63, “DoD Housing,” states that it is DoD policy:

 to ensure that eligible personnel and their families have access to affordable, 

quality housing facilities and services consistent with grade and dependent 

status and generally reflecting contemporary community living standards

 to rely on the private sector as the primary source for housing accompanied and 

unaccompanied personnel normally eligible to draw a housing allowance

 to use a consistent DoD-wide analytical methodology for calculating the need to 

provide housing

 that the Commander of an installation shall be responsible for the military 

housing programs with broad authority to decide the best use of resources to 

provide access to housing for eligible personnel and their families160

Consistent with DoD policy, the private sector is the primary source of housing for 

uniformed Service members. This includes commercially available housing (both 

purchased and rented) and privatized military housing. As of FY 2012, with a 

 

154 DoD Housing Management, DoD Manual 4165.63-M, 8 (2010). 155 Ibid. 156 Department of Defense, Report to Congress on Government-Owned Unaccompanied Housing, February 2013, 9, 

accessed June 1, 2014, http://www.acq.osd.mil/ie/fim/library/HAP%20files/2013%20-

%20Report%20to%20Congress%20on%20Govt-Owned%20Unaccompanied%20Housing.pdf. 157 DoD Housing Management, DoD Manual 4165.63, 11 (2010). 158 Ibid, 10. 159 Ibid, 10. 160 DoD Housing, DoDI 4165.63, 1-2 (2008).
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population of 1.4 million active-duty Service members, DoD provided long-term 

accommodations (government quarters) to approximately 22 percent.161 This included 

39,600 military owned family houses, 8,688 government leased houses, and 256,523 

unaccompanied housing beds.162 Privatized military housing, through the Military 

Housing Privatization Initiative (MHPI),

163 provided approximately 171,101 additional 

houses.164

The Coast Guard also provides UH and family housing to a portion of their 

members.165 Additional details on Coast Guard housing can be found in Section 

5.2.5 Military Housing. USPHS and NOAA do not maintain government housing units for 

their uniformed personnel, but rely, when necessary, on those provided by the Military 

Services.166

5.1.7.1. MILITARY FAMILY HOUSING

As an alternative to commercial housing options, the Military Departments either 

construct and operate government housing, or lease housing for use by Service 

members.167 The number of DoD-owned houses in the United States has reduced 

dramatically as a result of the MHPI.

168 Areas where government housing persists in 

the United States typically have small numbers of military homes, making 

privatization less practical. The Army, for example, still owns approximately 

2,800 housing units in CONUS169 (as compared to 117,000 in 1993170). A small portion 

of these have been designated as historic homes, which can introduce additional 

challenges for privatization.171 MHPI authorities do not apply to overseas housing.

Except for reasons such as security or essential support of an installation mission, 

uniformed Service members and their families are typically not required to live in 

military family housing. According to a study by the National Defense Research 

Institute (NDRI), Service members primarily choose to live in military housing for 

economic reasons.172 Military Service members generally consider military 

accommodations as superior to those available in the local community for the amount 

paid in basic allowance for housing (BAH),

173 particularly for junior personnel. Service 

 

161 Data provided by ODUSD(I&E)FIM following a March 2014 data call to the Military Departments and the Defense 

Agencies, Deputy Director FIM.

162 Ibid. 163 National Defense Authorization Act for FY 1996, Pub. L. No. 104-106, §§ 2801-2841, 110 Stat. 186, 544 (1996)

(codified, as amended, at Armed Forces, 10 U.S.C. §§ 2871-2885 (2011)). 164 Department of Defense, Office of the Deputy Under Secretary of Defense (Installations and Environment), Military 

Housing and Privatization Initiative Program Evaluation Plan, Executive Report as of March 31, 2012, 2013. 165 Coast Guard Housing Manual, COMDTINST M11101.13F (2013). 166 DoD Housing Management, DoD Manual 4165.63, 19 (2010). 167 Ibid. See generally Armed Forces, 10 U.S.C. §§ 2821-2838 (2011). 168 Department of Defense, Office of the Deputy Under Secretary of Defense (Installations and Environment), Military 

Housing and Privatization Initiative Program Evaluation Plan, Executive Report as of March 31, 2012, 22, 2013. 169 Information provided by Army Installation Services Directorate, e-mail to MCRMC, March 11, 2014. 170 Matthew C. Godfrey and Paul Sadin with Dawn Vogel, Joshua Pollarine, and Nicolai Kryloff, Privatizing Military 

Family Housing, A History of the U.S. Army’s Residential Communities Initiative, 1995–2010, (Washington, DC: GPO, 

2012).

171 Department of Defense, The Cost of Maintaining Historic Military Family Housing, accessed June 1, 2014, 

http://www.denix.osd.mil/cr/upload/DODHOUSINGFINAL_1.PDF. 172 An Evaluation of Housing Options for Military Families, NDRI, MR-1020-OSD, (prepared for the Office of the 

Secretary of Defense by RAND’s National Defense Research Institute), xvi (1999). 173 Pay and Allowances of the Uniformed Services, 37 U.S.C. § 403 (2012).
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members living in military housing may also avoid out-of-pocket expenses like 

deposits. Many military installations have waiting lists for military housing.174

Since the establishment of MHPI in 1996, DoD has privatized more than 90 percent of 

its domestic family housing.175 As summarized on the MHPI website, “The MHPI was 

designed and developed to attract private sector financing, expertise and innovation to 

provide necessary housing faster and more efficiently than traditional Military 

Construction processes would allow. The Office of the Secretary of Defense has 

delegated to the Military Services the MHPI and they are allowed to enter into 

agreements with private developers selected in a competitive process to own, maintain 

and operate family housing via a fifty-year lease.” 176 As of March 31, 2013, MHPI

authorities allowed the Services to privatize nearly 196,000 homes, eliminating more 

than 137,500 inadequate homes and providing almost 18,000-deficit reduction 

homes.177 “Deficit reduction homes” refer to the housing deficits resulting from the 

realignment and relocation of military members and their families due to the BRAC 

program, global repositioning of forces, the Army’s modularity program and Grow the 

Force initiatives.178

Unlike when they live in government-owned or leased housing, Service members 

continue to receive BAH when living in privatized family housing. The manager or 

owner of the privatized housing functions like a rental property manager in the civilian 

community. Service members sign a lease for privatized housing and pay rent directly 

to the owner. The rental rates reflect local BAH rates and may be reduced to offset 

utility costs, which in these cases is paid by the Service member. The Military 

Departments require the owners or managers to meet maintenance and support 

standards, provide flexible leases that accommodate military assignment and 

deployment needs, and provide a renter’s insurance package.179

5.1.7.2. UNACCOMPANIED HOUSING

Unaccompanied Housing (UH) facilities provide long-term accommodations for single 

or unaccompanied married military personnel.180 The UH is where most junior enlisted 

personnel without dependents are required to live during their initial training and first 

few years of service. While living in UH, a Service member does not receive BAH. 

These facilities have a variety of names including Unaccompanied Personnel Housing 

(UPH), Bachelor Housing, Bachelor Enlisted Quarters (BEQ), Bachelor Officer Quarters 

(BOQ), barracks, dormitories, billeting, and quarters.

Since the mid-1990s, the Military Departments have emphasized the modernization of 

permanent party unaccompanied housing with a substantial increase in MILCON

 

174 An Evaluation of Housing Options for Military Families, NDRI, MR-1020-OSD, (prepared for the Office of the 

Secretary of Defense by RAND’s National Defense Research Institute), xvi (1999). 175 Department of Defense, Military Housing Privatization Initiative Program Evaluation Plan Executive Report, 22, 

accessed March, 11, 2014, http://www.acq.osd.mil/housing/PEP%20Exec%20Report%20-Jun2010.pdf. 176 “Welcome,” Office of the Deputy Under Secretary of Defense Installations and Environment, accessed March 12, 

2014, http://www.acq.osd.mil/housing/mhpi.htm. 177 Department of Defense, Military Housing Privatization Initiative Program Evaluation Plan Executive Report, 12, 

accessed March, 11, 2014, http://www.acq.osd.mil/housing/PEP%20Exec%20Report%20-Jun2010.pdf. 178 Ibid, 29. 179 “Military Housing Privatization Initiative,” Military OneSource, accessed March 12, 2014, 

http://www.militaryonesource.mil/moving?content_id=266863. 180 DoD Housing Management, DoDI 4165.64-M, 54 (2010).
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funding and the introduction of new designs offering more privacy and amenities. 

From FY 1996 through FY 2012, more than $21 billion of MILCON funds, and 

hundreds of millions in operation and maintenance (O&M) funds, were invested in the 

construction and modernization of UH worldwide.181 As part of the modernization 

effort, the Military Departments routinely evaluate status and progress of all awarded 

MHPI projects against current standards, while building new units to the new 

construction standards.182 As specified in DoD 4165.63-M, “market-style” units are 

the new construction standard, reflecting a trend toward private sector type housing, 

improvements in new university student housing, and minimizing the housing 

disparity between married and single members in the same pay grade.183 Table 6 

provides the current minimum standards for privacy.

Table 6. DoD UH Minimum Configuration and Privacy Standards for 

Assignment – Permanent Party184

Pay Grades Minimum Adequacy Standards for Permanent Party Personnel

O-1 and above, WO and 

above and E-7 to E-9 

• Private unit with living room, bedroom, kitchen, and bathroom 

E-5 to E-6 • Shared unit with a living room: Private bedroom with 118 net square feet 

(NSF), bathroom shared with not more than one other, and a kitchen 

• Shared unit without a living room: Private bedroom with 135 NSF, 

bathroom shared with not more than one other, and a kitchenette

E-1 to E-4 • Shared unit with a living room: Shared bedroom with not more than one 

other and with a minimum of 72 NSF for each occupant, bathroom shared 

with not more than one other, and a kitchen 

• Shared unit without a living room: Private bedroom with 90 NSF, bathroom 

shared with not more than one other, and a kitchenette

NOTES: 

1. NSF minimums for units can be established by the Military Departments. 

2. The minimum standards can be waived on a temporary basis (for no more than 1 year) due to military necessity. However, exceptions 

for longer periods of time can only be approved by the Secretary of a Military Department. This includes realigning pay grades as 

warranted by similarity of responsibilities.

Although not as extensive as the privatization of family housing, under the MHPI 

authorities, the Military Services have initiated multiple privatization pilots for UH. As 

of 2013, the Army has privatized UH facilities at four locations (Fort Irwin, Fort Bragg, 

Fort Stewart, and Fort Drum) totaling 1,038 apartments185 and the Navy has privatized 

at two locations (San Diego, CA and Hampton Roads, VA) providing 3,112 privatized 

apartments.186 The Navy pilot programs focused on accommodations for junior enlisted 

and granted authority for sailors to receive a higher rate of partial BAH when living in 

privatized UH. Like privatized family housing, Service members sign a lease and pay 

rent to the property manager, equal to their special higher rate of partial BAH. The 

Army pilot programs have focused on unaccompanied officers and senior 

 

181 Department of Defense, Report to Congress on Government-Owned Unaccompanied Housing, February 2013, 1, 

accessed June 1, 2014, http://www.acq.osd.mil/ie/fim/library/HAP%20files/2013%20-

%20Report%20to%20Congress%20on%20Govt-Owned%20Unaccompanied%20Housing.pdf. 182 Ibid. 183 Ibid. 184 Ibid, 2. 185 DUSD(I&E), Military Housing Privatization Initiative Program Evaluation Plan Executive Report, March 31, 2012, 15, 

accessed June, 1, 2015, http://www.acq.osd.mil/housing/PEP%20Exec%20Report%20-Jun2010.pdf. 186 An Evaluation of Housing Options for Military Families, NDRI, MR-1020-OSD, (prepared for the Office of the 

Secretary of Defense by RAND’s National Defense Research Institute), xvi (1999).
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noncommissioned officers, groups receiving a higher rate of BAH; however, the pilot 

program planned for Fort Meade will house junior enlisted personnel.187

Beneficiaries 

Military Family Housing

Uniformed Service members who have been permanently assigned to an installation, 

other accompanied Service members, DoD civilian personnel at installations in foreign 

countries, and other groups defined in DoD Manual 4165.63M, “DoD Housing 

Management,” may apply for and occupy the military family housing managed by that 

installation. Accompanied Service members are those who have at least one family 

member living with them. For the Military Services, DoD establishes assignment 

priority categories for housing, and installation commanders are responsible for 

assigning priority for DoD family housing units. Installation commanders have the 

authority to deviate from the guidelines, on a case-by-case basis, when the guidelines 

would cause undue hardship.188 

The priorities for assignment of Service members and civilian employees to DoD family 

housing units are:

 Priority 1 - Key and essential Service members and civilians, including special command 

positions

 Priority 2

- Service members and equivalent civilians who are assigned to, or attached 

for duty at, the installation (including sea duty), or who are assigned to 

other installations that are served by the housing complex

- Independent duty personnel of any Service working within suitable 

commuting distances 

 Priority 3 - All Service members and civilians not included in Priority 1 or 2.

189 

Individuals in special categories and circumstances have additional eligibility and 

prioritization considerations. These include:

 uniformed personnel of USPHS

 uniformed personnel of NOAA

 foreign military personnel

 DoD civilian personnel in foreign countries

 DoD nonappropriated fund employees in foreign countries (on a reimbursable 

basis)

 DoD-sponsored civilian personnel in foreign countries (on a rental basis)

 families with special-needs members

 dependents of deceased military sponsors who die in the line of duty

 hardship cases (on a rental basis)

 dependents of sponsors assigned to an unaccompanied short tour outside the 

United States

 unmarried pregnant Service members without dependents

 

187 Information provided by Army Installation Services Directorate, e-mail and phone call to MCRMC, March 11, 2014.

See also Government Accountability Office, Military Housing: Opportunities That Should Be Explored to Improve Housing 

and Reduce Costs for Unmarried Junior Servicemembers, GAO-03-602 (2003), accessed June 13, 2014, 

http://www.gao.gov/cgi-bin/getrpt?GAO-03-602. 188 DoD Housing Management, DoD Manual 4165.63, 18-19 (2010). 189 Ibid, 19.
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 alleged victims of domestic violence

 Non-Federal entities such as ARC and USO outside the United States (on a 

reimbursable basis)

 persons without adequate shelter in accordance with 10 U.S.C. § 2556 and 

DoD 4165.65190

Additional details on when individuals on this list may be considered eligible and how 

their priority is set are in DoD 4165.63-M, “DoD Housing Management.”

191

Unaccompanied Housing

As specified in DoD 4165.63-M, “the Secretary of a Military Department determines 

the pay grade of members normally required to live in UH and not be authorized a 

housing allowance. Factors that impact what pay grades are required to live in UH 

include militarization and/or mentoring, team building, operational and/or mission 

requirements, and location (if outside the United States).”

192 Pursuant to 37 U.S.C. 

§ 403, even if assigned UH, Service members in pay grade E-7 and above may elect not 

to occupy such quarters and instead to receive BAH.193 Service members in pay grade 

E-6 have this same option if assigned to housing that does not meet the minimum 

adequacy standards established by the Secretary of Defense for members in such pay 

grade, or to housing under the jurisdiction of a uniformed service that does not meet 

such standards.194 Table 7 summarizes the Military Departments’ policies concerning 

requirements to live in UH.195 “At locations outside the United States, the thresholds 

can be at a higher pay grade due to security concerns and other factors.”

196

Table 7. Personnel without Dependents Required to Live in 

Permanent Party UH in the United States

Service Policy

Army E-1 to E-5 

Navy E-1 to E-3

E-4 with less than four years of service

Depending on availability of UH on an installation, E-4s with more 

than 4 years of service may also be required to live in the UH

Marine Corps E-1 to E-5

Air Force E-1 to E-3

E-4 with less than three years of service

UH is categorized as either permanent-party UH or training UH, depending on its 

typical use. Training and mobilization requirements typically require all members, 

regardless of pay grade, to live in UH. Depending on the Service and the facility, higher 

pay grades and “geographic bachelors” may live in permanent-party UH on a space 

available basis. Geographic bachelors are Service members who choose to not relocate 

 

190 Ibid, 19-23. 191 Ibid. 192 Ibid, 23. 193 Pay and Allowances of the Uniformed Services, 37 U.S.C. § 403(e)(2) (2012). 194 Pay and Allowances of the Uniformed Services, 37 U.S.C. § 403(e)(3) (2012). 195 Department of Defense, Report to Congress on Government-Owned Unaccompanied Housing, February 2013, 9, 

accessed June 1, 2014, http://www.acq.osd.mil/ie/fim/library/HAP%20files/2013%20-

%20Report%20to%20Congress%20on%20Govt-Owned%20Unaccompanied%20Housing.pdf. 196 Ibid. 
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their family to a new duty location and continue to draw BAH (with dependents) for 

their previous duty location.197

Historical Context 

The roots of military housing began with the United States Constitution, which 

specifically prohibited the British practice of quartering soldiers in private homes.198

Responsibility for constructing training cantonments and more permanent structured 

camps belonged to the Army Quartermaster Corps founded in June 1775. The War 

Department split the responsibility for housing between the Quartermaster Corps and 

the Army Corps of Engineers following the War of 1812. The Quartermaster Corps 

focused primarily on field military housing, and the Engineers Corps eventually 

constructed more permanent military housing for soldiers and their families. 

There were four major development periods for family housing in the U.S. military. The 

first took place in the late 19th century and early 20th century. The Quartermaster 

Corps “developed standardized plans and initiated a major effort to improve the 

quantity and quality of family housing.”

199

The second major housing development period came after World War I during the 

Great Depression. In response to the stock market collapse, President Hoover ordered 

Federal agencies to expedite public works projects, triggering the issuance of housing 

contracts. “This effort carried on during the Roosevelt Administration, up until the 

outbreak of WWII.”200 

The third period occurred during the 1950s, when more than 55,000 family housing 

units were added to the military inventory. In 1949, the Congress passed the Wherry

Bill, providing mortgage insurance through the Federal Housing Administration to 

private developers agreeing to construct housing on military bases. Congressional 

limitations on the amount of money which could be spent on Wherry housing units 

made it difficult to construct adequate numbers of units in high-cost areas. Military 

personnel paid rent on the units directly to the developers out of their housing 

allowance. In 1955, the Congress established a variation on the program named 

Capehart Housing.201 The Capehart program relied on private developers to construct 

housing units, but instead of having personnel pay rent, the government paid off the 

principal and interest on the units during a 25-year period. As part of the Capehart 

program, all Wherry Housing units were purchased by the Government. During the 

Kennedy Administration, the Secretary of Defense asserted a new military housing 

policy, stating, to the extent possible, the military would depend on the civilian 

economy to provide housing for service families.202 

The fourth major family housing development period took place during the Reagan 

Administration. The Military Departments used a variety of funding and construction 

programs to build housing units, including direct Congressional appropriations, 

 

197 Unaccompanied Personnel Housing for Junior Enlisted Members, LMI Report HCS80T1, 1-3 (2010) (as contracted 

for by the Department of Defense Office of Housing and Competitive Sourcing (H&CS)).

198 U.S. CONST. amend. III. 199 Department of Defense, The Cost of Maintaining Historic Military Family Housing, accessed June 1, 2014, 

http://www.denix.osd.mil/cr/upload/DODHOUSINGFINAL_1.PDF. 200 Ibid. 201 Ibid. 202 Ibid.
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Section 801, Section 802, and Real Estate out-leasing programs.203 “Section 801” (10 

U.S.C. § 2836) was essentially a build-to-lease program. The Services signed a 20-year 

lease/purchase agreement with a private developer. The Services built approximately 

11,000 houses, including more than 4,000 for the Air Force.204 “Section 802” 

(10 U.S.C. § 2837), a housing rental-guarantee program, obligated the Services to

guarantee ninety-seven percent occupancy or subsidize payments under a twenty fiveyear agreement with a private developer. Military members had first priority to rent the 

houses and paid the developer directly. However, rents were related to local basic 

allowance for quarters/variable housing allowance (BAQ/VHA) levels, which were 

fifteen percent below the median national housing costs and produced little interest 

from private developers. The Marine Corps used the Section 802 program to build 276 

houses.”

205

“Real estate out-leasing program (10 U.S.C. § 2667) allowed the Services to lease 

Government land to private developers to build houses with terms up to ninety-nine 

years. There was no rental guarantee. The developer assumed all the risk. Rents 

related to local BAQ/VHA levels but adjusted for inflation in later years. Individual 

Service members retained their housing allowances and entered into a lease with the 

developer.”

206

In 1992, it was determined that approximately 43 percent of military housing 

(approximately 58,000 units) needed extensive repair. DoD estimated that $16 billion, 

in the course of 20 years, was needed to complete the required renovations and 

improvements. DoD set a goal of revitalizing, replacing, or demolishing inadequate 

housing using MILCON and privatization by 2007.207 

MHPI provided an alternative to traditional military funding and construction. MHPI 

was designed and developed to attract private-sector financing and expertise and 

innovation to provide necessary housing faster and more efficiently than traditional 

military construction processes would allow.

MHPI, to which the Congress provided permanent authorities in FY 2005,

208 helped 

DoD alter the way it funds and builds housing in the following ways: 

 offering incentives to the private sector for assistance 

 leveraging private-sector financing

 giving the authority for government direct loans and guarantees of privatesector loans 

 using conveyance or lease of property and housing, investments in joint 

ventures, and differential lease payments209

 

203 Ibid. 204 Suzanne Chapman, “The Housing Problem,” Air Force Magazine, June 1996, accessed June 1, 2014, 

http://www.airforcemag.com/MagazineArchive/Pages/1996/June%201996/0696housing.aspx.

205 Ibid. 206 Ibid, 38. 207 Overview: Military Housing, DUSD(I&E), accessed March 18, 2014,

http://www.acq.osd.mil/housing/housing101.htm. 208 See generally Ronald W. Reagan National Defense Authorization Act for 2005, Pub. L. No. 108-375 107, Section 

2805) (2005). 209 “Overview: Military Housing,” DUSD(I&E), accessed March 18, 2014,

http://www.acq.osd.mil/housing/housing101.htm. 
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Under MHPI, private developers renovate or replace old, substandard military housing 

and, when necessary, build additional units. The developers become the owners and 

managers of those properties and the landlords for the military families in those 

homes. Military families are able to live in updated, repaired, or newly constructed 

homes that are maintained as part of a 50-year lease. In many areas, this approach 

addressed both the poor condition of DoD-owned housing and the shortage of quality, 

affordable, private housing. MHPI projects are approved by the Executive Office of the 

President (Office of Management and Budget (OMB)) and the Congress.210 As of 

February 2012, 105 projects had been approved and awarded211 representing 

191,905 homes.212

MHPI authorities have also been applied UH. Between 1996 and 2013, the Army and 

Navy implemented seven privatized UH projects. The Air Force and Marine Corps have 

not used the privatization authorities and are relying on MILCON funds to maintain 

and improve their UH inventory. 213

Financial Summary 

The FY 2013 cost of providing military housing was approximately $3.2 billion. This 

amount included the cost of government-owned or leased family housing, UH, and the 

Family Housing Improvement Fund.214 The FY 2013 DoD cost for government-owned 

family housing was $1.49 billion. This cost included $136 million for military 

construction and $1.35 billion for operations and maintenance.215 The FY 2013 DoD 

cost for UH was approximately $1.78 billion, including $978 million in military 

construction costs216 and $710 million in O&M Focused Funding (above normal 

sustainment funding).217 The $3.2 billion total does not include normal sustainment 

funding for the UH; that spending is included in other operations and maintenance 

budgets and is not separately reported.218 The total also does not include the cost of 

providing BAH for those who do not live in military housing.

FY 2013 DoD housing costs also included $2 million for the Family Housing 

Improvement Fund (FHIF).219 DoD may use funds available in the FHIF to “carry out 

activities such as required in connection with the planning, execution, and 

administration of contracts’ funds that are otherwise available to DoD for such types 

of expenses.”

220 In addition, with approval from OMB, the Services can transfer 

 

210 “Military Housing Privatization, Housing Projects, Project Awards as of February 2012,” DUSD(I&E), accessed 

March 18, 2014, http://www.acq.osd.mil/housing/projawarded.htm. 211 Ibid. 212 Ibid, Appendix 3, 24-26. The total of 191,905 privatized homes is calculated by summing the total number of 

privatized homes for each Service as shown. 213 See generally Government Accountability Office, Military Housing: Information on the Privatization of Unaccompanied 

Personnel Housing, GAO-14-313 (2014). 214 Cost information provided by Office of the Secretary of Defense Personnel and Readiness, e-mail to MCRMC, 

May 14, 2014. 215 Ibid. 216 Office of the Under Secretary of Defense (Comptroller), Department of Defense Budget, Fiscal Year 2015, Construction 

Programs (C-1), accessed June 1, 2014,

http://comptroller.defense.gov/Portals/45/documents/defbudget/fy2015/fy2015_c1.pdf. 217 Department of Defense, Report to Congress on Government-Owned Unaccompanied Housing, February 2013, 5, 

accessed June 1, 2014, http://www.acq.osd.mil/ie/fim/library/HAP%20files/2013%20-

%20Report%20to%20Congress%20on%20Govt-Owned%20Unaccompanied%20Housing.pdf. 218 Ibid, 2 and 5. 219 Office of the Under Secretary of Defense (Comptroller), Department of Defense Budget, Fiscal Year 2015,

Construction Programs (C-1), accessed June 1, 2014, 

http://comptroller.defense.gov/Portals/45/documents/defbudget/fy2015/fy2015_c1.pdf. 220 Armed Forces, 10 U.S.C. § 2883(d).
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MILCON funds to the FHIF for use as a Government equity (cash) contribution toward

new MHPI projects.221 These MILCON funds can help reduce the amount of debt 

required by the privatization partner for initial project construction, when a rental 

income stream is not yet available. According to the 2012 MHPI Program Evaluation 

Plan Executive Report, from the establishment of MHPI in 1996 to March 31, 2012, 

“The Government has contributed $3.6 billion to support privatization, primarily 

through equity investments and funding the scored costs for Government Direct Loans 

and Government Loan Guarantees. For this Government contribution, the program is 

receiving almost $30 billion in project development.”

222

5.1.8. MILITARY LODGING

DoD operates a variety of lodging facilities to accommodate Service members while on 

official and unofficial (recreational) travel. According to DoD Instruction 1015.11, the 

military lodging program supports, “readiness, mission accomplishment, and 

improved productivity by providing quality, affordable lodging and hospitality services 

for a mobile military community.”

223 DoD Instruction 1015.11, directs that, 

“Personnel staying in DoD lodging shall have the same quality facilities, furnishings, 

and services, as they would find in a good quality, mid-level, commercial hotel.”

224

There are four main categories of military lodging based on the types of travelers that 

they primarily support: temporary duty, permanent change of station, military 

treatment facility, and recreational.225

5.1.8.1. TEMPORARY DUTY LODGING/TRANSIENT 

UNACCOMPANIED PERSONNEL HOUSING 

Temporary Duty (TDY) lodging accommodations are provided to meet the needs of 

official travelers temporarily assigned to an installation other than their permanent 

duty station in the conduct of official duties (e.g., training, meetings).226 In FY 2013, 

DoD operated approximately 52,000 TDY lodging rooms. The occupancy rate was 

68 percent, and these facilities employed nearly 7,800 individuals, including many 

military family members.227

TDY lodges are known by a variety of official names, including Visiting Officer 

Quarters (VOQ), Visiting Enlisted Quarters (VEQ), and Distinguished Visitor Quarters 

(DVQ). Each of the Services has branded its lodging differently (i.e., Navy Gateway 

Inns & Suites, Inns of the Corps, Army Lodging, and Air Force Inns).228 TDY lodging 

 

221 Office of the Secretary of Defense Housing & Competitive Sourcing, Military Housing Privatization 101, briefing 

presented by Lisa Tychsen, January 26, 2005, accessed June 1, 2014, 

http://www.phma.com/osd/TYCHSEN.ppt&sa=U&ei=ZJtFU_jDIuPLsQSg_YDIDg&ved=0CDgQFjAF&usg=AFQjCNEYxPj

Zu3VRPkHl0TEBJ6tpLw3Ddg. 222 DUSD(I&E), Military Housing Privatization Initiative Program Evaluation Plan Executive Report, March 31, 2012, 23, 

accessed June 1, 2014, http://www.mcrmc.gov/public/docs/library/qol/MPHI_House_Report_109-

95_PEP_Exec_Rpt_sent_to_Congr_20_Feb_2013_data_as_of_31_Mar_2012.pdf. 223 Lodging Policy, DoDI 1015.11, 2 (2011). 224 Ibid. 225 Lodging Program Resource Management, DoDI 1015.12, 2-4 (1996). 226 Ibid, 2-3. 227 Information received from OSD(P&R), Military Community & Family Policy, e-mail to MCRMC, May 14, 2014. 228 “DoD Lodging,” Department of Defense, accessed February 28, 2014, http://www.dodlodging.net/. 
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may also be used by individuals who are in a PCS status or on recreational travel, but 

on a lower priority, space-available basis. 

TDY lodges are subsidized with appropriated funds, thereby reducing room rates. 

DoD promotes the use of military lodging over commercial alternatives to achieve high 

occupancy rates and reduce official travel costs.229 The Joint Federal Travel Regulation 

(JFTR) requires uniformed Service members on orders to a U.S. installation (as 

opposed to a geographic location like a town or city) to use Government quarters at the 

site to which they are temporarily assigned if Government quarters are available.230 If a 

Service member chooses to use nongovernment lodging when government lodging is 

available, reimbursement is limited to the cost of government lodging.231 

Civilian employees of DoD can be encouraged to stay in military lodging; however, the 

Joint Travel Regulations (JTR) prohibit directing or requiring civilian employees to use 

Government quarters, including military lodging. In addition, the reimbursement for 

civilian employees cannot be limited to the cost of Government lodging.232

Although official travel costs (including lodging) are paid with appropriated funds 

(APF), once the funds are paid to a military lodge, they become nonappropriated funds 

(NAF).233 As NAFs, “They are used for the collective benefit of the authorized patrons 

who generate them”

234 and thus are used to operate, maintain, or improve lodging. Per 

DoD Instruction 1015.12, “NAFs that are generated from lodging programs or 

associated with lodging programs shall only be used within lodging programs unless 

they are organized as part of the single MWR [Morale, Welfare, and Recreation] 

fund.”

235

TDY lodging is funded with a combination of APF and NAF. DoD Instruction 1015.12 

provides a listing of all lodging expense elements with the associated funding source 

(APF or NAF).236 For example, housekeeping services for guest rooms are funded with 

NAF, while housekeeping services for common areas are funded with APF.237 Service 

charges (room rates) are set at the lowest level possible to reduce travel costs yet 

recover authorized NAF expenses including planned room furnishings, refurbishment, 

amenity upgrades (as specified in a five-year lodging plan), and other specified costs.238 

APF cover many of the common costs, including major construction, renovation, 

administration, and common support services (e.g., utilities, repair and maintenance, 

trash removal). This subsidized approach, along with an exemption from state and 

 

229 Lodging Policy, DoDI 1015.11, 2 (2011). 230 Joint Federal Travel Regulations, Volume 1, Uniformed Service Members, U2H-1 (2014). See also Defense Travel 

Management Office website, Government Lodging, accessed June 9, 2014, 

http://www.defensetravel.dod.mil/site/govLodging.cfm. 231 Joint Federal Travel Regulations, Volume 1, Uniformed Service Members, U2H-1 through U2H-3 (2014). 232 Joint Travel Regulations, Volume 2, Department of Defense Civilian Personnel, as updated, C2H-1 (2012). See also 

44 Comp. Gen. 626, GAO B-156187 (1965). 233 Joint Travel Regulations, Volume 2, Department of Defense Civilian Personnel, as updated, C2H-1 through C2H3 

(2012).

234 Lodging Program Resource Management, DoDI 1015.12, Enclosure 2, 17 (1996). 235 Ibid, 6. 236 Lodging Program Resource Management, DoDI 1015.12, Enclosure 4, “Lodging Program (Category A) APF Support 

Table of Authorization,” 22 (1996). 237 Ibid. 238 Ibid, 2-3.
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local taxes (e.g., sales tax, hotel tax, business tax), typically result in room rates that 

are lower than comparable commercial lodging.239

TDY lodging is categorized as Mission Sustaining (Category A) in that it is considered 

essential in meeting the organizational objectives of the Military Services.

240 Like 

Category A MWR programs, TDY lodging, “promote[s] the physical and mental wellbeing of the military member, a requirement that supports accomplishment of the 

basic military mission.”

241 

5.1.8.2. PERMANENT CHANGE OF STATION LODGING/TEMPORARY 

LODGING FACILITIES 

Permanent Change of Station (PCS) lodging provides accommodations for Service 

members and their families who are in transition between permanent duty stations. 

Rooms normally include a kitchen242 and may be located in the same building as TDY 

lodging. PCS lodging may also be used by individuals who are in a TDY status or on 

recreational travel, but on a lower priority, space-available basis. 

Officially referred to as Temporary Lodging Facilities (TLF) or Guest Houses, most 

Services have branded their PCS lodging the same as their TDY lodging (i.e., Army 

Lodging, Air Force Inns, and Inns of the Corps). Navy is the exception, branding TDY 

lodges as Navy Gateway Inns & Suites and PCS lodging as Navy Lodges.243

In FY 2013, DoD managed 7,381 rooms in this category. Their occupancy rate was 

81 percent, and they employed more than 1,661 individuals.

244

Similar to TDY lodging, PCS lodges are exempt from taxes and receive a combination 

of APF and NAF.

245 In terms of which funds are used for individual cost elements, the 

only difference between TDY and PCS lodging is that major construction for PCS 

lodging is funded by NAF (rather than APF, like it is for TDY lodging).246 This means 

that the PCS lodging system must generate sufficient funding to pay for the initial 

construction or replacement of its lodging facilities.

PCS lodging can either be categorized as Mission Sustaining (Category A) or Revenue 

Generating (Category C).

247 PCS lodging is categorized as revenue generating when it is 

funded or operated by either an MWR program or a military exchange.248

Like Category C MWR programs, lodging is considered to be a “highly desirable” 

program, providing services that, “contribute to building a sense of community and 

enjoyment.”

249

 

239 Government Accountability Office, “Army’s Privatized Lodging Program Could Benefit from More Effective Planning,” 

GAO-10-771, 11 (2010). 240 Lodging Program Resource Management, DoDI 1015.12, Enclosure 3, 19-20 (2010). 241 Military Morale, Welfare, and Recreation (MWR) Programs, DoDI 1015.10 (2009). 242 Lodging Program Resource Management, DoDI 1015.12, 3, 21 (1996). 243 “Department of Defense Lodging,” DoD Lodging, accessed February 28, 2014, http://www.dodlodging.net/. 244 Information received from OSD(P&R), Military Community & Family Policy, e-mail to MCRMC, May 14, 2014. 245 Lodging Program Resource Management, DoDI 1015.12, Enclosure 4, 22 (1996). 246 Ibid. 247 Ibid, 3. 248 Ibid, Enclosure 3, 19.
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5.1.8.3. RECREATIONAL LODGING

Recreational lodging programs include a wide range of accommodations from camping, 

to unofficial lodging programs (e.g., cabins, cottages, trailers and recreational vehicle 

parks), to military resorts known as Joint Service Facilities (JSFs) and Armed Forces 

Recreation Centers (AFRCs).250 This lodging is available to Service members, retirees, 

their families, and other eligible patrons (e.g., un-remarried surviving spouses, DoD 

and Coast Guard civilians and their families when stationed outside the United States) 

for off duty, recreational use. In addition to accommodations, some recreational 

lodging options offer rental equipment and other discounted services.

AFRCs offer resort style accommodations. AFRCs are operated by the Army and are 

located in Hawaii (Honolulu), Florida (Orlando), South Korea (Seoul), and Germany 

(Garmisch-Partenkirchen). Providing similar accommodations, the Navy operates a 

JSF in Japan (Tokyo).251

In addition to the AFRCs and JSFs, the FY 2013 portfolio of recreational lodging 

facilities included 147 recreation areas, 71 hotel-like facilities, 1,072 cabins, 

500 cottages, 224 trailers, 164 RV/trailer parks, and 109 campgrounds.252

Except for camping (Category B, Basic Community Support Programs), recreational 

lodging options are categorized as Revenue Generating Programs (Category C), 

receiving limited APF support.253 Patrons are charged fees that cover most expenses.254

5.1.8.4. MILITARY TREATMENT FACILITY LODGING

Military Treatment Facility (MTF) lodging provides a home-like setting for patients of a 

nearby MTF, as well as their families. These facilities are built, furnished, and donated 

to the military by charitable organizations (e.g., Zachary and Elizabeth M. Fisher 

Armed Services Foundation).255 DoD Instruction 1015.12 specifies that, 

The local MTF Commander controls the operation of these houses. These are 

classified as a supplemental mission fund, special NAFI, separate from the 

Lodging, Billeting, or MWR fund, to account for NAF revenues from service 

charges, sundry sales, interest income, fund raising contributions and other 

income. The MTF commander establishes service charges to pay NAF 

operating expenses. The initial building, including furnishings, appliances, 

etc., for a complete and usable facility are initially provided with funds 

donated by a foundation; e.g., Zachary and Elizabeth M. Fisher Armed 

Services Foundation. Construction, replacement, and facility maintenance of 

these donated facilities are appropriated fund (APF) requirements.256

 249 Military Morale, Welfare, and Recreation (MWR) Programs, DoDI 1015.10, Enclosure 5, 29 (2011). 250 Lodging Program Resource Management, DoDI 1015.12, 3 (1996). 251 Information provided by Office of Secretary of Defense Personnel and Readiness, e-mail to MCRMC, May 14, 2014. 252 Ibid. 253 Lodging Program Resource Management, DoDI 1015.12, 20, 21, and 25 (1996). 254 Information provided by Office of Secretary of Defense Personnel and Readiness, briefing to MCRMC, October 30, 

2013. 

255 Lodging Program Resource Management, DoDI 1015.12, 3-4 (1996). 256 Ibid, 4.
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As discussed above, the management and funding models can vary between the 

different lodging types and different Military Services. The Army and Air Force each 

manage their TDY and PCS lodging together, yet the Navy and Marine Corps divide 

official lodging operations, managing separate TDY and PCS lodging programs. The

Nonappropriated Fund Instrumentality (NAFI) structures vary as well. Table 8 

summarizes these variations.257

Table 8. Military Lodging Overview258

Component Type of Lodging

Non-Appropriated 

Fund Instrumentality 

(NAFI)

Management 

Organization 

Army TDY and PCS (Army Lodging)

Recreational

AFRCs

Military Treatment Facility

Lodging Fund

MWR Fund

AFRC/JSF Fund

MTF Fund

IMCOM, G9

IMCOM, G9

IMCOM, G9

Medical Command

Air Force TDY and PCS (Air Force Inns)

Recreational

Military Treatment Facility

Lodging Fund

MWR Fund

MTF Fund

AF Services

AF Services

AF Services

Navy TDY (Navy Gateway Inns & Suites)

PCS (Navy Lodge)

Recreational

JSF New Sanno Hotel

Military Treatment Facility

Lodging Fund

Lodging Fund

MWR Fund

AFRC/JSF Fund

MTF Fund

CNIC

NEXCOM

CNIC

CNIC

CNIC

Marine Corps TDY (Marine Corps Lodging)

PCS (Inns of the Corps)

Recreational

Lodging Fund

MWR Fund

MWR Fund

Installations & Logistics

MCCS

MCCS

The information above only includes Army TDY and PCS lodging that is located 

outside the contiguous United States (20 locations, 1,951 rooms) and a limited 

number (2,215 rooms at four locations) within the contiguous United States (Fort Lee, 

Fort Benning, Fort Irwin, and the Judge Advocate General School).259 The remaining 

official Army lodging (TDY and PCS) in CONUS, Hawaii, and Puerto Rico is excluded, 

because it has been privatized.260 In 2003, the Army determined that 80 percent of the 

Army lodging inventory261 did not meet Army lodging standards and the associated 

recapitalization costs were estimated at more than $1 billion.

262 Building on MHPI,263

the Army entered into a lease with a commercial entity, conveying most existing 

lodging facilities in CONUS, Hawaii and Puerto Rico.264 The developer engaged a large 

international hotelier, raised the necessary private capital, assumed responsibility, 

 

257 Information provided by Office of Secretary of Defense Personnel and Readiness, briefing to MCRMC, October 30, 

2013.

258 Definitions: IMCOM G9: U.S. Army Installation Management Command, G9: Morale, Welfare and Recreation; AF 

Services: Air Force Services Agency (AFSVA); CNIC: Commander, Navy Installations Command; NEXCOM: Navy 

Exchange Service Command; MCCS: Marine Corps Community Services.

259 Information provided by Office of Secretary of Defense Personnel and Readiness, e-mail to MCRMC, May 14, 2014. 260 “Locations,” Privatized Army Lodging (PAL), accessed April 10, 2014, 

http://www.pal.army.mil/programinformation/locations.html. 261 Government Accountability Office, “Army’s Privatized Lodging Program Could Benefit from More Effective Planning,” 

GAO-10-771, 1 (2010). 262 Privatization of Army Lodging (PAL) Group, A Report to Congress, 3, March 12, 2010. 263 National Defense Authorization Act for FY 1996, Pub. L. No. 104-106, §§ 2801-2841 (1996), codified as amended at 

Armed Forces, 10 U.S.C. §§ 2871 et seq., Alternative Authority for Acquisition and Improvement of Military Housing. 264 “PAL Locations,” Privatized Army Lodging (PAL), accessed April 10, 2014, 

http://www.pal.army.mil/programinformation/locations.html. 
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and started renovations and replacements of lodging facilities.265 As of 2011, the 

Privatization of Army Lodging (PAL) program had privatized 8,039 rooms on 

21 installations.266 The rate charged to official travelers is capped at the weighted 

average of 75 percent of the lodging per diem across the portfolio.267 The room rates 

cover all operational costs, on-going recapitalization, and future sustainment 

requirements.268 There are no occupancy or financial guarantees made by the Army to 

the owner-developer.269 DoD policy does not require official travelers to use these 

facilities; however, priority is given to official travelers.270 As reported to the Congress 

in 2010, 95 percent of PAL customers were official travelers (on military orders) and 

5 percent were unofficial travelers.271

Beneficiaries 

The following groups are examples of those who are eligible to use official military 

lodging:272

 active-duty Service members on PCS or Temporary Assigned Duty (TAD) orders 

and their family members, or family members alone when traveling in a PCS 

status

 active-duty Service members who are single and nonprimary custodial parents, 

during custodial or other visitation periods with minor dependent children

 Reserve Component members on active duty or on active duty for training and 

during periods of scheduled inactive-duty training at an installation

 DoD and Coast Guard civilians (both APF and NAF) on TAD orders

 DoD and Coast Guard civilians (both APF and NAF) on PCS orders and their 

family members or family members alone OCONUS

 DoD sponsored foreign nationals on TAD orders

 Military Service family members on medical TAD orders

 families, relatives, guests of hospitalized Service members 

 active and retired Service members and their family members undergoing 

outpatient treatment at a medical facility who must stay overnight in lodging

 honorable discharged veterans with 100 percent Service connected disability 

and involuntary separated members under the Transition Assistance 

Management Program.

 Congressional Medal of Honor recipients

 guests of the Military Services as determined by the installation commander

The following groups are eligible to use official military lodging on a space available 

basis:273

 

265 Privatization of Army Lodging (PAL) Group, A Report to Congress, March 12, 2010, 3, 12, 15, provided by U.S. Army 

HQDA ACSIM, e-mail to MCRMC, April 18, 2014. 266 Department of Defense, Military Housing Privatization Initiative, Program Evaluation Plan, Executive Report, as of 

March 31, 2012, 15, accessed June 1, 2014, http://www.acq.osd.mil/housing/PEP%20Exec%20Report%20-

Jun2010.pdf. 267 Ibid. 268 Ibid, 29. 269 Government Accountability Office, Army’s Privatized Lodging Program Could Benefit from More Effective Planning, 

accessed June 1, 2014, http://www.gao.gov/assets/310/308068.pdf 270 “PAL Locations,” Privatized Army Lodging (PAL), 38, accessed April 10, 2014, 

http://www.pal.army.mil/programinformation/locations.html.

271 Ibid. 272 “Lodging Guest Eligibility,” Inns of the Corps, accessed June 1, 2014, 

https://www.innsofthecorps.com/lodging_guest_eligibility.htm. Note that eligibility requirements for lodging are not 

currently defined at the DoD level. Service-level requirements are consistent with minor differences.
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 active-duty Service members and Reserve Component members in a nonduty

status and/or their family members

 Service retirees, retired Reserve Component members with pay and retired 

without pay (gray area), and their family members

 relatives and guests of Service members assigned to the installation

 DoD civilians (APF and NAF) on PCS orders and their family members in the 

continental United States

 DoD civilians (APF and NAF) in a nonduty status and their accompanying 

family members

 unremarried surviving spouses of personnel who died while on active duty or 

while in retired status and unremarried former spouses who were married to 

military members for at least 20 years while the military member was on active 

duty

 nonmilitary uniformed personnel of USPHS and NOAA, and foreign military 

personnel in an active-duty status, when authorized by the installation 

commander

Historical Context 

For centuries, military organizations have provided basic necessities (e.g., food, 

shelter) to their members as a fundamental benefit of military service.274 Setting aside 

the harsh conditions faced in war zones, military “shelter” has evolved from basic 

encampments to modern standards that include a variety of permanent duty station 

options (e.g., barracks, military housing, pay allowances for commercial housing) and 

temporary duty options (e.g., military lodging, commercial lodging with 

reimbursement). In most situations, military lodging ensures affordable, quality 

lodging facilities for authorized travelers. For remote installations, military lodging 

may be the only practical option because off-installation, commercial lodging is either 

not available or not affordable.

Since the development of the All-Volunteer Force, it has been shown that the quality of 

military accommodations for Service members and their families is a relevant factor in 

their retention.275 DoD has made significant investments in the last decade, 

eliminating most of the major repair and recapitalization backlog.276 Lodging 

privatization programs (primarily in the Army) have provided access to additional 

private funding to support these efforts.277

The MTF lodging category was developed in response to philanthropic efforts to assist 

Service members and their families undergoing treatment at MTFs. Wanting to create 

an on-installation equivalent of a Ronald McDonald House, a Nightingale House was 

established on Wright Patterson Air Force Base in 1990.278 The same year, the wife of 

 273 “Lodging Guest Eligibility,” Inns of the Corps, accessed April 10, 2014,

https://www.innsofthecorps.com/lodging_guest_eligibility.html, April 10, 2014. 274 “U.S. Army MWR History,” U.S. Army MWR, accessed May 21, 2014, 

http://new.armymwr.com/commander/history.aspx. 275 “What is important to you and your family?” National Military Family Association, accessed June 1, 2014, 

http://www.militaryfamily.org/assets/pdf/Web-Executive-Summary-7.pdf. See also “NMFA Survey Summary,” 

National Military Family Association, accessed June 1, 2014, http://www.militaryfamily.org/assets/pdf/SurveySummary-edited.pdf. 276 Information provided by Office of Secretary of Defense Personnel and Readiness, e-mail to MCRMC, May 14, 2014. 277 Government Accountability Office, Army’s Privatized Lodging Program Could Benefit from More Effective Planning, 

What GAO Found, accessed June 1, 2014, 2014, http://www.gao.gov/assets/310/308068.pdf. 278 “History,” Fisher Nightingale Houses, Inc., accessed February 28, 2014, http://www.fnhi.org/about.html. 
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the Chief of Naval Operations presented to philanthropists Zachary and Elizabeth 

Fisher the need for temporary lodging facilities for families at major military medical 

centers.279 Since 1990, the Fisher House Foundation has opened 62 Fisher Houses, 

serving more than 180,000 families and providing more than 5 million days of lodging, 

saving military families more than $200 million in lodging and transportation costs.280

The MTF lodging category addresses the transfer and operation of these donated 

facilities.281

Financial Summary 

Military lodging costs are funded with a combination of APF and NAF.282 The APF 

funding for FY 2013, covering direct lodging costs for TDY and PCS lodging, was 

$65 million.

283 Some APF cost elements are indirectly funded through installation-level 

service organizations and are thus not reflected in this amount. These indirectly 

funded costs typically include services such as utilities, maintenance of common 

areas, security, snow removal, etc.284 With the exception of camping facilities, 

recreational lodging, as revenue generating programs (Category C), receive only limited 

APF support.285

In FY 2013, official military lodging (TDY and PCS) collected $592 million in revenue to 

cover NAF expense elements.286 Most of this originated as APF (travel and personnel 

budgets), but a small amount is attributable to recreational travelers using lodging on 

a space-available basis, receiving no government reimbursement.287 As NonAppropriated Fund Instrumentalities (NAFIs), lodging programs have the flexibility to 

set aside these NAFs to address future requirements.288

5.1.9. MORALE, WELFARE, AND RECREATION

DoD provides Morale, Welfare, and Recreation (MWR) programs to maintain individual, 

family and mission readiness during peacetime, contingencies, and war.289 These 

programs are designed to build healthy military families and communities, encourage 

positive values, and provide for physical, social and cultural needs.290 MWR includes a 

wide range of programs and services from fitness and outdoor recreation, to libraries, 

bowling centers, and organized social activities. Active living is promoted in an effort to 

build positive self-esteem and esprit de corps—considered to be essential qualities for 

personal and professional success.291 These activities are intended to lead to improved 

personal health, personal and family resilience, and strong military families.292

 

279 “Our History,” Fisher House, accessed February 28, 2014, http://www.fisherhouse.org/about/our-history/. 280 Ibid. 281 Lodging Program Resource Management, DoDI 1015.12 (1996). 282 Ibid, Enclosure 4. 283 Information provided by Office of Secretary of Defense Personnel and Readiness, e-mail to MCRMC, May 14, 2014. 284 Lodging Program Resource Management, DoDI 1015.12, 22 (1996). 285 Military Morale, Welfare, and Recreation (MWR) Programs, DoDI 1015.10, 30 and 33 (2011). 286 Ibid. 287 Ibid. 288 Armed Forces, 10 U.S.C. § 2783. DoD FMR 7000.14-R, Volume 13, Nonappropriated Funds Policy and Procedures 

(2013). Procedures and Support for Non-Federal Entities Authorized to Operate on DoD Installations, DoDI 1000.15 

(2008). Lodging Program Resource Management, DoDI 1015, 12 (1996). 289 See generally Armed Forces, 10 U.S.C. §§ 2491-2495b. 290 “Achieving Resilience through Morale, Welfare, and Recreation Programs,” Military OneSource, accessed February 1, 

2014, http://www.militaryonesource.mil/mwr. 291 Military Morale, Welfare, and Recreation (MWR) Programs, DoDI 1015.10, 9, para e (2011). 292 Ibid, 2.
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According to DoD Instruction 1015.10, “Throughout the military, MWR programs 

provide high quality recreation opportunities and consistent community support for 

Service members and their families.”

293 Many of the MWR services are located on 

military installations and are similar to those provided by local and state governments. 

“For deployed National Guard, Reserve and active-duty Service members who live far 

from an installation, MWR offers some outreach programs.”

294 MWR programs promote 

military quality of life as well as military recruitment and retention.295

Morale, Welfare, and Recreation programs have different names in each of the 

Services: Army Family and MWR, Marine Corps Community Services, Navy MWR, 

U.S. Air Force Services, and Coast Guard Morale, Well-Being, and Recreation. Each 

provides a variety of recreational programs on and off the installation for Service 

members, their families, and other eligible patrons. Available programs and services 

can vary substantially from one installation to another.296 Each of the Services have 

mechanisms to measure customer demand, usage, and satisfaction, and act upon 

findings through program adjustments, new initiatives, or closures.297 Additional

information is available by Service on the Military OneSource website.298 All Servicelevel MWR programs are organized into three categories: Category A-Mission 

Sustaining Programs, Category B-Basic Community Support Programs, and Category 

C-Revenue Generating Programs.299

5.1.9.1. CATEGORY A - MISSION SUSTAINING PROGRAMS 

Mission sustaining programs are considered essential in meeting the organizational 

objectives of the Military Services by promoting the physical and mental well-being of 

the military member, a requirement that supports the accomplishment of the basic 

military mission.300 Although fees may be charged for some services (i.e., generating

NAF), the DoD standard is to fund Category A MWR programs with APF at a minimum 

of 85 percent of total expenditures.301 This standard is monitored through the routine 

reporting required of all MWR programs.302 Mission sustaining programs include the 

following:

5.1.9.1.1. Armed Forces Entertainment

Service members overseas may be provided free, professional entertainment.303

5.1.9.1.2. Motion Pictures Provided at No Cost to the User

Military Service members located on ships, in isolated areas, and on deployments can 

watch movies licensed for public viewing at no cost.304

 

293 Ibid, 17. 294 Ibid. 295 Ibid, 2, para 4 (a-d). 296 See the following MWR websites: Army Family and MWR, http://www.armymwr.com/; Marine Corps Community 

Services, http://www.usmc-mccs.org/fitnessrec/index.cfm?sid=rf&smid=1; Navy MWR, 

http://www.cnic.navy.mil/ffr/fleet_readiness.html; United States Air Force Services, 

https://www.usafservices.com/Home.aspx. 297 Military Morale, Welfare, and Recreation (MWR) Programs, DoDI 1015.10, 11 (2011) 298 Ibid, 9. See also http://www.militaryonesource.mil. 299 Military Morale, Welfare, and Recreation (MWR) Programs, DoDI 1015.10, 24-31 (2011). 300 Ibid, 24. 301 Ibid, 32. 302 Ibid. 303 Ibid, 24. 
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5.1.9.1.3. Physical Fitness

Fitness and sports programs are provided to develop cardiovascular fitness, strength 

conditioning, flexibility, and muscular endurance. These programs also promote 

healthy lifestyles.305

5.1.9.1.4. Aquatic Training

Aquatic training programs include swimming associated with Service member training. 

These programs do not include recreational swimming programs, which are included 

either in Category B programs or through aquatics centers covered under 

Category C.306

5.1.9.1.5. Library Programs and Information Services

DoD MWR library services and activities may include professional and technical 

education and training, Internet access, transition and career assistance, relocation 

assistance, and leisure needs of the military community. This category does not 

include libraries for which the primary purpose is to provide technical information 

related to military education.307 Components may include library buildings, 

multimedia resource centers, and information centers.308

5.1.9.1.6. Basic Social Recreation Programs

Basic social recreation programs provide opportunities for social interaction, selfexpression, leisure pursuits, and cultural and educational activities that appeal to all 

segments of the community.309

5.1.9.1.6.1. Single Service Member Programs

Single Service member programs support the overall quality of life for single Service 

members ages 18 to 25 by offering diverse programs and services that appeal to this 

age group. These programs encourage and assist single Service members in identifying 

and planning for recreational and leisure activities.310

5.1.9.1.6.2. Category A Recreation Center Programs

Category A Recreation Centers centrally locate MWR programs that provide directed 

and self-directed individual and group activities. Targeted to the DoD community as a 

whole, military personnel are provided opportunities to become involved in their 

community. Centers provide facilities such as Internet cafes, game rooms, video 

games, billiards, table games, table tennis, television and movie rooms, music rooms, 

and classrooms to allow for participation in a variety of social, competitive, and 

educational activities.311

5.1.9.1.7. Shipboard, Company, and Unit-Level Programs

Shipboard, company, and unit-level programs provide activities to maintain mission 

readiness, improve unit teamwork, and create esprit de corps.312

 304 Ibid. 305 Ibid. 306 Ibid. 307 Ibid. 308 Ibid. 309 Ibid. 310 Ibid, 25. 311 Ibid. 312 Ibid. 
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5.1.9.1.8. Sports and Athletics

Sports and athletics provide support for individuals and teams to enhance individual 

fitness and unit teamwork and readiness.313

5.1.9.1.9. Outreach Programs

Outreach programs offer active-duty Service members, National Guard, and Reserve 

members, access to quality of life programs in the civilian community. Under these

programs, DoD has contracted with the Armed Services Young Men’s Christian 

Association (ASYMCA) to offer memberships at local participating Young Men’s 

Christian Associations (YMCAs) for families of deployed Guard and Reserve personnel, 

active-duty Service members assigned to Independent Duty locations, relocated 

spouses of deployed active-duty members, and wounded warriors assigned to a 

community-based Warrior Transition Unit. The free memberships are available at 

more than 2,000 YMCAs in the United States and Puerto Rico. In addition, respite care 

for eligible families is currently offered in nine states that meet DoD child care 

requirements.314

5.1.9.1.10. Warfighter Family Services

Warfighter Family Services (WFS) can provide a variety of support services designed to 

help with an individual’s quality of life. These services may include coordination of

volunteers; solution-focused, nonmedical counseling; preventive counseling to ensure 

healthy lifestyles; crisis assistance; counseling on parenting; and decision-making 

assistance. There are also unit-level programs focused on financial counseling, 

decision-making skills, job seeking, and adjustment to the military environment. 

These support services may be offered as a Category A MWR program at the discretion 

of the Military Services.315

5.1.9.2. CATEGORY B - BASIC COMMUNITY SUPPORT PROGRAMS 

Basic Community Support Programs, “satisfy the basic physiological and psychological 

needs of Service members and their families, providing to the extent possible the 

community support systems that make DoD installations temporary hometowns for a 

mobile military population.”

316 Like most other MWR programs, costs are covered by a 

combination of APF, provided by the Congress, and NAF, collected as usage fees from 

patrons. For Category B, “These support programs should receive substantial amounts 

of APF support but differ from those in Category A in part because of their ability to 

generate NAF revenues. That ability is limited, however, and in no case could they be 

sustained without substantial APF support.”

317 The DoD standard is to fund 

Category B MWR programs with appropriated funds at a minimum of 65 percent of 

total expenditures.318 Examples of Category B programs include the following:

5.1.9.2.1. Child, Youth, and School Support Services

DoD Child, Youth, and School Support (CYSS) Services, regardless of program setting 

or age group, promote the cognitive, social, emotional, and physical development of 

 

313 Ibid. 314 “Outreach to Active, Guard, and Reserve Information,” Military OneSource, accessed June 1, 2014, 

http://www.militaryonesource.mil/mwr/leaders?Contentid+268237. 315 Military Morale, Welfare, and Recreation (MWR) Programs, DoDI 1015.10 (2009), 5 (2011). 316 Ibid, 26. 317 Ibid. 318 Ibid, 33. 
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children and youth. Child care, school-age care, and youth programs are expected to 

achieve the following: meet the basic needs of children and youth in a safe, healthy, 

and nurturing environment; recognize the individual differences of children and youth; 

provide an environment that encourages child and youth self-confidence, curiosity, 

creativity, and self-discipline; employ competent and well-trained personnel; support 

parents in the care and development of their children/youth; and provide referrals to 

family support programs, education, health, and recreation programs.319

DoD CYSS programs support military family quality of life within the context of a 

demanding and mobile military lifestyle. The factors that make child care and youth 

supervision options particularly important to military families include:

 young families with children who live away from their own families

 large numbers of infants and toddlers who have the least available care on or 

off the installation

 military duties requiring child care and youth supervision 10-14 hours per day 

including early morning, weekends, and 24 hours a day, 7 days a week care for 

extended periods of time

 lack of options at remote sites and overseas

 dual and single military parents, along with large numbers of parents whose 

spouses are deployed, temporarily resulting in single-parent situations320

In a statement before the Congress, the Director of Army Child and Youth Services 

noted, “Quality child and youth programs allow Service members to focus on their 

mission, knowing their children are learning and are well cared for in our child care 

programs and their teens are adjusting well to new schools. Military child care and 

youth programs are an incalculable force multiplier.”321

Child and Youth programs have evolved into an integrated system that supports 

eligible children and youth from birth to 18 years of age, with a variety of options, both 

on and off installations.322 Services are primarily provided in DoD child development 

centers, school age facilities, youth centers, and in authorized military Family Child

Care homes on and off the installation.323 The programs offer full-day, part-day, 

before- and after-school, summer, and hourly and extended care options. Full-time, 

24 hours a day, 7 days a week care, and long term options meet unique mission 

requirements.324 All military programs must meet DoD certification standards, the 

equivalent of state licensing, and be nationally accredited.325 Off-installation 

 

319 Child Development Programs (CDPs), DoDI 6060.2, 4 (1998). School-Age Care (SAC) Program, DoDI 6060.3, 2 

(1996). Department of Defense (DoD) Youth Programs (YPs), DoDI 6060.4, 11 (2004). 320 Statement made by M.-A. Lucas, Director, Army Child and Youth Services before the Personnel Subcommittee and 

Children and Families Subcommittee of the Health, Education, Labor and Pensions Committee, United States Senate, 

First Session, 108th Congress, 134, June, 24, 2013. 321 Ibid. 322 See generally Kate Pomper, Helen Blank, Nancy Duff, and Karen Schulman, 2004 Follow-Up Be All That We Can 

Be: Lessons from the Military for Improving Our Nation’s Child Care System (Washington, D.C.: National Women’s Law 

Center, 2004), 1.

323 See generally Child Development Programs (CDPs), DoDI 6060.2 (1998). School-Age Care (SAC) Program, 

DoDI 6060.3 (1996). Department of Defense (DoD) Youth Programs (YPs), DoDI 6060.4 (2004). 324 Ibid. 325 Ibid. 
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community-based programs need to meet standards outlined by DoD in formal 

agreements and contracts.326

Child care and youth supervision programs have been repeatedly linked to Service 

member and family readiness, as well as force retention. In 2013, approximately 

44 percent of active-duty Service members were parents supporting a total of more 

than 1.2 million children. Among those military children, 43 percent were five years 

old and younger and 35 percent were 6-12 years old. More than half of active-duty

spouses (52 percent) are also employed. The DoD Child Development Program System 

of care serves more than 200,000 military children daily from birth to 12 years of age, 

operating more than 750 Child Development Centers and School-Age Care facilities at 

more than 300 locations worldwide, as well as approximately 4,400 Family Child Care 

homes.327

To meet the demand for DoD-operated child care, the first goal is to assist personnel 

who are parents of children younger than the age of six, or who are full-time students, 

in locating at least one affordable option for quality child care.328 The second goal is to 

assist parents of school-age children.329 If care in the on-installation programs is 

unavailable, the next goal is to assist parents locate quality options off the 

installation.330 Lastly, whenever possible, the child development and school-age care 

programs support the needs of personnel for hourly and preschool programs.331 If 

there are no full day/part day options available, a patron is placed on a waiting list.332

Waiting lists are managed locally by priority. First priority goes to children of activeduty military and DoD civilian personnel who are either single parents or whose 

spouse is a military member on active duty or is employed on a full-time basis outside 

of the home.333 A position on the waiting list is normally determined by priority and 

the date that the request for care was filed; however, the installation commander can 

identify additional, mission-related, factors to be considered in this process.334

5.1.9.2.1.1. Child Development Program (CDP)

The Child Development Program (CDP) provides a collection of child care services to

assist military and civilian personnel when balancing the competing demands of 

family life and the accomplishment of the DoD mission, and improve the economic 

viability of the family unit. Per DoD Instruction 6060.2, “Child care is not considered 

an entitlement.”

335 Children of DoD personnel receive child care services in child 

development facilities, including contract locations, family child care homes, and 

alternative locations. The children range from birth through 12 years of age. These 

 

326 “Community-based Child Care for Military Families through Child Care Aware of America,” Military OneSource, 

accessed June 1, 2014, http://www.militaryonesource.mil/cyt/child-care-options?content_id=267337. Lodging Policy, 

DoDI 1015.11, 2 (2011). 327 Department of Defense, Annual Report to Congress on Plans for DoD for Support of Military Family Readiness, 

FY 2013, 8, received from Department of the Army, e-mail to MCRMC, June 1, 2014. 328 Child Development Programs (CDPs), DoDI 6060.2, 18 (1998). 329 Ibid, 3. 330 Ibid. 331 Ibid. 332 Ibid, Enclosure 2, 18. 333 Ibid, 3. 334 “Questions and Answers: About Military Child Care Waiting Lists and Costs,” Military OneSource, accessed June 2, 

2014, 

http://www.militaryonesource.mil/12038/MOS/Articles/QA_AboutMilitaryChildCareWaitingListsAndCosts.pdfm.

335 Child Development Programs (CDPs), DoDI 6060.2, 2 (1987).
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programs provide care on a full-day, part-day, or hourly basis. Programs also focus 

on protecting the health and safety of children, promoting their physical, social, 

emotional, and cognitive development, and enhancing children’s readiness for later 

school experience.336

5.1.9.2.1.1.1. Child Development Center (CDC)

Military Child Development Centers (CDCs) are located on military installations337 and 

provide child care for children ages six weeks to five years of age in full-day, part-day, 

or hourly care programs. Full-day care meets the needs of parents working outside the 

home who require services five hours or more per day on a regular basis, usually at 

least four days per week. Part-day care is generally for working parents for fewer than 

five hours per day and usually fewer than four days per week. Hourly care meets the 

needs of parents requiring short-term child care services on an intermittent basis.338

5.1.9.2.1.1.2. Family Child Care (FCC)

There are also Family Child Care (FCC) services, based in private homes, for children 

ages four weeks to 12 years of age. The Secretary of the Military Service concerned or 

Defense Agency Director and/or Commander must certify the provider as qualified.339

Services are provided for 10 hours or more per week per child on a regular basis for 

compensation. Care may be provided in either on- or off-installation homes.340

5.1.9.2.1.1.3. Community Based Child Care Programs

The DoD works with Child Care Aware® of America to make quality community-based 

child care more affordable and accessible to military families.341 As a nonprofit 

organization, Child Care Aware® of America provides support to more than 800 state 

and local child care resources and referral agencies to help families throughout the 

United States find quality, affordable child care.342 Off-installation, community-based 

programs are specifically designed to help military families with child care needs that 

cannot be accommodated through installation programs.

Child Care Aware® of America’s programs assist military families with locating state 

licensed child care options in the community, provide assistance with child care fees, 

and continue that assistance for up to 60 days following deployment. Assistance is 

also available for up to 60 days for nonmilitary spouses looking for work. Child Care 

Aware® of America’s website helps families find quality child care in the community 

where they live and assists in covering the cost so that it is commensurate with oninstallation child-care fees.343

5.1.9.2.1.1.4. School-Age Care

School-Age Care (SAC) takes place in either facility-based or home-based settings for 

eligible children who require supervision before and after school, during duty hours, 

during school holidays, and during school closures. Programs are required to provide 

 

336 Ibid, 13. 337 Armed Forces, 10 U.S.C. § 1800(1) (2014) (defining “military child development center”). See also Child Development 

Programs (CDPs), DoDI 6060.2, Enclosure 2, 16 (1998). 338 Child Development Programs (CDPs), DoDI 6060.2, Enclosure 2, 16 (1998). 339 Ibid, Enclosure 3, 21. 340 Ibid. 341 “Community-based Child Care for Military Families through Child Care Aware of America,” Military OneSource, 

accessed May 8, 2014, http://www.militaryonesource.mil/cyt/child-care-options?content_id=267337. 342 Ibid. 343 Ibid. 
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safe, supervised, healthy, accountable, and age-appropriate environments for children 

in grades kindergarten through six for children ages five through twelve.344

5.1.9.2.1.2. School Transition Support

School Transition Support focuses on ensuring quality educational opportunities for 

military children affected by mobility, family separation, and transition. Military 

children generally move six to nine times during their K-12 school years, and 

frequently make multiple moves during high school years including their senior year. 

In addition to changing educational environments, they move away from their friends 

and experience disruptions in their routines. As they move from school to school, they 

may encounter different academic standards and courses, issues with access to 

programs, different promotion and graduation requirements, different programs for 

children with special needs, issues with transfer and acceptance of records, and 

separation from a deployed parent (or parents).345

School Transition Support provides programmatic strategies and resources to help 

transitioning military students. The school liaison staff prepares schools and 

installations to respond to the complexities of transitions, and to minimize the 

associated challenges. The collaborative efforts of school systems; national, state, and 

local education agencies; public- and private-sector youth service organizations; 

community groups; and DoD personnel establish a partnership in support of military 

children. The school liaison staff can also directly assist students and their parents, 

coordinating their efforts with local school systems and military resources.346 Each 

Service provides the funding and staff for the School Transition Support program 

differently. Although there is no DoD Instruction to provide overall policy guidance, 

each Military Service strives to meet the program goals, which include the following:

 identify barriers to academic success and develop solutions

 promote parental involvement and educate local communities and schools 

regarding the needs of military children

 develop and coordinate partnerships in education

 provide parents with the tools they need to overcome obstacles to education 

that stem from the military lifestyle347

5.1.9.2.1.3. Youth Programs

Youth Programs (YPs) offer opportunities for children and youth, from kindergarten 

through 12th grade, to develop their physical, social, emotional, and cognitive abilities 

in a series of planned, self-directed activities and events.348 These activities are 

designed to support the acquisition of lifelong skills and facilitate transition to 

adulthood. Youth programs are required to provide a physically and emotionally safe 

environment that includes appropriately trained support staff in designated facilities 

and locations. Youth programs include Education and Youth Development, 

 

344 School-Age Care (SAC) Program, DoDI 6060.3 (1996). 345 “All About Military K-12 Partners” Military K-12 Partners, accessed June 1, 2014, 

http://www.militaryk12partners.dodea.edu/about.cfm. 346 “Military K-12 partners,” Department of Defense Education Activity, 4, accessed March 29, 2014, 

http://militaryk12partners.dodea.edu/resources.cfm?colId=liaison. 347 Ibid. 348 Department of Defense (DoD) Youth Programs (YPs), DoDI 6060.4, 13 (2004).
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Instructional, Recreation, Youth Sports and Fitness, and Youth Sponsorship.349 Per 

DOD Instruction 6060.4, “Youth programs are not considered an entitlement.”

350

YPs operate as an element of the Morale Welfare and Recreation (MWR) program in 

collaboration with other DoD activities such as Family Support Centers, DoDEA 

schools, chapels, Family Advocacy Programs, health providers, and on-base law 

enforcement agencies.351 Partnerships with community organizations may be offered to 

enhance and expand opportunities for children and youth in the community. 

Examples of such organizations are the Boys & Girls Clubs of America (B&GCA), 

Cooperative Extension, and 4-H.352

5.1.9.2.1.3.1. Education and Youth Development Programs

Education and Youth Development programs are designed to provide youth with skills 

to enhance their interests and abilities. The target population are youth who are too 

young to hold a job and too young to drive. These programs focus on citizenship, 

character building, public speaking, and leadership.353

5.1.9.2.1.3.2. Instructional Programs

Instructional programs provide opportunities to develop new skills and learn in handson, informal settings.354 They are designed to complement, expand, and support the 

academic, life skills, and athletic experience of children and youth.355 These programs 

are typically fee-for-service options and are offered in classes that appeal to the 

interests of children and youth. Music, dance, gymnastics, martial arts, photography, 

woodworking, science and technology, gardening, health and safety cooking, 

babysitting, SAT prep, and tutoring may be available depending on the Military Service 

and location.356

5.1.9.2.1.3.3. Recreation Programs

Recreation programs provide opportunities for youth to engage in open recreation 

activities, through which they have an opportunity to learn and socialize in a safe, 

supervised location with their friends. Open activities may include computer labs, 

athletic games, dancing, board games, and watching videos. Activities are available for 

various interests, but are not necessarily directed with staff leading the session.357

These programs take place in youth centers or at a variety of MWR facilities, such as 

golf courses and bowling centers.358

5.1.9.2.1.3.4. Youth Sports and Fitness Programs

Youth sports and fitness programs provide opportunities for children and youth 

(ages 3-18 years) to engage in fun physical activities and to develop lifelong healthy 

habits. A variety of traditional and nontraditional sports, games, and activities teach 

 

349 Ibid. 350 Ibid. 351 Ibid, 14. 352 Ibid. 353 “An Overview of Children and Youth Programs,” Military OneSource, accessed February 20, 2014, 

http://www.militaryonesource.mil/cyt?content_id=267586. 354 Ibid. 355 “Children, Youth & Teens,” Military OneSource, accessed June 1, 2014, http://www.militaryonesource.mil/cyt/. 

See also Military Service websites: http://www.afyouthprograms.com; http://www.myarmyonesource.com/; 

http://www.militaryonesource.mil/navy; http://www.militaryonesource.mil.marines. 356 Ibid. 357 Ibid. 358 Ibid. 
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sportsmanship, team building, goal setting, and self-discipline, along with the values 

of good sportsmanship and teamwork. Sports and fitness programs use standardized 

programs and curriculum from the National Alliance for Youth Sports, 4-H, 

“CHARACTER COUNTS!” and B&GCA. Activities include team sports, individual 

sports, fitness and health, and outreach to private-sector organizations for 

intramurals and skill building.359

5.1.9.2.1.3.5. Youth Sponsorship

Each military installation is required to have “a Youth Sponsorship program to 

facilitate the integration of dependent children of members of the Military Services into 

new surroundings when moving to that military installation as a result of a parent’s 

permanent change of station.”

360 Programs vary at each location but are primarily 

directed toward preteens and teens who are new to an installation as a result of a 

parent’s PCS.361

CYSS Beneficiaries 

DoD instructions provide detailed eligibility information for CDPs, SAC, and YPs.362

Patron eligibility differs among the child development and school-age programs and 

the youth programs.

Eligible patrons of CDPs and SAC include children from birth to 12 years of age363 of

the following:

 active-duty military personnel from the Army, Navy, Air Force, Marine Corps, 

and U.S. Coast Guard

 DoD civilian personnel paid from both appropriated and non-appropriated 

funds

 Reservists on active duty or during inactive duty personnel training

 DoD contractors364

Eligible patrons of YPs include children and youth in grades K–12 of:

 active-duty uniformed Service members

 members of Reserve Components (Ready Reserve, National Guard, Reservists in 

training)

 Reservists on active duty or during inactive-duty training

 other uniformed service retirees 

 others separated from Military Services 

 former and/or surviving spouses 

 other supporters of DoD (as authorized)

 DoD civilian personnel paid from appropriated and non-appropriated funds

 DoD contractors365

 

359 Ibid. 360 Armed Forces, 10 U.S.C. § 1785. 361 Ibid. 362 Child Development Programs (CDPs), DoDI 6060.2, Enclosure 2, 16 (1998). School-Age Care (SAC) Program, 

DoDI 6060.3 (1996). Department of Defense (DoD) Youth Programs (YPs), DoDI 6060.4 (2004). 363 Child Development Programs (CDPs), DoDI 6060.2, Enclosure 2, 13 (1998). 364 Child Development Programs (CDPs), DoDI 6060.2, Enclosure 2, 2-3 (1998). School-Age Care (SAC) Program, 

DoDI 6060.3, 3 (1996). 365 Military Morale, Welfare, and Recreation (MWR) Programs, DoDI 1015.10, 21 (2011).
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CYSS Historical Context 

Originally, military child care services were provided through parent cooperatives, 

“wives clubs,” or other private organizations.366 Child care was operated mainly as 

babysitting on an hourly basis.367 In 1978, DoD issued a directive recognizing child 

care as an official MWR activity.368 Individual Services developed programs, policies, 

and standards, and individual installations established their own operating 

procedures and fees.369 In the 1980s, GAO reports370 and Congressional hearings371

exposed military child care as substantially flawed in several key areas. These 

included insufficient capacity to meet the needs of a changing workforce; unsafe and 

unsuitable facilities; reports of child abuse by caregiving personnel; lack of adequate 

standards or inspections; untrained, under-compensated staff with high turnover; and 

inability of parents to pay for care.

372

The Congress passed the Military Child Care Act of 1989 (MCCA) to improve the 

availability, management, quality, and safety of child care provided on military 

installations. 373 The MCCA established program standards for the operation of child 

care facilities. These include the following: 

 an increase in the military’s mandated contribution to the operation of CDS, to 

a 50 percent match between appropriated funds and parent fees.

374

 a pay increase for child care employees directly involved in providing care

 employment preference for military spouses

 uniform parent fees based on family income

 expanded child abuse prevention and safety

 parent partnerships with CDCs 

 a report on the five-year demand for child care

 subsidies for family home day care

 early childhood education demonstration program (accreditation required by a 

national early childhood accrediting body)375

DoD transformed its child care program from one that was plagued with allegations of 

abuse and poor conditions into an exemplary model of affordability to parents and 

DoD, with availability across the Military Services, and high quality.376 The National 

Women’s Law Center conducted an evaluation of the program after DoD addressed the 

issues and concluded that standards were applied and rigorously enforced through 

 

366 U.S. General Accounting Office, Report to the Secretary of Defense, Military Child Care Programs: Progress Made, 

More Needed, 1982, 1, http://www.gao.gov/assets/140/137668.pdf. 367 U.S. General Accounting Office, Report to Congressional Requestors, Military Child Care: Extensive, Diverse, and 

Growing, 12 (1989) accessed June 1, 2014, http://www.gao.gov/assets/140/137668.pdf. 368 Funding of Morale, Welfare, and Recreation (MWR) Programs, DoDD 1330.2 (1978) (subsequently canceled). 369 U.S. General Accounting Office, Report to the Secretary of Defense, Military Child Care Programs: Progress Made,

More Needed, 1982, 1, http://www.gao.gov/assets/140/137668.pdf. 370Ibid. U.S. General Accounting Office, Report to Congressional Requestors, Military Child Care: Extensive, Diverse, and 

Growing (1989). 371 U.S. General Accounting Office, Report to the Secretary of Defense, Military Child Care Programs: Progress Made, 

More Needed, 1982, 3, http://www.gao.gov/assets/140/137668.pdf. 372 Ibid. 373 Department of Defense Authorization Act of 1989, Pub. L. No. 101-189, 103 Stat. 1352 (codified as amended at 

Armed Forces, 10 U.S.C. §§ 1791 to 1798 (1999)). 374 Child Development Programs (CDPs), DoDI 6060.2 (1993). 375 National Defense Authorization Act for FY 1996, Pub. L. No. 104-106, § 568, 110 Stat. 186, 330 (1996). 376 See generally Kate Pomper, Helen Blank, Nancy Duff, and Karen Schulman, 2004 Follow-Up Be All That We Can Be: 

Lessons from the Military for Improving Our Nation’s Child Care System (Washington, D.C.: National Women’s Law 

Center, 2004), 1.
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inspections and national accreditation requirements and that caregiving personnel 

received systematic training and adequate compensation.377 It was noted that offset 

funding assists parents in affording the child care they need.378

CYSS Financial Summary 

In FY 2013, DoD spent $970 million in appropriated funds on CYSS programs.379 This 

included funding for child development and youth programs. DoD Components that

provide a DoD child development facility-based program must operate, maintain, and 

fund such programs with direct APF at least equal to the amount of fees they collect 

from users.380 DoD Instruction 6060.2 states, “The DoD Component shall ensure the 

amount of direct APF support used for operation of DoD facility-based child care 

programs is not less than the amount of child care fee receipts.”381

The Secretary of Defense is authorized to prescribe regulations establishing fees to be 

charged at military development centers.382 For full-day child development centers and 

school-age care, DoD establishes a range for user fees based on total family income 

(TFI) categories.383 Each Military Service issues more specific fee guidelines, including 

exceptions to the fee schedule.

Table 9 shows military child care fee ranges for 2012-2013 (FY 2013). Based on this 

DoD guidance, weekly fees can range from $140 per week (for TFI above $126,900) 

down to $52 per week (for TFI of $29,865 or lower).384

 

377 Ibid, 3-6. 378 Ibid, 7. 379 “Budget Materials,” Department of Defense, Undersecretary of Defense Comptroller, accessed June 12, 2014, 

http://comptroller.defense.gov/BudgetMaterials.aspx. Department of the Army, Fiscal Year 2015 President’s Budget, 

Submission, 30, 33, 36, 37, accessed June 12, 2014, 

http://asafm.army.mil/Documents/OfficeDocuments/Budget/budgetmaterials/fy15/opmaint//oma-v2.pdf.

Department of the Navy, Fiscal Year 2015 Budget Estimates, 5, accessed June 12, 2014, 

http://www.finance.hq.navy.mil/FMB/15pres/OMN_Vol2_BOOK.pdf. Department of the Navy, Fiscal Year 2015 

Budget Estimates, Operation and Maintenance, Marine Corps Data Book, 6, 7, 8, accessed June 12, 2014, 

http://www.finance.hq.navy.mil/FMB/15pres/OMMC_Vol2_BOOK.pdf. Department of the Air Force, Fiscal Year 2015 

Budget Estimates, Operation and Maintenance, Air Force, 9, accessed June 12, 2014, 

http://www.saffm.hq.af.mil/shared/media/document/AFD-140310-081.pdf. Additional information regarding MWR 

funding provided by the U.S. Coast Guard, e-mail to MCRMC, March 25, 2014. 380 Child Development Programs (CDPs), DoDI 6060.2, 4-5 (1995). 381 Ibid, 24. 382 Armed Forces, 10 U.S.C. § 1793(a). 383 Ibid. 384 Frederick E. Vollrath, Assistant Secretary of Defense for Readiness and Force Management, Department of Defense 

Memorandum, Subject: Department of Defense (DoD) Child Development Program Fee Ranges for School Year (SY) 2012-2013), Attachment

2. 
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Table 9. Child Development Program Fee Ranges

School Year 2012-2013 (FY 2013)

Category Family Income Weekly Fee

Per Child

I $0 – $29,865 $52 - $58

II $29,866 – $36,264 $67 - $73

III $36,265 – $46,930 $84 - $89

IV $46,931 – $58,662 $98 - $103

V $58,663 – $74,661 $112 - $119

VI $74,662 – $86,343 $126 - $130

VII $86,344 – $101,580 $134

VIII $101,581 – $126,975 $137

IX $126,976 + $140

Child and youth programs are a Category B MWR activity, staffed and operated by 

DoD personnel and contractors.385 Accordingly, the targeted level of appropriated 

funding for the operations of YPs is at least 65 percent.386

5.1.9.2.2. Community Programs

Community programs provide opportunities for the general enjoyment of the 

installation community, and they tend to build a sense of community and relieve 

stress.387 Activities may include fun runs, carnivals, and festivals.

5.1.9.2.3. Cable and/or Community Television

Cable and/or community television services are provided to common areas on military 

installations.388 Common areas may include community centers, fitness centers, and 

family centers.

5.1.9.2.4. Recreational Information, Tickets, Tours, and Travel Services

The DoD Information, Tickets, Tours, and Travel Services program provides economic 

opportunities for Service members and their families to satisfy their needs for national, 

regional, and local travel, tours, attractions, and events.389 Military members and 

families can purchase reduced-price tickets to attend events in the surrounding 

community or on vacation travel. 

5.1.9.2.5. Recreational Swimming

These aquatic programs take place in a stand-alone recreational facility that is not 

adjacent to, or part of a fitness center.390 They provide opportunities for recreational 

swimming activities and lap swimming.

5.1.9.2.6. Category B Recreation Centers

Category B recreation centers are available to Service members and their families; 

however, the MWR programs offered in these centers target the DoD community as a 

 

385 Youth Programs (YPs), DoDI 6060.4, Enclosure 3, 13 (2004). 386 Ibid, 13-14. 387 Military Morale, Welfare, and Recreation (MWR) Programs, DoDI 1015.10, 26 (2011) 388 Ibid. See also Military Family Readiness, DoDI 1342.22, 7 (2012). 389 Military Morale, Welfare, and Recreation (MWR) Programs, DoDI 1015.10, 26 (2011). 390 Ibid, 27. 
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whole. These centers accommodate diverse services and are designed for flexibility to 

accommodate changing community interests and needs.391

5.1.9.2.7. Outdoor Recreation Programs

Outdoor recreation programs build a sense of community; support skill development; 

and promote unit cohesion, stress relief and enjoyment. A variety of programs are 

available depending on the location and the Military Service. Directed outdoor 

recreations may provide instruction and structured outdoor recreational activities. 

These can include archery, hunting, fishing, rappelling, hiking, scuba diving, sail 

boarding, backpacking, bicycling, mountain biking, boating, canoeing, and water and 

snow skiing. Outdoor recreation equipment checkout may also be available for 

directed and self-directed participation. Equipment rental fees are often used to 

recover all or part of the costs associated with providing these services.392

5.1.9.2.8. Boating Programs

Boating programs typically include boat checkout and lessons, and may include the 

operation of a marina. They may not include resale or private boat berthing. All boats 

and equipment must be MWR owned and operated.393

5.1.9.2.9. Camping

Camping programs provide small campgrounds with primitive or tent camping as the 

primary activity. They may support participation in adjacent outdoor recreational 

activities.394

5.1.9.2.10. Riding Stables

Riding stables are available at some military locations, with Government-owned or 

Government–leased horses used for recreational riding.395

5.1.9.2.11. Recreational Skill Programs

Recreational skill programs build a sense of community, promote skill development, 

and provide stress relief and enjoyment. These may include amateur radio, performing 

arts (music, drama, and theater), arts and crafts skill development, or automotive skill 

development.396

5.1.9.2.12. Bowling (16 Lanes or Less) 

Bowling programs at centers having 16 lanes or fewer are Category B activities. These 

centers typically offer bowling, bowling instruction, open-play bowling, league bowling 

and tournaments, as well as food and beverages.397 Bowling centers with more than 16 

lanes are categorized as Category C activities,398 as are any resale activities operated 

within a bowling facility (e.g., snack bar).399 

 

391 Ibid. 392 Ibid. 393 Ibid. 394 Ibid. 395 Ibid. 396 Ibid, 28. 397 Ibid. 398 Ibid. 399 Ibid. 
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5.1.9.2.13. Sports Programs above Intramural Level

Sports Programs above the intramural level involve competition by individuals or 

teams representing the installation or a higher-level command. The Armed Forces 

Sports Council sanctions inter-Service sport competition events.400 If the Secretary of 

State determines that an event or game is in the best interest of the United States, 

then military Service members can participate. These events include national and 

international sporting events, such as training or national qualifying events, occurring 

in preparation for, and the actual participation in, the Pan American Games, the 

Olympic Games, the Paralympic Games, the Conseil International du Sport Militaire 

(CISM), or other international competitions in amateur sports. These programs do not 

include installation (extramural and/or intramural), command, Service, or interService competitions, or preparation, training, or qualification for these 

competitions.401

5.1.9.2.14. Service Member Techno-Activities Center

Techno-activities centers are available in a multipurpose facility where personnel can 

socialize and participate in individual and competitive activities for a fee. Targeted at 

junior active-duty personnel, these centers accommodate diverse services and 

sufficient flexibility to allow modifications based on changing technology, trends, 

interest, and needs. These centers are available to active-duty personnel and their 

accompanied guests, 18 years of age and older.402

5.1.9.3. CATEGORY C - REVENUE GENERATING PROGRAMS

Category C MWR programs are distinguished by their ability to generate significant 

revenue. “These highly desirable programs provide recreational activities that 

contribute to building a sense of community and enjoyment. Activities in this group 

have the business capability of generating enough income to cover most of their 

operating expenses, but they lack the ability to sustain themselves based purely on 

their business activity. Consequently, these activities receive limited APF support.”403

Additional guidance on funding is provided for programs operated in remote and 

isolated locations, and operations during heightened security levels. Examples of 

Category C MWR programs include the following:404

5.1.9.3.1. Hospitality and Lodging

The MWR hospitality programs provide dining options that are distinct and separate 

from military dining facilities (used to support subsistence feeding/essential dining). 

Similarly, recreational lodging options are provided that are distinct from official 

lodging, and focus primarily on unofficial travelers and their families. Official lodging 

(for travelers on TDY/PCS orders) can be made available to unofficial travelers on a 

space-available basis.405 This category includes the following:

 Joint Service Facilities (JSFs) and Military Service Recreation Centers (MSRCs) 

provide rest and recreational activities in a resort setting. These facilities are 

each operated by a single Service, but they are available for use by all Military 

 

400 Ibid. 401 Armed Forces Participation in National and International Sports Activities, DoDI 1330.4 (2010). 402 Military Morale, Welfare, and Recreation (MWR) Programs, DoDI 1015.10, 28 (2011). 403 Ibid, 29. 404 Ibid. 405 Lodging Policy, DoDI 1015.11, 3 (2011).
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members. They include AFRCs, major hotel operations, and recreational 

sites.406

 Food, beverage and entertainment programs include restaurants, snack bars, 

limited-menu operations, social catering, themed-food operations, and 

entertainment programs.407

 Recreational lodging programs offer lodging facilities and services including

camping, hotel-like lodging, cabins, cottages, trainers, and trailer and/or 

recreational vehicle parks generally occupied by unofficial travelers.408

 PCS lodging programs provide lodging facilities and services that meet the 

needs of active-duty members and their families who are in PCS status.

Normally these facilities include kitchen facilities.409

Additional details on lodging programs can be found in the Military Lodging section of 

this report—Section 5.1.8 Military Lodging.

5.1.9.3.2. Special Interest Programs

Certain, specialized programs appeal to a limited audience, and are only operated in 

areas where interest and adequate user frees support them. Examples include flying, 

parachuting and sky diving, rod and gun activities, scuba and diving, and horseback 

riding.410

5.1.9.3.3. Other Revenue Generating Programs

Other revenue-generating MWR programs provide a variety of entertainment and 

recreational opportunities. Examples of these include resale programs; amusement 

and recreational machines and/or gaming, bowling alleys with more than 16 lanes, 

golf courses, marinas (resale or private boat berthing and storage), equipment rental, 

party and catering equipment, maintenance and construction equipment, base theater 

film programs, vehicle storage, and commercial-grade aquatics centers.411

Beneficiaries 

Eligible patrons of MWR programs are categorized in two ways: those with unlimited 

access and those with limited access.412 Unlimited access to MWR programs is 

provided to uniformed Service members, retirees, Congressional Medal of Honor 

recipients, some disabled and involuntarily separated veterans, former and/or 

surviving spouses and their families, as specified in DoD Instruction 1015.10. 

Unlimited access is also granted to DoD and Coast Guard civilians (and their family 

members) when stationed outside the United States and others meeting specific 

conditions.413 Additional details are provided in Table 10. 

 

406 Military Morale, Welfare, and Recreation (MWR) Programs, DoDI 1015.10, 29 (2011). 407 Ibid. 408 Ibid, 30. 409 Ibid. 410 Ibid, 30-31 411 Ibid. 412 Ibid, 20. 413 Ibid, 21.
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Table 10. Groups Authorized Unlimited Use of All MWR Programs

414

Category Authorized Group

Uniformed Service members

and their family members

 Members on active duty (Army, Navy, Air Force, Marine Corps, and Coast 

Guard).

 Members of the Reserve Components(Ready Reserve and National Guard;

Reservists in training).

 Cadets of Service Academies and U.S. Merchant Marine Cadets.

 Members of the Commissioned Corps of the Public Health Service and the

Commissioned Corps of the National Oceanic and Atmospheric Administration

on active duty. 

Other uniformed Service

retirees and their family

members

 Retired from active duty.

 Retired from the Reserve Components with pay and retired without pay.

Others separated from the

Military Services and their

family members

 Honorably discharged veterans with 100 percent, Service-connected disability

and involuntarily separated Service members under the Transition Assistance

Management Program. 

 Medal of Honor recipients.

Former and/orsurviving

spouses and family members

 Un-remarried surviving spouses of personnel who died while on active duty or

while in retired status.

 Unremarried formerspouses who were married to Military Service members for

at least 20 years while the Service member was on active duty. 

 Surviving children of Service members who have not been adopted by new

parents and are younger than 21 years old (or older if they are incapable of

supporting themselves, or younger than 23 years old if they are in full-time

study).

DoD and Coast Guard civilians

and their family members

 When stationed outside the United States.

Other supporters of DoD  U.S. Federal employees when assigned in areas outside the United States.

 Medical personnel under contract to the Military Services during periods when

they are residing on the installation.

 Military and civilian personnel of foreign nations and their family members

when on U.S. military orders assigning them to the United States or in overseas

areas when the major command commander grants privilegesin the best

interest of the United States.

 Paid members of the American Red Cross, YMCA, YWCA, United Service

Organization, and other Type 1 private organizationsidentified when assigned 

with the Military Services outside the United States.

 U.S. citizens employed by firms under contract to DoD working on an 

installation when assigned in areas outside the United States.

Limited access to MWR programs can be granted at the discretion of the installation 

commander to eligible patrons based on local demand and capacity.415 Special 

restrictions apply to the resale of food, state tax-free beverages, tobacco products, and 

 

414 Ibid. 415 Ibid, 20. 
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other MWR resale items.416 Eligible groups include DoD and Coast Guard civilians and

family members (including retirees and their family members) as well as various 

support personnel who meet specific requirements (e.g., DoD contract personnel and 

technical representatives, MHPI employees, residents and employees of privatized 

Army lodging, foreign national employees).417 Approved, invited, and accompanied 

guests, and in some cases, members of the public, can also be provided limited 

access.418 Additional details are provided in Table 11. 

Table 11. Groups Authorized Limited Use of Military MWR Activities - 

Authorized by Installation Commanders

419

Category Authorized Group

U.S. DoD and Coast Guard civilians and

family members(including retirees and

their family members)

• Appropriated Fund, Nonappropriated Fund, and retired DoD and

U.S. Coast Guard civilians.

DoD contract personnel and technical

representatives

• Working full time on the installation.

Others associated with DoD • Reserve Officers’ Training Corps cadets when participating in field

training or practice cruises. 

• Former prisoners of war (POWs) and spouses of POWs or Service

members missing in action and their family members.

Other non-DoD Federal employees and

contractors

• Working full-time on the installation.

Military Housing Privatization Initiative

(MHPI) employees and residents and

privatized Army lodging employees.

• MHPI employees or residents and privatized Army lodging employees.

Foreign national employees • APF and NAF foreign national employees assigned and working directly

for DoD installations overseasif not prohibited by Status of Forces

Agreements(SOFAs) or other international agreements or local laws

and the installation commander determinesit is in the best interest of

the command. Annual recertification of the employee authorization is

required.

Guests • Those who are not otherwise eligible to use MWR programs, when

specifically invited and accompanied by an authorized patron.

Installation commanders approve local rules governing the number of

guests and the frequency of use at specific facilities.

 

416 Ibid. 417 Ibid, 22. 418 Ibid. 419 Ibid. 
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Category Authorized Group

Members of the public • Leadersin the local community designated by the installation

commander. Individuals must be recertified annually. Applicable to 

community leaders overseasif SOFA or other international agreements

or local laws do not prohibit and the installation commander 

determinesit is in the best interest of the command.

• Members of the general public can attend infrequent MWR- sponsored

events when the installation meets controls established by the DoD

Component.

• Members of the general public within the United States and its

territories and possessions may use Category C programs on a continual 

basis when the established criteria has been met and specifically

approved by the Secretary of the Military Department, who may further

delegate this approval authority to a flag officer or Senior Executive 

Service (SES) equivalent of the Military Service headquartersstaff, but

no further.

• Sponsored visitors to the installation may use MWR food and beverage 

activities.

Note 1. Motion picture patronage shall be in accordance with non-theatrical licensing agreements negotiated separately by the Military Service.

Note 2. At a minimum:

a. Commander determines that adequate facilities are available and currently underutilized by authorized patrons.

b. Written agreements are obtained from local government officials or other appropriate community leadersindicating that they have no

objectionsto expanded use of military MWR programs.

c. Allowing these individualsto use these facilitiesis beneficial to both the military members and civiliansin the community. 

d. No conflict exists with Federal, State, or local laws.

When MWR facilities cannot accommodate all authorized patrons, the installation 

commander determines specific use priorities, based on unlimited use and limited use. 

Members of the Ready Reserve and Retired Reserve, including those who have 

qualified for retired pay at age 60 but have not reached age 60, can use Category C 

activities (revenue generating) on the same basis as members on active duty.420

Historical Context 

DoD recognizes the MWR Program as essential for creating and maintaining the 

morale of military personnel.421 The Services have provided essential food, lodging and 

support services for Service members for many years. The MWR program, however, did 

not exist until the start of the 20th century. From the founding of the Army in 1775 to 

1876, there were unofficial and informal forms of troop support such as the tradesmen 

who provided meals, clothing, and laundering, and trading posts that provided goods 

for purchase. In the 1870s the Congress provided limited oversight for “post traders” 

and the Army established Post Exchanges (PXs), supporting recreational activities for 

troops from their profits.422 This relationship between exchanges and MWR programs 

continues to today.

 

420 Ibid, 20. 421 Ibid, 24. 422 Joanne Marshall-Mies, David Westhuis, and Richard Fafara, “U.S. Army Morale Welfare Recreation (MWR) 

Programmes: Links to Readiness and Retention,” Res Militaris (European Journal of Military Studies), vol. 1, no. 3 

(2011), accessed June 19, 2014, http://www.resmilitaris.net/ressources/10144/30/res_militaris_-

_us_army_morale__welfare_and_recreation__mwr__programmes.pdf, See also John A. Wickham, White Paper: The Army 

Family (Washington, DC: Department of the Army, 1983). See also Eric K. Shinseki, The Army Family (self published,

2003).
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The 20th century saw many changes in MWR programs across all the Military 

Services. In 1903, the Congress authorized the Army to build, operate, and maintain 

PXs, libraries, schools, recreation centers, and gyms for Service members. The Army 

established the Morale Division in 1918, the Army Motion Picture Service in 1920, and 

the Library Service in 1923. The establishment of these organizations led to the 

creation in 1941 of “Special Services.”

423 Similar developments occurred in the Navy, 

Air Force, and Coast Guard.

In the Army, the Army Morale Division became known as Special Services, and by 

1943 this organization encompassed Army Recreation Services, the Army Exchange, 

and the Army Soldier Show. By the end of World War II, Special Services established 

the first AFRC, a military resort facility, in Bavaria, Germany.424

Services for families, rather than just Service members, began to emerge in the mid to 

late 1960s. Emphasis on family and MWR support continues today as programs to 

build both Service member and family resilience emerge in the MWR arena. DoD’s 

Total Force Fitness (TFF) initiative focuses on a holistic approach that incorporates 

social, physical, psychological, and spiritual aspects.425 A similar effort under the 

MWR umbrella is the Healthy Base Initiative. It focuses on improved nutritional 

choices, increased physical activity, obesity reduction, and decreased tobacco use. The 

Healthy Base Initiative is part of Operation Live Well, the DoD program that supports 

the National Prevention Strategy of improving Americans’ health and well-being 

through a prevention-oriented approach.426 These initiatives incorporate Service 

members and their families, and are generally implemented through the MWR 

organization and structure.427

Financial Summary 

In FY 2013, DoD MWR programs received $2.05 billion in appropriated funds of which 

$970 million was provided for Child and Youth Services.

428 The total cost of these

programs was higher, but the remaining costs were covered by the nonappropriated 

funds collected as fees from patrons and nonappropriated funds contributed by the 

Service exchanges as dividends.

MWR programs fall into three categories based on their purpose and relevance to the 

organizational mission. Programs are funded based on that categorization. Table 12 

 

423 Ibid. 424 Ibid. 425 Chairman’s Total Force Fitness Framework, Chairman of the Joint Chiefs of Staff Instruction 3405.01, 1, Enclosure 

B, B-1 (2011) directive current as of 23 Sep 2013. 426 “Healthy Base Initiative,” Military OneSource, accessed June 1, 2014, http://www. militaryonesource.mil. 427 “Achieving Resilience through Morale, Welfare, and Recreation Programs,” Military OneSource, accessed May 28, 

2014, http://www.militaryonesource.mil/mwr/overview?content_id=271534. 428 “Budget Materials,” Department of Defense, Undersecretary of Defense Comptroller, accessed June 12, 2014, 

http://comptroller.defense.gov/BudgetMaterials.aspx. Department of the Army, Fiscal Year 2015 President’s Budget 

Submission, 25, 26, 27, 32, 33, 36, accessed June 12, 2014, 

http://asafm.army.mil/Documents/OfficeDocuments/Budget/budgetmaterials/fy15/opmaint//oma-v2.pdf.

Department of the Navy, Fiscal Year 2015 Budget Estimates, 2, 3, 4, 6, , accessed June 12, 2014, 

http://www.finance.hq.navy.mil/FMB/15pres/OMN_Vol2_BOOK.pdf. Department of the Navy, Fiscal Year 2015 

Budget Estimates, Operation and Maintenance, Marine Corps Data Book, 1, 3, 4, 5, 8, accessed June 12, 2014, 

http://www.finance.hq.navy.mil/FMB/15pres/OMMC_Vol2_BOOK.pdf. Department of the Air Force, Fiscal Year 2015 

Budget Estimates, Operation and Maintenance, Air Force, 9, 10, 11, accessed June 12, 2014, 

http://www.saffm.hq.af.mil/shared/media/document/AFD-140310-081.pdf. Department of the Air Force, Fiscal Year 

2015 Budget Estimates, Operation and Maintenance, Air Force Reserve, 68, accessed June 12, 2014, 

http://www.saffm.hq.af.mil/shared/media/document/AFD-140310-012.pdf.
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summarizes the categories, their purpose, the target level of APF funding, and the 

included programs.429 “The basic funding standard, regardless of category, is to use 

APF to fund 100 percent of costs for which they are authorized.”

430 Note that in remote 

or isolated locations, Category C programs can be approved to receive the same level of 

APF funding as Category B. This funding exception is also possible when the programs 

are inaccessible to eligible patrons due to security concerns.431

Table 12. Summary of MWR Categories

CAT Description Programs Funding

A Mission Sustaining Programs:

Programs that promote the

mental and physical well-being 

of military personnel. The 

programs support 

accomplishing the basic military 

mission and are considered an 

essential part of meeting the 

Military Services’ organizational 

objectives. 

• Armed Forces entertainment

• motion pictures (free)

• physical fitness

• aquatic training

• libraries and information services

• on-installation parks and picnic areas

• basic social recreation programs

• single Service member programs

• Category A recreation centers (military 

personnel)

• shipboard, company, and/or unit-level 

programs

• sports and athletics programs and activities

• WFS (warfighter and family services)

“They shall be 

supported almost entirely with 

APF, with the use of NAF limited 

to specific instances where APF 

support is prohibited by law or 

where the use of NAF is 

essential for the operation of a 

facility or program. Programs in 

this category have virtually no 

capacity for the generation of 

NAF revenues.” 

DoD fiscal standards for MWR: 

Minimum standard for APF = 

85%

B Basic Community Support 

Programs: 

Programs that satisfy the basic 

psychological and physiological 

needs of Service members and 

their families. Similar to 

Category A programs, they 

support mission

accomplishment. They provide 

community support systems 

which serve the mobile military 

population. As far as possible, 

DoD installations become 

temporary hometowns.

• childcare and youth programs (child 

development and school age programs, 

youth programs) 

• community programs 

• cable and/or community television 

• recreational info, tickets, tours, and travel 

services

• recreational swimming 

• Category B recreation centers (military 

personnel and family members)

• outdoor recreation 

• boating program 

• camping 

• riding stables, government-owned or leased 

• recreational skill programs 

• bowling (16 lanes or less) 

• sports programs above intramural level 

• Service member techno-activities center

“These support programs 

should receive substantial 

amounts of APF support, but 

differ from those in Category A 

in part because of their ability 

to generate NAF revenues. That 

ability is limited, however, and 

in no case could they be 

sustained without substantial 

APF support.” 

DoD fiscal standards for MWR: 

Minimum standard for APF = 

65%

 

429 Military Morale, Welfare, and Recreation (MWR) Programs, DoDI 1015.10, 24-35 (2011). Table created by MCRMC 

staff from DoDI 1015.10. 430 Ibid, 32. 431 Ibid, 35. 
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CAT Description Programs Funding

C Revenue Generating Programs:

These programs provide 

recreational activities that 

support the community 

environment.

• hospitality and lodging

• joint service facilities and military service 

recreation centers

• food, beverage, and entertainment programs

• membership and non-membership clubs

• recreational and permanent change of station 

(PCD) lodging programs (recreational lodging 

programs, PCS lodging facilities)

• other special interest programs (flying, 

parachute and sky diving, rod and gun, scuba 

diving, horseback riding programs and 

stables, other)

• other revenue-generating programs 

(amusement and recreational machines 

and/or gaming, bowling over 16 lanes, golf, 

marinas, equipment rental, base theater film 

program, vehicle storage, animal kennels, 

aquatics centers, other)

“Activities in this group have the 

business capability of 

generating enough income to 

cover most of the operating 

expenses but they lack the 

ability to sustain themselves 

based purely on their business 

activity. Consequently, these

activities receive limited APF 

support.” 

Profits from the military exchanges (i.e., AAFES, NEXCOM, MCX, and CGES) are either 

invested back into the exchange system or paid as dividends to MWR accounts. In 

FY 2012, the Service MWR programs received approximately $320 million in 

dividends.432 Table 13 summarizes these contributions.

Table 13. Exchange Dividends Contributed By Exchange Systems

to Service MWR Programs (FY 2012)433

Army and 

Air Force 

(AAFES)

Navy 

(NEXCOM)

Marine 

Corps (MCX)

Coast Guard

(CGES) Total

Total $224M $43.1M $49.6M $3.6M $320M 

 

5.1.10. SERVICE MEMBER AND FAMILY SUPPORT

Service member and family support encompasses a variety of programs and services 

designed to enhance an individual’s quality of life. Though Service members and their 

families have primary responsibility for their well-being, the DoD’s organizational goals 

related to the recruitment, retention, morale, and operational readiness of the force 

enhance members’ and families’ abilities to fulfill that responsibility.434 The Family 

Readiness System (FRS), as discussed in DoD Instruction 1342.22, provides services 

to assist commanders, Service members, and their families in managing the competing 

 

432 Army and Air Force Exchange Service, 2012 Annual Report, 1, accessed June 8, 

2014, http://aafes.imirus.com/Mpowered/book/vaar12/i1/1. Navy Exchange Command, Navy Exchange Program of 

the Navy Exchange Service Command, Financial Statements, February 2, 2013 and January 28, 2012, accessed June 8, 

2014, https://www.mynavyexchange.com/command/about_us/Annual%20Report12.pdf. Coast Guard Exchange data 

provided by Coast Guard Exchange Service via Office of Budget and Programs (CG-821), May 5, 2014. U.S. Marine 

Corps Exchange data provided by Deputy Director, Plans, Policy and Analysis NAF Business and Support Services 

Division (MR) HQMC, M&RA, May 5, 2014. 433 Ibid. 434 Military Family Readiness, DoDI 1342.22, 2 (2012).
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demands of meeting military mission requirements and family readiness.435 The DoD 

2012 Annual Report to the Congress states, “the majority of family readiness programs 

are community-based, prevention-oriented, and voluntarily participated programs.”

436

According to Serving Military Families in the 21st Century, “most military families 

adjust well to the challenges that come with military life. They demonstrate numerous 

strengths while responding to frequent moves, separations from extended family, 

deployments, and living in other countries.”

437 “Military and family programs identify 

and build on families’ existing strengths.”438 They are available to help Service 

members and their families manage the challenges of daily living experienced in the 

unique context of military service.439

FRS is primarily an education and prevention effort that assists Service members, 

families and commanders in identifying, preventing, and addressing family-readiness 

related challenges to maintain unit cohesion and operational readiness.440 FRS helps 

the Military Services respond swiftly and effectively to the changing needs of Service 

members and their families during peacetime, war, periods of force structure change, 

relocation of military units, base realignment and closure, crisis, natural disaster, and 

other emergency situations.441 To provide maximum exposure to FRS, diverse forms of 

service delivery include, but are not limited to, the Internet, telephone, outreach, and 

colocation of services in an easily accessible environment.442

The welfare and success of military families are crucial to the accomplishment of the 

mission of DoD. DoD programs support Service members and families across three 

domains of family readiness: mobilization and deployment readiness, mobility and 

financial readiness, and personal and family-life readiness.443 FRS provides a system 

that maximizes a network of agencies, programs, services, and individuals in a 

collaborative manner to promote military family readiness.444

Each Military Service provides FRS under a unique program name: Army Community 

Service, Navy Fleet and Family Support Center, Airman and Family Readiness Center, 

Marine Corps Community Services, and U.S Coast Guard Office of Work-Life.445 Coast 

Guard programs are described in greater detail in Section 5.2.1 of this report.

National Guard Family Assistance Centers (FACs) are available in 50 states, 

three territories, and the District of Columbia to provide information and referral 

 

435 Ibid, 2-3. 436 Department of Defense, Annual Report to the Congressional Defense Committees on Plans for the Department of 

Defense for the Support of Military Family Readiness, Fiscal Year 2013, 12, received from Department of the Army, 

e-mail to MCRMC, May 22, 2014. 437 Karen Rose Blaisure, Tara Saathof-Wells, Angela Pereria, Shelley MacDermid Wadsworth, Amy Laura Dombro. 

Serving Military Families in the 21st Century, (New York, NY: Taylor and Francis Group, 2012), 15. 438 Ibid. 439 Military Family Readiness, DoDI 1342.22, 13 (2012). 440 Ibid. 441 Ibid, 3. 442 Ibid. 443 Military Family Readiness, DoDI 1342.22, 2 (2012). 444 Ibid. 445 See Service-level regulations and instructions: Army Community Service, AR 608–1 (2013). Airman and Family 

Readiness Centers, AFI 36-3009 (2013). Family Care Plans, AFI 36-2908 (2011). U.S. Navy Family Care Policy, 

OPNAVINST 1740.4D (2009). Fleet and Family Support Center Program, OPNAVINST 1754.18 (2007). Family Readiness 

Groups, OPNAVINST 1754.5 (2006). Department of the Navy Family Support Programs, SECNAVINST 1754.1B (2005). 

Marine Corps Community Services Policy Manual, MCO P1700.27B (2007).
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resources to Service members and military family members regardless of activation 

status.446

Reserve Component (RC) Family Programs deliver family readiness services through 

facility-based locations, via websites, and by telephone.447 While these access points 

deliver a limited number of direct services to members and their families, RC contacts 

can refer personnel to other community and installation FRS resources.448

DoD Instruction 1342.22 specifies that the following programs and services are to be 

made available to Service members and their families:

5.1.10.1. RELOCATION ASSISTANCE

Relocation assistance focuses on assisting Service members and families in managing 

the requirements of the mobile military lifestyle.449 Relocation assistance includes 

information, education, and referrals related to destination area preparation and 

settling-in; workshops and counseling; and sponsorship training services.450

Web-based relocation tools MilitaryINSTALLATIONS451 and Plan My Move452 provide 

installation- and community-specific information on more than 250 installations 

worldwide. Using these tools, Service members and their families can plan their move, 

estimate expenses, obtain information on housing, view household goods inventories, 

and use a calendar to plan moving events.

5.1.10.2. NONMEDICAL COUNSELING 

Confidential, nonmedical counseling is available to help prevent situations from 

developing that can compromise military readiness.453 These programs provide shortterm counseling to active-duty members, National Guard and Reserve Service 

members, and their families.

454 Counseling is provided by professionals who possess a 

master’s or doctoral degree in a mental health field and are licensed or certified in a 

state, territory or the District of Columbia to practice independently.455 Confidential, 

nonmedical counseling addresses issues such as improving relationships at home and 

 

446 National Guard, 2013 National Guard Bureau Posture Statement, 27, accessed June 1, 2014, 

http://www.nationalguard.mil/portals/31/Documents/PostureStatements/2013%20National%20Guard%20Bureau%

20Posture%20Statement.pdf. 447 “New to the Military,” Military OneSource, accessed June 1, 2014, http://www.militaryonesource.mil/phases-newto-the-military?content_id=266979. See also Military Family Readiness, DoDI 1342.22, 10, (charging the Assistant 

Secretary of Defense for Readiness and Force Management to coordinate with the Assistant Secretary of Defense for 

Reserve Affairs to ensure access to family readiness services by members of the RCs and their families consistent with 

Service regulations for the RCs.)

448 “New to the Military,” Military OneSource, accessed June 1, 2014, http://www.militaryonesource.mil/phases-newto-the-military?content_id=266979. 449 Military Family Readiness, DoDI 1342.22, 2 (2012) 450 Ibid, 14. 451 “Get Started,” MilitaryINSTALLATIONS, accessed April 27, 2014, 

http://www.militaryinstallations.dod.mil/MOS/f?p=MI:ENTRY:0. 452 “Plan My Move,” Military OneSource, accessed April 27, 2014, 

http://apps.militaryonesource.mil/MOS/f?p=PMM:ENTRY:0. 453 Counseling Services for DoD Military, Guard and Reserve, Certain Affiliated Personnel, and Their Family Members, 

DoDI 6490.06, 7 (2011). 454 Military Family Readiness, DoDI 1342.22, 14 (2012). 455 Counseling Services for DoD Military, Guard and Reserve, Certain Affiliated Personnel, and Their Family Members, 

DoDI 6490.06, 7 (2011)
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work, stress management, adjustment difficulties (such as returning from a 

deployment), marital problems, parenting, and grief or loss.456

Eligible individuals may receive up to 12 sessions per issue.

457 These sessions may be 

held face-to-face, online, or telephonically at no cost from both the Military OneSource 

and the Military and Family Life Counselor Program. Face-to-Face counseling can take 

place in a variety of settings depending on the needs or preferences of the person 

seeking assistance, counselor availability, or other factors.458

5.1.10.2.1. Military and Family Life Counseling Program

The Military and Family Life Counseling (MFLC) program provides confidential 

nonmedical, short-term, solution-focused counseling and briefings that augment 

counseling provided by the Military Services. 459 These services are provided to Service 

members and their families, as well as DoD Civilian Expeditionary Workforce members 

and their families.

460 These counselors can assist with a variety of issues including

coping with stress, improving relationships, adjusting to a new place, and handling a 

situation in the workplace.461

5.1.10.2.2. Military OneSource

Military OneSource (MOS) is a DoD-funded program that provides an interactive 

website with information, materials, moderated chats, discussion boards, blogs, 

podcasts, webinars, access to consultants, and referrals to local resources.462 The 

information and services offered on the site are available 24 hours a day, 7 days a 

week, at no cost to Service members and their families.463 MOS enables Service 

members and families to contact professionally trained consultants by telephone or 

online to obtain information on a wide range of topics including deployment 

adjustment, relocation, spouse employment, special needs, and education.464 These 

no-cost, confidential, nonmedical, short-term counseling services are delivered 

through face-to-face counseling in the local community, via telephone, or through 

online secure chat.465 Specialty consultations, including financial counseling, spouse 

career consultation, wounded warrior consultations, and consultations for families 

with special needs, are also available.466

Crisis Assistance

MOS provides resources, so Service members and families do not have to face crisis 

situations alone. Professional support is available to help mitigate the risk of suicide, 

 

456 Counseling Services for DoD Military, Guard and Reserve, Certain Affiliated Personnel, and Their Family Members, 

DoDI 6490.06, 7 (2011). 457 Ibid. 458 Ibid. 459 See Counseling Services for DoD Military, Guard and Reserve, Certain Affiliated Personnel, and Their Family 

Members, DoDI 6490.06, 7 (2011). 460 “Stay Mentally Fit with the Military and Family Life Counselor Program,” Military OneSource, accessed May 2, 2014 

http://www.militaryonesource.mil/non-medical-counseling?content_id=269730.(DoDI 6490.06, Enclosure 3, ¶1(f) 

provides that more information on MFLC can be found at http://www.militaryhomefront.dod.mil/service/counseling

which redirects to www.militaryonesource.mil). , 461 Counseling Services for DoD Military, Guard and Reserve, Certain Affiliated Personnel, and Their Family Members, 

DoDI 6490.06, 6 (2011). 462 Home Page, Military OneSource, accessed April 28, 2014, http://www.militaryonesource.mil/. 463 Counseling Services for DoD Military, Guard and Reserve, Certain Affiliated Personnel, and Their Family Members, 

DoDI 6490.06, 7 (2011). 464 Ibid. 465 Ibid. 466 Military Family Readiness, DoDI 1342.22 (2012). See also Counseling Services for DoD Military, Guard and Reserve, 

Certain Affiliated Personnel, and Their Family Members, DoDI 6490.06 (2011).
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post-traumatic stress, substance abuse, or other addictive behaviors.467 In addition, 

the MOS website provides access to information and contacts.468 Crisis assistance 

provides immediate, short-term assistance in response to acute crisis situations.469

5.1.10.3. PERSONAL AND FAMILY LIFE EDUCATION

Personal and family life education services provide a variety of education, prevention, 

and enrichment support focusing on helping families build and maintain healthy 

relationships, build resiliency, strengthen interpersonal competencies and problemsolving skills, and master respective roles, tasks, and responsibilities throughout the 

family life cycle.470 Also provided, when possible, and in collaboration with other family 

readiness service providers, are education and resources related to health, fitness, 

wellness, and nutrition.471

5.1.10.4. PERSONAL FINANCIAL MANAGEMENT AND COUNSELING

Under the Family Readiness System (FRS) umbrella, DoD Instruction 1342.22 

requires the delivery of personal financial management (PFM) services.472 These are 

described as proactive personal life cycle financial management services that provide 

Service members and their families with the tools and information they need to 

develop individual strategies to achieve financial goals and address financial 

challenges.473 Education and training is to be delivered as a continuum of service, 

initially provided as a component of the Service members’ entry orientation training 

and then through periodically recurring training across the military lifecycle.474 Service 

members are ultimately responsible for their personal finances and are expected to 

pay financial obligations in a timely manner.475 The Military Services provide PFM 

support to help commanders maintain unit financial readiness in an effort to sustain 

the mission, promote personnel readiness, and encourage retention in the military.476

PFM and Counseling services include:

 personal and family financial education 

 financial information services

 assistance and targeted financial planning and financial management training 

to first-term Service members by specially trained counselors.

477

At a minimum, each installation must designate one staff member to organize and 

execute financial management services.478 This person must possess a baccalaureate 

degree from an accredited university or equivalent work and education experience and 

 

467 “Crisis Prevention,” Military OneSource, accessed April 27, 2014, http://www.militaryonesource.mil/crisisprevention. 468 Ibid. 469 Military Family Readiness, DoDI 1342.22 (2012). See also DoDD 6400.01, August 23, 2004. 470 Ibid, 14-15. 471 Ibid, 15. 472 Ibid, 14. 473 Ibid, 15. 474 Ibid. 475 Indebtedness of Military Personnel, DoDI 1344.09, 2 (2008). 476 Military Family Readiness, DoDI 1342.22, 15 (2012). 477 Ibid, 15-16. 478 Ibid. 
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a nationally recognized financial counselor certification.479 Generally, installations offer

programs through financial assets approved by the installation commander and take 

advantage of command-based service-providers when possible.480 Programs, as 

applicable, must incorporate the eight service pillars identified by DoD: 481

 maintain good credit

 achieve financial stability

 establish routine savings

 participate in the Thrift Savings Plan and Savings Deposit Program

 sustain the Servicemember’s Group Life Insurance and other insurance

 encourage low-cost loan products as an alternative to payday lending and 

predatory loans

 use low-cost MWR programs

 preserve security clearances

Military Saves 

Military Saves is a program that encourages all Service members to save money, 

reduce debt, and build wealth.482 It is a component program of America Saves and is 

sponsored in partnership with DoD’s Financial Readiness Campaign.483 Service 

members in all active-duty and reserve branches can participate in an annual 

campaign called Military Saves Week, during which participants make a pledge to save 

part of every paycheck, create a personal financial plan, establish good credit, and 

participate in work-based programs aimed at promoting financial security, such as the 

Thrift Savings Plan, Savings Deposit Program, and Servicemembers’ Group Life 

Insurance.484

Military OneSource Financial Counseling

The MOS website offers an array of financial management articles for Service 

members, divided into categories, including “The Basics,” “Home and Family 

Finances,” “Budgeting Basics,” “Military Benefits,” and “Protecting Your Financial 

Health.”

485 The website also provides a list of links for web pages addressing both 

general financial planning and military pay and benefit programs related to the 

financial readiness pillars.486 Service members and their spouses who seek individual 

financial counseling and/or referrals to support programs can call MOS directly.487

Financial consultants provided through MOS, at no cost to the Service member, can 

help families create a financial plan and consolidate bills.488 Daily living specialists 

work with families that are in financial crisis, or approaching the crisis level.489

 

479 Ibid. 480 Ibid. 481 Ibid. 482 “What is Military Saves?” Military America Saves, accessed April 22, 2014, http://www.militarysaves.org/learnmore-about-us/what-is-military-saves, 483 Ibid. 484 “Join a Military Community of Savers and Encourage Others to do the Same,” Military Saves Website, accessed April 

22, 2014, http://www.militarysaves.org/images/stories/pdf/factsheetmsw2014.pdf.

485 “Money Management,” Military OneSource Website, accessed April 22, 2014, 

http://www.militaryonesource.mil/pfm. 486 Ibid. 487 “Financial Planning for Your Family’s Financial Future,” Military OneSource, accessed April 22, 2014, 

http://www.militaryonesource.mil/pfm?content_id=274657. 488 Interview with Military OneSource worker, April 22, 2014. 489 Ibid. 
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Army Financial Programs

The U.S. Army provides classes related to personal financial management readiness 

and consumer affairs to Soldiers and family members.490 These classes support 

participants in understanding banking and credit union services, developing budget 

and recordkeeping practices, liquidating debt, establishing and maintaining credit, 

understanding consumer rights and obligations, gaining financial security through 

insurance, and establishing personal financial readiness.491

The Army implements its programs at the installation and unit level in coordination 

with Army Community Service Centers.492 Financial counseling services provide 

members and their families with individualized assistance with tasks such as 

developing a budget, creating a spending plan, managing finances, and evaluating 

assets and liabilities.493 Consumer complaint resolution services help Service members 

and families understand the rights and protections that serve consumers, contact 

resources for resolving complaints, contact appropriate legal resources within the 

Service, draft complaint letters, and publicize agencies and businesses with unfair 

practices.494

The Army offers multiple programs for Service members and families who are 

struggling financially. All Service members undergo eligibility prescreening for the 

Family Subsistence Supplemental Allowance (FSSA), and eligible members receive 

referral back to their respective units to complete the process.495 The Army also offers 

debt liquidation assistance that focuses on resolving financial crisis by helping 

members and their families review their finances, create repayment plans, and contact 

creditors.496 Debt liquidation counselors support clients until their debts are 

liquidated, and they feel the clients can manage their finances independently.497 When 

necessary, counselors help clients transfer to the debt liquidation program at their 

new duty stations.498 Members and families may receive emergency assistance to help 

them avoid deprivation of basic needs to include Army Emergency Relief loans and 

grants and use of food lockers or vouchers.499

Although many of the programs offered by the Army are voluntary, there are some 

instances for which training is mandatory.500 Those who abuse or misuse checkcashing privileges must take a financial-management refresher course.501 All junior 

enlisted members scheduled for their first PCS move receive financial training and 

counseling.

502 First-term and initial-term soldiers receive personal financial readiness 

training through their units.503

 

490 Army Community Service Center, AR 608-1, 2 (2013). 491 Ibid, 2. 492 Ibid, 1. 493 Ibid, 23. 494 Ibid, 23. 495 Ibid, 23. Pay and Allowances of the Uniformed Services, 37 U.S.C. § 402A. 496 Army Community Service Center, AR 608-1, 2 (2013). 497 Ibid. 498 Ibid. 499 Ibid, 23-24. 500 Ibid, 23. 501 Ibid. 502 Ibid. 503 Ibid.
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Air Force Financial Programs

The Air Force offers financial readiness programs through Airman and Family 

Readiness Centers.504 Services include information, education, and personal finance 

counseling for Air Force members and their families.505

Several circumstances exist under which financial counseling is mandatory for all Air 

Force personnel. For example, officer and enlisted Service members receive, within the 

first 90 days of arrival at their first duty station, information on the following topics: 

pay and entitlements; banking and checkbook management; budgeting, savings, and 

investments (including investing tools); insurance; credit; car buying; and state and 

federal liability laws.506 They also receive information about obtaining financial 

counseling and assistance, maintaining personal and family readiness, and avoiding 

local fraudulent business practices.507 Individual or group settings provide the forums 

for these training events.508

Navy and Marine Corps Financial Programs

Secretary of the Navy Instruction 1740.4 mandates personal financial management 

education, training, and counseling for both the Navy and the Marine Corps.509

Personal financial management programs address three key components:

 financial education and training

 financial information and referral

 financial counseling510

Family Centers support these programs in collaboration with Command Financial 

Specialists.511 All Navy and Marine Corps personnel participate in continuum of 

learning throughout a sailor’s and Marine’s career and transition to civilian life.512

Family Centers establish personal financial management programs that encourage 

spouses to participate as well.513

Financial education, training, and counseling are provided through the collaboration 

of two sources: the Command Financial Specialist (CFS) and the Family Center PFM 

staff.514 Core topics to be covered by the CFS and the Family Center PFM staff include, 

but are not limited to, military pay issues, banking and financial services, credit 

management, saving and investing, consumer awareness, the basics of retirement 

planning, and college savings.515

The Marine Corps has been revamping its financial readiness programs since 2011, 

when it developed a curriculum that includes 26 personal financial management 

 

504 Airman and Family Readiness Centers, AFI 36-3009, 16 (2013). 505 Ibid. 506 Ibid. 507 Ibid. 508 Ibid. 509 Department of the Navy Personal Financial Management Education, Training, and Counseling Program, 

SECNAVINST 1740.4, 3-4 (2007). 510 Ibid. 511 Ibid, 4. 512 Ibid. 513 Ibid. 514 Ibid. 515 Ibid, Enclosure 4.
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programs offered to Service members and their families.516 Tiered financial courses 

began in 2014. These tiered courses are part of the Marine for Lifecycle Approach to 

reach Marines from boot-camp, their first permanent duty station, throughout their 

career, and prior to their transition out of service. There is also an Emotional Money 

Triggers and Readiness course that focuses on financial behaviors that will become the 

foundation for the USMC personal finance program.517

5.1.10.5. INFORMATION AND REFERRAL PROGRAM

The Information and Referral (I&R) Program familiarizes Service members and their 

families with the range of services available through the FRS, making referrals to both 

DoD-operated and community-based resources.518 I&R services also work closely with 

Service members and their families to identify their needs and locate services not 

readily available through the FRS.519 When necessary, they advocate for Service

member and family access to needed services.520

5.1.10.6. MOBILIZATION AND DEPLOYMENT SUPPORT

Mobilization and deployment support activities help Service members and their 

families before, during, and after deployment to promote positive adjustment to 

deployment, family separation, and family reunion.521 These services educate Service 

members and their families about deployment-related challenges that they may face, 

and the services available to them to cope with such challenges.522 They also provide 

ongoing outreach, communication, activities, and events with deploying and deployed 

units, Service members and their families throughout all phases of deployment to 

promote early identification and prevention of family problems that may compromise 

military or family readiness.523

5.1.10.7. SPOUSE EMPLOYMENT AND CAREER OPPORTUNITIES

The Spouse Education and Career Opportunities (SECO) program helps military 

spouses and other family members find public- and private-sector employment, 

advance careers, or start education for a portable career.524 The program helps military 

spouses understand their skills, interests, and goals to assist them in discovering

available opportunities that are aligned with these personal characteristics.525 It also 

helps military spouses identify academic, licensing, or credentialing requirements that 

can help them reach career goals and access sources of financial assistance for such 

requirements.526 SECO counselors can assist with resume writing and interview 

techniques, as well as promote the hiring of military spouses through the Military 

 

516 Headquarters U.S. Marine Corps, USMC Personal Finance Briefing to MCRMC, February 12, 2014. 517 Ibid. 518 Military Family Readiness, DoDI 1342.22, 17 (2012). 519 Ibid. 520 Ibid. 521 Ibid. 522 Ibid. 523 Ibid. 524 See generally Armed Forces, 10 U.S.C. §§ 1784-1784a. 525 Military Family Readiness, DoDI 1342.22, 18 (2012). 526 Ibid. 
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Spouse Employment Partnership (MSEP) and other partnerships, online career 

networks, job fairs, and Federal appointment authorities, as appropriate.527

MSEP represents an employment and career partnership connecting military spouses 

with military-friendly partner employers interested in recruiting, hiring, promoting, 

and retaining military spouses in career job openings and career ladders.528 This 

partnership includes more than 130 Fortune 500 employers, and participation in 

United States Chamber of Commerce Hiring Our Heroes (HOH) job fairs.529

5.1.10.7.1. Military Spouse Career Advancement Account

The Military Spouse Career Advancement Account (MyCAA), also known as Spouse 

Tuition Assistance, is a workforce development program that pays up to $4,000 of 

financial assistance to eligible military spouses who are pursuing a license, 

certification, or associate’s degree in a portable career field and occupation.530 The 

financial assistance is used for education, training courses, and licensing and 

credentialing fees. This assistance includes state certifications for teachers, medical 

professionals and other occupations requiring recognized certifications, licensing 

exams and related prep courses, continuing education unit (CEU) classes including

those offered through professional associations, and degree programs leading to 

employment in portable career fields. Military spouses of junior Service members, who 

are serving on Title 10 orders and are in the pay grades of E-1 to E-5, W-1 to W-2, and 

O-1 to O-2 are eligible to apply.531

5.1.10.8. EXCEPTIONAL FAMILY MEMBER PROGRAM

The Exceptional Family Member Program (EFMP) provides support to Service members 

who have family members with special medical or educational needs.532 These family 

members may be spouses, children, or dependent parents who require special medical 

or educational services for a diagnosed physical, intellectual, or emotional condition.533

Each Military Service has an established EFMP to work with these families and 

 

527 Ibid. 528 “Spouse Employment and Career Opportunities,” Military OneSource, accessed April 27, 2014, 

http://www.militaryonesource.mil/seco. (DoDI 1342.22 requires Spouse Education and Career Opportunities services 

to include Employment connections that promote the hiring of military spouses through the Military Spouse 

Employment Partnership). 529 “Spouse Education and Career Opportunities Overview,” Military OneSource, accessed May 2, 2014, 

http://www.militaryonesource.mil/seco?content_id=269424. 530 “The Military Spouse Career Advancement Accounts (MyCAA) Program,” MyCAA, accessed April 27, 2014,

https://aiportal.acc.af.mil/mycaa/default.aspx. 531 Department of Defense, Annual Report to the Congressional Defense Committees on Plans for the Department of 

Defense for the Support of Military Family Readiness, Fiscal Year 2013, 12, received from Department of the Army, 

e-mail to MCRMC, May 22, 2014. See also Armed Forces, 10 U.S.C. § 1784a. See also Military Family Readiness, 

DoDI 1342.22 (2012). 532 Military Family Readiness, DoDI 1342.22, 18 (2012). 533 DoDI 1315.19 defines “family member” the same as “dependent.” DoDI 1342.22 provides that “dependent” will be 

given the same definition as that found in 37 U.S.C. § 401(a), which defines “dependent” as a spouse, unmarried child 

under 21, or a dependent parent. DoDI 1315.19 provides criteria to be used in determining when a family member is a 

“family member with special needs.” These criteria include certain diagnosed physical, intellectual, and emotional 

conditions.
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address their unique needs.534 As of 2013, DoD reported more than 128,000 military 

families had been enrolled in EFMP.535

Although enrollment in EFMP is mandatory for active-duty Service members,

536

assistance is provided to military families with family members with special needs, 

regardless of the sponsor’s enrollment status.537 Members of the National Guard or 

Reserves may enroll according to service-specific guidance.538 Enrollment in EFMP 

ensures a family member’s documented medical and educational needs are considered 

during the assignment process.539 It also allows families to receive the support and 

assistance they need to navigate medical and educational systems.540

Family members with special medical or educational needs, including a spouse, child 

or a dependent adult, are required to enroll in the program. This includes family 

members who meet any of the following criteria: 

 require special medical services for a chronic condition such as asthma, 

attention deficit disorder, diabetes, multiple sclerosis, etc.

 receive ongoing services from a medical specialist

 have significant behavioral health concerns

 receive early intervention or special education services through an 

individualized education program or individualized family service plan541

Medical or educational professionals review a family member’s documented needs to 

determine the availability of services at a proposed location.542 The EFMP family 

support helps families identify and access programs and services.543 Family support 

includes, but is not limited to, the following:

 information and referral for military and community services

 

534 See Exceptional Family Member Program, OPNAVINST 1754.2D (2010). See also Exceptional Family Member 

Program, AR 608-75 (2011). See also Medical Support to Family Member Relocation and Exceptional Family Member 

Program, AFI 40-701 (2012). See also Exceptional Family Member Program (EFMP), MCO 1754.4B (2010). 535 Department of Defense Annual Report to Congress on Plans for DoD for Support of Military Family Readiness, 

FY 2013, 45, received from Department of the Army, e-mail to MCRMC, May 22, 2014. 536 See Exceptional Family Member Program, OPNAVINST 1754.2D (2010). See also Exceptional Family Member 

Program, AR 608-75 (2011). See also Medical Support to Family Member Relocation and Exceptional Family Member 

Program, AFI 40-701 (2012). See also Exceptional Family Member Program (EFMP), MCO 1754.4B (2010). (Each of 

these Service-level regulations provide that enrollment is mandatory for Service members who have family members 

with special needs.) 

537 Military Family Readiness, DoDI 1342.22, 18 (2012).

538 “Exceptional Family Member Program,” Military OneSource, accessed April 27, 2014, 

http://www.militaryonesource.mil/efmp/overview?content_id=269174.

539 See Exceptional Family Member Program, OPNAVINST 1754.2D (2010). See also Exceptional Family Member 

Program, AR 608-75 (2011). See also Medical Support to Family Member Relocation and Exceptional Family Member 

Program, AFI 40-701 (2012). See also Exceptional Family Member Program (EFMP), MCO 1754.4B (2010). (Each of 

these Service-level regulations provides that the Service will consider members’ family members with special needs 

when assigning Service members to duty stations.)

540 See Military Family Readiness, DoDI 1342.22, 18 (2012). (Provides for education and provision of assistance to 

Service members and their families about the EFMP enrollment and assignment coordination process, resources, and 

other topics as deemed appropriate). 541 Authorizing Special Needs Family Members Travel Overseas at Government Expense, DoD Criteria for Identifying a 

Family member with Special Needs, DoDI 1315.19, Enclosure 4 (2011). 542 See Exceptional Family Member Program, OPNAVINST 1754.2D (2010). See also Exceptional Family Member 

Program, AR 608-75 (2011). See also Medical Support to Family Member Relocation and Exceptional Family Member 

Program, AFI 40-701 (2012). See also Exceptional Family Member Program (EFMP), MCO 1754.4B (2010). (Each of 

these Service-level regulations provides that the Service will consider members’ family members with special needs 

when assigning duty stations to Service members.)

543 Military Family Readiness, DoDI 1342.22, 19 (2012). 
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 education and outreach

 referral to other family support center providers

 warm handoffs to the EFMP at the next location

 nonclinical case management, including individualized services plans544

Prior to 2010, EFMP’s primary focus was on the identification and enrollment of family 

members with special needs as related to the personnel assignment coordination 

process.545 In 2010, Section 563 of National Defense Authorization Act for FY 2010 

added 10 U.S.C. § 1781c, and established the Office of Community Support for 

Military Families with Special Needs (OSN), to enhance and improve DoD support 

around the world for military families with special needs.546 The law also required the 

expansion of the coordination of assignments to, and within, the United States for 

Service members who have family members with special needs and of community 

support to military families with special needs.547

5.1.10.9. FAMILY ADVOCACY PROGRAM

The Family Advocacy Program (FAP) works to prevent domestic violence and child 

abuse and neglect548 by providing public awareness, education, and family support 

programs for military families who have been identified as at-risk of committing child 

abuse or family violence.549 The program promotes early identification, advocacy, and 

comprehensive prevention, assessment, and support to persons who may be at risk.550

This is a coordinated effort, engaging with civilian authorities and organizations, as 

well as medical treatment facilities.551

5.1.10.9.1. New Parent Support Program

The New Parent Support Program (NPSP) provides services to expectant parents as 

well as parents of children from birth to three years of age who are eligible to receive 

treatment in military medical treatment facilities.552 Support is available on either a 

fee-paying or a non-fee-paying basis.553 An intensive, voluntary home visitation 

program service is available in response to self-referrals and referrals from health care 

providers and other service providers in the community to individuals whose life 

circumstances may place them at risk for child abuse or neglect.554 The program 

promotes resilient families and development of healthy parenting attitudes and skills 

to prevent child abuse, child neglect, and domestic abuse within the DoD.555 NPSP 

provides proactive outreach, strengths-based services and education, and support to 

 

544 Ibid, 18-19. See also “Exceptional Family Member Program,” Military OneSource, accessed April 27, 2014, 

http://www.militaryonesource.mil/efmp/overview?content_id=269174. 545 Department of Defense, Annual Report to Congressional Defense committees on Plans for the Department of Defense 

on the Support of Military Family Readiness, Fiscal Year 2013, 5, received from Department of the Army, e-mail to 

MCRMC, May 22, 2014.

546 National Defense Authorization Act for FY 2010, Pub. L. No. 111-84, § 563, 123 Stat. 2190, 2304-2308 (2009). 547 Ibid. 548 Armed Forces, 10 U.S.C. § 1787(b) defines “child abuse and neglect” the same way that the Child Abuse Prevention 

and Treatment Act, Pub. L. No. 93-247, § 3, 88 Stat. 4, 5 (1974) does: the physical or mental injury, sexual abuse, 

negligent treatment, or maltreatment of a child under the age of eighteen by a person who is responsible for a child’s 

welfare under circumstances which indicate that the child’s health or welfare is harmed or threatened. 549 Family Advocacy Program, DoDD 6400.01 2 (2004). 550 Ibid. 551 Ibid, 3. 552 New Parent Support Program (NPSP), DoDI 6400.05 (2012). 553 Ibid, 1 554 Ibid, 8. 555 Ibid, 2
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families facing challenging and stressful conditions related to parenting due to 

deployment and other military operations.556 NPSP fosters a cross system coordination 

of military and civilian resources to support parents who may be at risk for child 

abuse or neglect or domestic abuse.557

5.1.10.10. TRANSITIONAL COMPENSATION

Transitional Compensation (TC) is a congressionally mandated program for abused 

dependents of military personnel.558 Legislation authorizes temporary payments for 

families in which the active-duty member has been separated administratively by 

court-martial for a dependent-abuse offense.559 The TC program offers benefits and 

entitlements for 12-36 months to eligible family members.560 During this benefit 

period, beneficiaries are provided temporary financial compensation and are eligible to 

continue to receive medical care, including behavioral health services, and 

commissary and exchange privileges.561

5.1.10.11. WARFIGHTER FAMILY SERVICES AS A MORALE 

WELFARE RECREATION ACTIVITY

Military Services have the discretion to provide Military Family Readiness programs as 

a Category A MWR program known as Warfighter Family Services (WFS).562

5.1.10.12. EMERGENCY FAMILY ASSISTANCE

Emergency Family Assistance (EFA) is part of a military installation’s overall 

emergency plan.563 The plan establishes an organized response and processes to follow 

in the event of an all-hazards incident, which is defined in DoD Instruction 6055.17 as 

any incident, natural or man-made, that warrants action to protect the life, property, 

health, and safety of military members, dependents, and civilians at risk, and 

minimize any disruptions of installation operations.564 Included in the plan is the 

establishment of an Emergency Family Assistance Center (EFAC) which promotes 

short- and long-term recovery and the return to a stable environment and missionready status for DoD personnel and their families.565 Plans address issues such as 

temporary lodging, health and security, medical support, religious and psychosocial 

services, transportation, child and youth services, and legal and financial services.566

 

556 Ibid. 557 Ibid, 1. 558 Armed Forces, 10 U.S.C. § 1059 (2012). 559 Ibid. 560 Armed Forces, 10 U.S.C. § 1059(e)(2). 561 Transitional Compensation for Abused Dependents, DoDI 1342.24 (1997). 562 Military Morale, Welfare, and Recreation (MWR) Programs, DoDI 1015.10, 26 (2011). 563 Military Family Readiness, DoDI 1342.22, 19 (2012). 564 Ibid. (“All-hazard incident” defined in Installation Emergency Management Program, DoDI 6055.17, 44 (2010). 565 Ibid. 566 Military Family Readiness, DoDI 1342.22, 19-23 (2012).
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5.1.10.13. TRANSITION ASSISTANCE

Transition assistance services prepare separating uniformed Service members and 

their families for reentry into the civilian work force.567 These benefits are provided by 

multiple agencies and are described in the Cross-Agency Benefits section of this 

report—Section 5.8.4 Transition Assistance.

The Employer Support of the Guard and Reserve (ESGR) and Employment Initiative 

Program (EIP) focus on employment issues faced by Guard and Reserve.

5.1.10.13.1. Employer Support of the Guard and Reserve

The National Committee for Employer Support of the Guard and Reserve (NCESGR) is 

responsible for creating and advocating programs that promote stronger, more positive 

partnerships between Reservists and their civilian employers.568 ESGR programs 

include public relations events, educational materials dissemination, and an informal 

mediation services.569 NCESGR develops Uniformed Services Employment and 

Reemployment Rights Act (USERRA)570 and ESGR training curricula, and makes these 

resources available to Reserve Components in support of required training.571 They 

also assist in preventing, resolving, or reducing employer and/or employee problems 

and misunderstandings that result from National Guard or Reserve membership, 

training, or duty requirements by providing information services and informal 

mediation.

572

5.1.10.13.2. Employment Initiative Program

EIP is a portfolio of services provided to connect job-seeking Reserve Component 

Service members and veterans with potential employers.573 In 2011, EIP launched 

Hero 2 Hired (H2H), which is a comprehensive service designed to address the unique 

needs of Reserve Component members, focusing on employment issues.

574 The 

program contains the tools for a job seeker to find a position, build a resume, and 

prepare for an interview.575 

5.1.10.14. ADOPTION REIMBURSEMENT 

As provided for in DoD Instruction 1341.09, DoD Adoption Reimbursement Policy, the 

Adoption Reimbursement program reimburses Service members who adopt a child 

younger than 18 years of age.576 This reimbursement is for reasonable and necessary 

adoption expenses, up to $2,000 per adoptive child, but no more than $5,000 per 

 

567 Ibid, 23. 568 Employer Support of the Guard and Reserve, DoDI 1205.22, 2 (1997). See also National Committee for Employer 

Support of the Guard and Reserve (NCESGR), DoDD 1250.01, 2 (2004). 569 Employer Support of the Guard and Reserve, DoDI 1205.22, 3 (1997). 570 Veterans’ Benefits, 38 U.S.C. §§ 4301- 4335, Uniformed Services Employment and Reemployment Rights Act of 

1994 (1994).

571 National Committee for Employer Support of the Guard and Reserve (NCESGR), DoDD 1250.01, 5 (2007). 572 Employer Support of the Guard and Reserve, DoDI 1205.22, 2 (1997). See also National Committee for Employer 

Support of the Guard and Reserve (NCESGR), DoDD 1250.01, 5 (2007). See also Karen Rose Blaisure, Tara SaathofWells, Angela Pereria, Shelley MacDermid Wadsworth, Amy Laura Dombro, Serving Military Families in the 21st Century, 

(New York, NY: Taylor and Francis Group, 2012), 204.

573 “Service Member & Family,” Employer Support of the Guard and Reserves, accessed October 30, 2013, 

http://www.esgr.mil/Service-Members-Family/Find-a-Job.aspx. 574 Yellow Ribbon Reintegration Program, Annual Advisory Board Report to Congress Fiscal Year 12, 9, accessed June 1, 

2014, http://www.yellowribbon.mil/assets/docs/FY2012_YRRP_Report_to_Congress_Final.pdf. 575 Ibid. 576 Adoption Reimbursement Policy, DoDI 1341.09, 2 (2009).
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calendar year.577 In the case of two married Service members, only one member may 

claim expenses for each adopted child.578 The program requires that adoptions are 

final before the member leaves active duty.579 A qualified adoption agency or other 

source authorized to place children for adoption under State or local law is 

necessary.580

5.1.10.15. YELLOW RIBBON REINTEGRATION PROGRAM

The Yellow Ribbon Reintegration Program (YRRP), “provides informational events and 

activities for members of the Reserve Components of the Armed Forces, their families, 

and community members to facilitate access to services supporting their health and 

well-being through the 4 phases of the deployment cycle,” 581 defined as the following:

 predeployment

 deployment

 demobilization

 post-deployment-reconstitution

The Congress established YRRP in 2008.582 The historic increase in the use of National 

Guard and Reserve forces, combined with the geographic isolation of many Service 

members and their families, resulted in the need for consistent deployment cycle 

support and a sustainable structure to most effectively meet the needs of the present 

and future operational force.583 

YRRP evaluates and shares resources, tools, and promising practices across the seven 

Reserve Components.584 The seven Reserve Components are responsible for 

implementing YRRP for their members and families using DoD guidelines, which 

maintain program consistency and still address each Service’s unique missions and 

challenges.585 In FY 2012, the Services conducted 2,028 YRRP events, providing 

services, information, and referrals to 248,252 Service members and family or 

designated representatives.586

5.1.10.16. SURVIVOR OUTREACH

Survivor outreach is an extension of the support provided by the Casualty Assistance 

Program (explained in greater detail in Section 5.1.11. of this report). Casualty 

Assistance Officers assist survivors in making difficult decisions while navigating them

through the military’s system of privileges, benefits, and entitlements.587 Survivor 

 

577 Ibid. 578 Ibid. 579 Ibid. 580 Ibid. 581 National Defense Authorization Act for FY 2008, Pub. L. No. 110–181, § 582, 122 Stat. 3, 122-126 (2007). See also

DoD Yellow Ribbon Reintegration Program (YRRP), DoDI 1342.28 (2011). 582 Ibid. 583 Yellow Ribbon Reintegration Program, Annual Advisory Board Report to Congress Fiscal Year 12, accessed June 1, 

2014, 3, http://www.yellowribbon.mil/assets/docs/FY2012_YRRP_Report_to_Congress_Final.pdf. 584 Ibid. 585 Ibid, 4. 586 Ibid, 15. 587 Department of Defense (DoD) Personnel Casualty Matters, Policies, and Procedures, 11, DoDI 1300.18 (2009). 

See also Department of Defense, A Survivor’s Guide to Benefits: Taking Care of Our Families, accessed June 1, 2014, 

https://www.militaryonesource.mil/12038/MOS/ResourceGuides/A_Survivors_Guide_To_Benefits.pdf. 
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outreach extends initial support during a time of grief to help survivors feel less 

overwhelmed and more able to manage feelings and reactions.588

The Military Departments provide non-medical counseling through MOS to family 

members of fallen Service members at no cost.589 Consultants share information and 

make referrals on a wide range of issues, including grief and bereavement.590 Face-toface non-medical counseling sessions, and their equivalent by phone or online, are all 

available to the Service member.591

5.1.10.17. WOUNDED, ILL, AND INJURED

The military’s wounded warrior programs provide support to Service members who are

wounded, ill, and injured and their families. Each Service operates a wounded warrior 

program, in accordance with DoD Instruction 1300.24, to assist Service members and 

their families with nonmedical issues associated with the transition back to duty or to 

civilian life.592 The wounded warrior programs work with the Service members and 

their medical team to develop a comprehensive recovery plan that addresses specific 

recovery, rehabilitation, and reintegration goals.593 These programs provide lifetime 

support for the Service member as eligibility for participation in the program does not 

conclude when the Service member is discharged from an MTF.

594 Typical nonmedical 

support provided by the wounded warrior programs may include, but is not limited to, 

assistance with the following:

 pay and personnel issues

 invitational travel orders

 lodging and housing adaptations for the wounded warrior

 child and youth care arrangements

 transportation needs

 legal and guardianship issues

 education and training benefits

 respite care

 traumatic brain injury/post-traumatic stress support services595

Eligibility for wounded warrior programs is extended to Service members who are 

battling serious illnesses or who are injured in accidents and generally require long 

term care.596

 

588 “Finding Support After the Loss of a Loved One,” Military OneSource, accessed October 2013, 

http://www.militaryonesource.mil/casualty?content_id=271827. 589 Counseling Services for DoD Military, Guard and Reserve, Certain Affiliated Personnel, and Their Family Members, 

DoDI 6490.06, Enclosure 3, 6 (2009). 590 Ibid. 591 Ibid, 7. 592 Recovery Coordination Program (RCP), DoDI 1300.24, 2 (2009). See also “Wounded Warrior Programs,” Military 

OneSource, accessed May 5, 2014, http://www.militaryonesource.mil/wounded-warrior?content_id=268711. 593 Recovery Coordination Program (RCP), DoDI 1300.24, 20 (2009). 594 Ibid, 19. See also “Wounded Warrior Programs, Military OneSource, accessed May 5, 2014, 

http://www.militaryonesource.mil/wounded-warrior?content_id=268711. 595 “Wounded Warrior Programs, Military OneSource, accessed May 5, 2014, 

http://www.militaryonesource.mil/wounded-warrior?content_id=268711. 596 Ibid. 
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5.1.10.18. OUTREACH AND COMMUNITY CAPACITY BUILDING 

Outreach efforts to geographically dispersed Service members and their families 

include a network of service delivery providers to support those who do not have direct 

access to on-installation FRS programs.597 The goal is to connect Service members and 

their families with community-based services to execute coordinated, comprehensive 

local support.598

One example of this type of outreach is the Joint Family Support Assistance Program 

(JFSAP). In 2007, the Congress authorized the DoD to develop JFSAP,

599 a program 

providing services to families located in areas where military installations are 

unavailable to do so.600 The result augments family readiness services from all 

components in all U.S. States and territories.601 A state or territory-based team 

provides a combination of military- and family-life counselors, child and youth 

behavioral counselors, personal financial counselors, and MOS consultants.602

Beneficiaries 

FRS is available to Service members and their families. The Secretary of a Military 

Service may expand availability to other designated populations, such as civilian 

personnel, when authorized by law.603 

EFA is available to a broader list of beneficiaries. The EFA beneficiaries include DoD 

personnel, Active Components, Reserve Components, DoD civilians, DoD families, DoD 

and non-DoD tenants, transient DoD and U.S. Government personnel, and DoD 

contractors living or working on DoD installations worldwide.604 

Historical Context 

Initially, families were “camp followers.” Officers took care of their own families and

enlisted personnel were expected to not marry.605 Although families have always been 

associated with the military, the role families play in supporting the mission was not 

formally recognized by the military until the late 1800s.

606 Entry into World War II 

found no single agency prepared to assist young military members and their families 

experiencing problems of adjustment, financial challenges, wartime separation, and 

emotional burdens.607

It was not until the advent of the All-Volunteer Force in the 1970s that specialized 

programs were developed to meet the needs of military families experiencing 

adjustment challenges and financial burdens.608 More recently, as stated in Serving 

Military Families in the 21st Century, “the DoD views spouses and other family 

 

597 Military Family Readiness, DoDI 1342.22, 25 (2012). 598 Ibid. 599 John Warner National Defense Authorization Act for FY 2007, Pub. L. No. 109-364, § 675, 120 Stat. 2083, 2273-

2274 (2006). 

600 Military Family Readiness, DoDI 1342.22, 25 (2012). 601 Ibid. 602 Ibid. 603 Ibid, 1. 604 Ibid. 605 Chief of Staff, US Army, White Paper 1983, “The Army Family,” 1, July 20, 1984. 606 Ibid, 2. 607 Ibid, 3. 608 Ibid. 
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members as vital to the success of an-all volunteer force.”

609 If family members have a 

sense of being well-cared for and doing well in the military community, the Service 

members will not need to spend as much time and energy worrying about their 

families when they cannot physically be with them. This builds a sense of satisfaction 

and a desire to stay in the military.610

Financial Summary 

In FY 2013, $605 million of appropriated funds were expended to support DoD Family 

Readiness Systems.611 

5.1.11. CASUALTY ASSISTANCE

DoD provides families of every Service member who dies while on active duty with 

certain benefits, privileges, and entitlements. These benefits include the death 

gratuity, unpaid pay and allowances, a burial allowance, flags, funeral travel, dignified 

transfer travel, unit memorial travel, military funeral honors, and the Gold Star lapel 

button.

5.1.11.1. DEATH GRATUITY

“The Death Gratuity provides for a special tax free payment of $100,000 to eligible 

survivors of members of the Armed Forces, who die while on active duty or while 

serving in certain reserve statuses.”

612 The death gratuity is an immediate cash 

payment (usually within the first 72 hours) to assist survivors of deceased Service 

members to meet their financial needs during the period immediately following a 

member’s death and before other survivor benefits are received.613 Death gratuity is 

payable to one or more persons designated by the Service member.614

The death gratuity is payable for death of members in a reserve status while 

performing authorized travel to or from active duty, while on inactive-duty training, or 

while performing authorized travel directly to or from active duty for training or 

inactive-duty training.615 It can also be paid to members of reserve officers’ training 

 

609 Karen Rose Blaisure, Tara Saathof-Wells, Angela Pereria, Shelley MacDermid Wadsworth, Amy Laura Dombro. 

Serving Military Families in the 21st Century, (New York, NY: Taylor and Francis Group, 2012), 16. 610 Ibid. 611 “Budget Materials,” Department of Defense, Undersecretary of Defense Comptroller, accessed June 12, 2014, 

http://comptroller.defense.gov/BudgetMaterials.aspx. Department of the Army, Fiscal Year 2015 President’s Budget, 

Submission, 29, 33, 35, 36, accessed June 12, 2014, 

http://asafm.army.mil/Documents/OfficeDocuments/Budget/budgetmaterials/fy15/opmaint//oma-v2.pdf.

Department of the Navy, Fiscal Year 2015 Budget Estimates, 4, 5, 7, accessed June 12, 2014, 

http://www.finance.hq.navy.mil/FMB/15pres/OMN_Vol2_BOOK.pdf. Department of the Navy, Fiscal Year 2015 

Budget Estimates, Operation and Maintenance, Marine Corps Data Book, 2, 6, 8, accessed June 12, 2014, 

http://www.finance.hq.navy.mil/FMB/15pres/OMMC_Vol2_BOOK.pdf. Department of the Air Force, Fiscal Year 2015 

Budget Estimates, Operation and Maintenance, Air Force Reserve, 68, accessed June 12, 2014, 

http://www.saffm.hq.af.mil/shared/media/document/AFD-140310-012.pdf. Additional information regarding Air 

Force (active component) FY 2013 Warfighter and Family Services from their Program Resources Collection Process 

(PCRP) Database, provided by Office of the Undersecretary of Defense Comptroller, telephone conference with MCRMC, 

March 2014.

612 “Death Gratuity,” Under Secretary of Defense, Personnel and Readiness, accessed June 1, 2014, 

http://militarypay.defense.gov/Benefits/Death%20Gratuity/. See also Armed Forces, 10 U.S.C. § 1478. Certain 

Military Benefits, 26 U.S.C. § 134. 613 Armed Forces, 10 U.S.C. § 1475. 614 Armed Forces, 10 U.S.C. § 1477. 615 Armed Forces, 10 U.S.C. § 1475(a). 
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programs who die while performing annual training duty under orders for a period of 

more than 13 days or while performing authorized travel to or from that duty, to 

applicants for membership in Reserve Officers’ Training Corps who die while 

attending/travelling to or from field training or a practice cruise and to persons 

traveling to/from or while at a place of acceptance for entry to active duty.616

The death gratuity is also payable if an eligible member or former member dies within 

120 days of release or discharge from active duty, or active duty for training when the 

Secretary of Veterans Affairs determines that the death resulted from injury or disease 

incurred or aggravated during such duty.617

5.1.11.2. UNPAID PAY AND ALLOWANCES

After the death of an active-duty member, any pay and allowances due to the member, 

are paid to the designated beneficiary.618 The Secretary of Defense has the authority to 

settle all accounts of deceased members to include for the payment of accrued leave, 

unpaid pay and allowances including unpaid basic pay, amounts due for travel, per 

diem expenses, transportation of eligible family members, shipment of household 

goods, and unpaid installments of variable reenlistment bonuses.619

5.1.11.3. BURIAL ALLOWANCE

Upon death, the Military Service concerned may provide an active-duty member’s 

surviving spouse or blood relative a burial allowance to cover the expense of recovering 

and identifying remains, preparation of the remains for burial including cremation; 

furnishing of a uniform or other clothing; furnishing of a casket or urn, or both; 

hearse service; funeral director’s services; and interment of the remains.620

5.1.11.4. FLAGS

The Military Service concerned will provide a U.S. flag during the funeral honors 

ceremony to the spouse of the Service member and each child of the deceased, as well 

as the member’s parents.621

5.1.11.5. FUNERAL TRAVEL

The Government will provide transportation to the burial site for the Service member’s 

immediate family, including the surviving spouse, children, siblings of the Service 

 

616 Armed Forces, 10 U.S.C. § 1475(a)(4). 617 Armed Forces, 10 U.S.C. § 1476. “Death Gratuity,” Military Compensation, accessed June 1, 2014, 

http://militarypay.defense.gov/benefits/deathgratuity.html. 618 Armed Forces, 10 U.S.C. § 2771(a). 619 Armed Forces, 10 U.S.C. § 2771. Pay and Allowances of the Uniformed Services, 31 U.S.C. § 3702(a)(1) (2012). Pay 

and Allowances of the Uniformed Services, 37 U.S.C. § 501 (2011). Procedures for Settling Personnel and General 

Claims and Processing Advance Decision Requests, DoDI 1340.21 (2004). (Armed Forces, 10 U.S.C. § 2771 in 

conjunction with 31 U.S.C. § 3702(a)(1) gives the Secretary of Defense authority to settle all accounts of deceased 

members. 37 U.S.C. § 501 sets the parameters for the payment of accrued leave. DoDI 1340.21 sets forth the policies 

and procedures for the settlement of the claim, including, but not limited to what expenses can be submitted with the 

claim.)

620 Armed Forces, 10 U.S.C. § 1482(a). See also Interment Allowance for Deceased Military Personnel, DoDI 1344.08 

(2009).

621 Armed Forces, 10 U.S.C. § 1482(e).
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member, the parents of both the Service member and the surviving spouse, and the 

person authorized to direct disposition (PADD) of human remains that may elect two 

close family members in addition to themselves.622 If family members prefer to make 

their own arrangements, they may be reimbursed by the Government.623 Eligible 

family members can be authorized to receive travel and per diem expenses to attend 

the funeral.624

5.1.11.6. DIGNIFIED TRANSFER TRAVEL

The person most closely related to the casualty or the primary next of kin (PNOK), plus 

two additional family members of the PNOK’s, are eligible for dignified transfer 

travel.625 Eligible PNOK may travel to Dover Air Force Base to participate as official 

observer(s) at the dignified transfer when a fatality from a theater of combat operations 

returns.626

5.1.11.7. UNIT MEMORIAL TRAVEL

A military unit may schedule a memorial service as a way for fellow unit members to 

honor the deceased.627 Immediate family, including the surviving spouse, children, 

siblings of the Service member, the parents of both the Service member and the 

surviving spouse, and the PADD are eligible for funded travel to the memorial 

service.628

5.1.11.8. MILITARY FUNERAL HONORS

Upon request, DoD will provide military funeral honors consisting of the folding and 

the presenting of the U.S. flag and the playing of “Taps.”629 A funeral honors detail 

consists of two or more uniformed members of the Military Services, with at least one 

member from the deceased’s Service branch.630

5.1.11.9. GOLD STAR LAPEL BUTTON

The Gold Star lapel button is provided to the family of Service members who lost their 

lives under hostile conditions.631 These are presented to the spouse, parents, siblings, 

and children of deceased active-duty members prior to the funeral or interment 

service.632

 

622 Pay and Allowances of the Uniformed Services, 37 U.S.C. § 481f. 623 Special Circumstances Travel and Transportation, JFTR U7070-A §U7070 (2013). 624 Mortuary Affairs Policy, DoDD 1300.22E, Enclosure 2, 4(b) (2011). 625 Pay and Allowances of the Uniformed Services, 37 U.S.C. § 481f(e). See also Department of Defense Personnel 

Casualty Matters, Policies, and Procedures, DoDI 1300.18E, 4.10 (2009). 626 Pay and Allowances of the Uniformed Services, 37 U.S.C. § 481f(e). See also Department of Defense Personnel 

Casualty Matters, Policies, and Procedures, DoDI 1300.18E, 4.10 (2009). 627 Travel and Transportation for Survivors of Deceased Members of the Uniformed Services to Attend Memorial 

Ceremonies, DoD Directive-Type Memo 10-008 (2010). 628 Pay and Allowances of the Uniformed Services, 37 U.S.C. § 481f(a)(2). See also DoD Directive-Type Memo 10-008 

(May 11, 2010). 

629 Armed Forces, 10 U.S.C. § 1491. 630 Armed Forces, 10 U.S.C. § 1491. See also Military Funeral Support, DoDI 1300.15 (2009). 631 See generally Armed Forces, 10 U.S.C. § 1126. 632 Armed Forces, 10 U.S.C. § 1126. See also Military Awards to Foreign Personnel and U.S. Public Health Service 

Officers; and Miscellaneous Information, DoDM 1348.33-V3 (2013). 
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Beneficiaries 

Beneficiaries include survivors of members of the uniformed Service who die while on 

active duty or while serving in particular reserve statuses.633

Historical Context 

On July 17, 1862, President Lincoln signed the Omnibus Act of 1862, which gave the 

President the authority to purchase cemetery grounds that would be used as a 

national cemetery for soldiers who die in the service of the country.634 On March 4, 

1865, in his second inaugural address, President Lincoln said, “To care for him who 

shall have borne the battle and for his widow, and his orphan,” affirming the 

Government’s obligation to care for those injured during the war and to provide for the 

families of those who perished on the battlefield.635

Financial Summary 

In FY 2013 the Army spent $9.8 million, the Air Force spent $5.1 million, and the 

Navy and Marine Corps spent $4.3 million on casualty assistance.636

5.1.12. SPACE AVAILABLE TRAVEL

Pursuant to 10 U.S.C. § 2641b, the Secretary of Defense is authorized to establish

Space Available Flights (Space-A travel) for Service members, certain retirees and their 

family members. The system accommodates passengers by letting them occupy seats 

on military air transport flights that would otherwise be left empty. Unused seats on 

DoD-owned or controlled aircraft are available once all the space-required (duty) 

passengers and cargo have been accommodated. Passengers are categorized by 

priority of travel and are processed in priority order. Official duty passengers have 

priority over Space-A travelers.637

Beneficiaries 

The following are travel categories for Space-A beneficiaries in priority order:638

Category I – Emergency Leave Unfunded Travel

 emergency travel in connection with serious illness, death, or impending death 

of a member of the immediate family of the following: U.S. citizen civilian 

employees of DoD stationed overseas

 full-time, paid personnel of the American Red Cross serving with U.S. Military 

Services overseas

 uniformed Service family members whose sponsors are stationed within the 

CONUS and the emergency exists overseas

 family members of U.S. citizen civilian employees of DoD when both sponsor 

and dependents are stationed overseas at the same location

 

633 “Death Gratuity,” DoD Military Compensation, accessed May 21, 2014, 

http://militarypay.defense.gov/Benefits/Death%20Gratuity/. 634 Act of July 17, 1862, 12 Stat 594 (1862). 635 President Abraham Lincoln’s Second Inaugural Address, March 4, 1865. 636 Casualty and Mortuary Affairs, ODASD (MC&FP), e-mail to MCRMC, May 14, 2014. 637 10 U.S.C. § 2641b. 638 Air Transportation Eligibility, DoD 4515.13-R (1994). See also Military Airlift Passenger Service, AMCI24-101V14 14 

(2012). See also Air Mobility Command Website, Space Available Travel Eligibility, accessed June 16, 2014, 

http://www.amc.af.mil/amctravel/spaceatravelcategories.asp
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Category II – Environmental and Morale Leave (EML)

 sponsors on EML and accompanied family members 

 DoDDS teachers and their accompanied family members in EML status during 

school year holiday or vacation periods

Category III – Ordinary Leave, Close Blood or Affinitive Relatives, House Hunting 

Permissive TDY, Medal of Honor Holders, Foreign Military, and Others

 members of the uniformed services in an ordinary or re-enlistment leave status 

and uniformed services patients on convalescent leave (members on 

convalescent leave may not travel overseas unless their leave form is so 

annotated)

 military personnel traveling on permissive TDY orders for house hunting

 dependents of military members deployed for more than 365 consecutive days

 bona fide family members (up to age 23 with a valid identification card) of a 

Service member of the uniformed services when accompanied by their sponsor 

who is in an ordinary leave status within overseas areas between overseas 

stations and air terminals in the CONUS

 foreign exchange service members on permanent duty with DoD, when in a 

leave status

Category IV – Unaccompanied Dependents on EML and DoDDS Teachers on EML 

During Summer

 dependents of military members deployed for more than 120 consecutive days 

 unaccompanied family members (18 years or older) traveling on EML orders

(family members under 18 must be accompanied by an adult family member 

who is also traveling on EML orders)

 DoDDS teachers or family members (accompanied or unaccompanied) in an 

EML status during summer break

Category V – Permissive TDY (Non-House Hunting), Students, Dependents, and 

Others

 unaccompanied Command-sponsored dependents

 students whose sponsor is stationed in Alaska or Hawaii 

 students enrolled in a trade school in the CONUS when the sponsor is stationed 

overseas

 military personnel traveling on permissive TDY orders for other than house 

hunting 

Category VI – Retired, Dependents, Reserve, ROTC, Nuclear Power Officer 

Candidates, and Civil Engineer Corps

 National Guard/Reserve Components/members of the Ready Reserve and 

members of the Standby Reserve who are on the Active Status List

 retired military members who are issued DD Form 2 and eligible to receive 

retired or retainer pay

 family members (with a valid identification card) of retired members when 

accompanied by a sponsor

A more detailed listing of beneficiaries can be found in Section C6.1.7 of 

DoD 4515.13-R, Air Transportation Eligibility.
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Historical Context 

The Space Available program can be traced back to 1907, when the Congress 

authorized the travel of families to accompany officials traveling on official business 

when accommodations were available.639 The laws, policies and regulations governing 

Space-A have expanded over the years to extend this benefit to the current group of 

beneficiaries.

Financial Summary 

Passengers are charged a Federal Inspection Fee if traveling on a commercial mission 

arriving in the United States from overseas.640 Also passengers who arrive/depart the 

Customs Territories of the United States to/from overseas locations are charged a 

Heat Tax.641

5.1.13. SUBSISTENCE FEEDING/ESSENTIAL DINING

Subsistence feeding/essential dining refers to the rations (meals) provided as a basic 

benefit of military service. Service members entitled to receive basic pay are either 

entitled to a basic allowance for subsistence (BAS),642 or, if they are enlisted, they may 

be paid partial BAS and furnished meals or rations at no charge from an appropriated 

fund dining facility (subsistence-in-kind).643 One exception is that enlisted members 

undergoing basic training are subsisted-in-kind and not entitled to partial BAS.644 In 

general, Service members may not receive full BAS and meals or rations at no charge 

for the same period of service.645

Subsistence-in-kind is typically provided to Service members through essential station 

messing or essential unit messing.646 Essential station messing is either essential to 

operating the appropriated fund dining facility efficiently and economically, or is 

necessary for the health and safety of enlisted personnel permanently assigned to 

single quarters (i.e., unaccompanied housing).647 Essential unit messing is declared 

essential for operational readiness, military operations, or effective training of a unit 

(e.g., field messing units, ship’s galley).648

Military dining facilities and essential messing units receive APF commensurate with 

the number of Service members they are expected to feed.649 Meals are tracked using a 

“meal card” (or more modern alternative) and the Service member has no out-of-pocket 

 

639 Act of March 2, 1907, ch. 2511, 34 Stat. 1171 (1907). 640 Military Airlift Passenger Service, AMCI24-101V14 14 (2013). 641 Ibid. See also Air Mobility Command, AMC Travel FAQs, http://www.amc.af.mil/amctravel/amctravelfaqs.asp, 

March 25, 2014.

642 37 U.S.C. § 402. 643 Basic Allowance for Subsistence, DoD Financial Management Regulation Volume 7A, Chapter 25, Section 250101, 

25-3 and 25-4 (2002). 644 Ibid, 25-6. 645 Ibid, 25-7. 646 Basic Allowance for Subsistence (BAS) Policy, DoDI 1418.05, 9 (2003). 647 Ibid. 648 Ibid. 649 Special Accounts, Funds, and Programs, Financial Management Regulation Volume 12, DoD 7000.14-R Chapter 19, 

19-10 (2014).
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expense for these meals.650 Those receiving full BAS are typically permitted to eat in 

the government dining facility but pay an out-of-pocket fee to do so.651

Subsistence feeding does not include the dining options provided at military 

recreational facilities operated with NAF (e.g., officers’ club, enlisted club, squadron 

mess, organized mess).652 Those options are managed as Category C MWR activities.653

Beneficiaries 

Although nearly all Service members are provided a subsistence benefit, only a portion 

(typically those living in unaccompanied personnel housing or assigned to essential 

messing units) are provided this benefit as meals or rations, delivered through an 

appropriate fund dining facility, also known as government mess.654 When Service 

members who are receiving full BAS (or full per diem while travelling), and other nonService members, such as family members and guests, eat in a government mess, they 

are charged for their meals.655 According to 37 U.S.C. § 1011, “Such rates shall be 

established at a level sufficient to provide reimbursement of operating expenses and 

food costs to the appropriations concerned.”

656 The costs of these meals are 

standardized across DoD657 and in FY 2014 range from $2.55 for breakfast to $6.55 

for supper ($7.70 for holiday meals).658 A la carte diners are charged 33 percent above 

the cost of food.659

A Service member who is undergoing medical recuperation or therapy at a military 

treatment facility for an injury, illness, or disease associated with designated combat 

operations, or is otherwise in the status of continuous care, including outpatient care, 

is not required to pay any charge for meals provided to the member by the military 

treatment facility.660 This is true even if they are receiving full BAS.661

Historical Context 

For centuries, militaries have provided rations to their members as a fundamental 

benefit of military service. As indicated by Napoleon’s famous quote, “une armée 

marche à son estomac” (an army marches on its stomach), providing military forces 

adequate nourishment is an important aspect of military operations.662

 

650 Basic Allowance for Subsistence, DoD Financial Management Regulation Volume 7A, Chapter 25, Section 250101

(2002). 651 Special Accounts, Funds, and Programs, Financial Management Regulation Volume 12, DoD 7000.14-R Chapter 19, 

19-10 (2014). 652 Military Morale, Welfare, and Recreation (MWR) Programs, DoDI 1015.10 (2011). 653 Ibid. 654 Basic Allowance for Subsistence, DoD Financial Management Regulation Volume 7A, Chapter 25, Section 250101, 

25-3 and 25-7 (2002). 655 Department of Defense, Food Service Charges at Appropriated Fund Dining Facilities and the Military Academies, 

Effective January 1, 2014, accessed June 1, 2014,

http://comptroller.defense.gov/Portals/45/documents/rates/fy2014/2014_g.pdf. 656 Pay and Allowances of the Uniformed Services, 37 U.S.C. § 1011. 657 Special Accounts, Funds, and Programs, Financial Management Regulation Volume 12, DoD 7000.14-R Chapter 19 

(2014). 658 Food Service Charges at Appropriated Fund Dining Facilities and the Military Academies, Effective January 1, 2014, 

http://comptroller.defense.gov/Portals/45/documents/rates/fy2014/2014_g.pdf. 659 Ibid. 660 Pay and Allowances of the Uniformed Services, 37 U.S.C. § 402. 

661 Ibid. 662 David Axe, From A to B: How Logistics Fuels American Power and Prosperity (Dulles, VA: Potomac Books, 2011).
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In the early days of the Revolutionary War, the U.S. Continental Congress established 

a Commissary General of Stores Provisions.663 On November 4, 1775, legislation was 

passed establishing a standard daily ration (16 oz. beef, 6.8 oz. peas, 18 oz. flour, 

1.4 oz. rice, 16 oz. milk, .1830 oz. soap, .0686 oz. candle, 1 qt. spruce beer).664 Over 

the years, the options and complexity of military rations increased, as did the 

governing rules and regulations. In 2002, the DoD simplified the rules by paying full 

BAS to all Service members (following initial training) and withholding a standard 

amount for those being fed through military dining facilities (subsistence-in-kind).665

There have been multiple initiatives to privatize military dining facilities. In 

October 2002, the Marine Corps converted all CONUS garrison mess halls to 

contractor management and operation under their Regional Garrison Food Service 

Contracts (currently 51 mess halls).666 Under these contracts, private sector food 

service providers have introduced industry best practices and technologies. In 2010, 

the Air Force launched the Food Transformation Initiative (FTI) to improve the quality, 

variety, and availability of food at Air Force bases.667 In addition to privatized food 

service at dining halls, at a limited number of pilot sites, this initiative manages both 

the APF dining halls and NAF dining options, such as a bowling alley snack shop, or a 

grill at the installation golf course, under one management structure.668 This pilot

allows junior enlisted personnel to use their meal cards at any of these dining 

options.669 The FTI also allows APF dining facilities to be opened up to anyone with 

base access (using standard DoD meal fees).670 Both of these privatization efforts 

incorporate military food service specialists, to promote training of those who Service 

members during deployments.671

Financial Summary 

In FY 2013, a total of $7.2 billion in appropriated funds was spent on subsistence for 

the Military Departments.672 Of this, approximately one quarter, $1.9 billion was used 

for government messes (i.e., dining facilities, essential messing units).673 The 

 

663 “The History of Rations,” U.S. Army Quartermaster Foundation, accessed March 2, 2014, 

http://www.qmfound.com/history_of_rations.htm. 664 Ibid. 665 Basic Allowance for Subsistence, DoD Financial Management Regulation Volume 7A, Chapter 25, Section 250101, 

25-3 (2002). 666 Department of the Navy, Commandant of Marine Corps, Commanders’ Guidance for the CONUS Regional Garrison 

Food Service Contracts, accessed June 1, 2014, 

http://www.quantico.marines.mil/Portals/147/FSB_Cmdrs%20Guidance%20Aug%2003.pdf. 667 Government Accountability Office, Defense Management: Actions Needed to Improve Management of Air Force’s Food 

Transformation Initiative, GAO-11-676 (2011). 668 Ibid. 669 Ibid. 670 Ibid. 671 Ibid. 672 Budget document (Active Component): Military Personnel Programs (M-1), Department of Defense Budget, FY 2015, 

March 2014; Budget document (Reserve Component): Department of the Army, FY 2015 President’s Budget 

Submission, Reserve Personnel, Army, March 2014; Budget document (Reserve Component): Department of the Army, 

FY 2015 Budget Estimates, Volume I, National Guard Personnel, Army, March 2014; Budget document (Reserve 

Component): Department of the Navy, FY 2015 Budget Estimates, Reserve Personnel, Navy, March 2014; Budget 

document (Reserve Component): Department of the Navy, FY 2015 Budget Estimates, Reserve Personnel, Marine 

Corps, March 2014; Budget document (Reserve Component): Air Force Reserve, FY 2015 Budget Estimates, 

Appropriation 3700, Reserve Personnel, Air Force, March 2014; Budget document (Reserve Component): Air National 

Guard, FY 2015 Budget Estimates, Appropriation 3850, National Guard Personnel, Air Force, March 2014. 673 Ibid.
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remainder was spent in the form of BAS.674 Note that this figure does not include the 

funding provided for Family Subsistence Supplemental Allowance.

5.2. DEPARTMENT OF HOMELAND SECURITY 

(U.S. COAST GUARD) PROGRAMS

5.2.1. SERVICE MEMBER AND FAMILY SUPPORT

5.2.1.2. TRANSITION AND RELOCATION ASSISTANCE

5.2.1.2.1. Transition Assistance Program

Transition assistance services prepare separating uniformed Service members and 

their families for reentry into the civilian work force.675 These benefits are provided by 

multiple agencies, and are described in the Cross-Agency Benefits section of this 

report—Section 5.8.4 Transition Assistance.

5.2.1.2.2. Relocation Assistance Program

The Relocation Assistance Program assists members in becoming familiar with their 

new community and available resources.676 The following services and resources are 

available within the Relocation Assistance Program:

 community information

 demographics information

 relocation packages

 state information677

The Relocation Assistance Program is available to active-duty Coast Guard members 

and their dependents.678

5.2.1.2.3. Spouse and Dependent Employment Services

The Spouse Employment Assistance Program assists spouses in overcoming the 

difficulties associated with finding employment, especially during the relocation 

process.

679 The program provides comprehensive and standardized employment 

information and services.680 Spouse and Dependent Employment Services are available 

to family members of active-duty personnel, retired Service members and their 

dependents, and relocating spouses of employees.681 The Spouse and Dependent 

Employment Services program provides self-service employment resources, a 

computer access reference library, general employment information, and assistance in 

 

674 Ibid. 675 Ibid. 676 “Safety and Work-Life, Family Support,” U.S. Coast Guard, accessed March 31, 2014, 

http://www.uscg.mil/worklife/relocation_assistance.asp. 677 Ibid. 678 Ibid. 679 “Office of Work-Life Programs - Spouse Employment Assistance,” U.S. Coast Guard, 

http://www.uscg.mil/worklife/spouse_employment.asp (2014). 680 Ibid. 681 Ibid. 
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preparing a regular or Government resume.682 The CG SUPRT683 Education and Career 

Center offers tools and information to enhance knowledge of portable careers, earning 

potential, and attaining jobs.

684

5.2.1.3. SPECIAL NEEDS

The Coast Guard implemented the Special Needs program to help address the complex 

requirements of families with special-needs dependents.685 The objective of the Special 

Needs program is to ensure active-duty members maintain maximum flexibility in 

their assignment through the support of their dependents with special needs.

686 The 

Special Needs program, along with other military and civilian organizations, provide a 

comprehensive, coordinated, multidisciplinary approach to community support, 

housing, medical, educational, and personnel services for Coast Guard families with 

special needs.687 By following well defined procedures and guidelines, the Coast Guard 

ensures sponsors with family members who have special needs receive assignments to 

duty stations where resources are available to support their needs.688

Personnel in the following categories must enroll in the Special Needs program: activeduty Service members, USPHS officers serving with the Coast Guard, and selected 

reserve members on orders for 181 days or more, with dependent family members 

diagnosed with medical, psychological, physical, or educational special needs.689 The 

Special Needs section of the Coast Guard Office of Work-Life Programs website

identifies the criteria for diagnosis in greater detail.690

In FY 2013, the Coast Guard spent approximately $41,000 in appropriated funds to 

support the Special Needs Program.

691

5.2.1.4. FAMILY SERVICES PROGRAMS

5.2.1.4.1. Adoption Reimbursement

The Adoption Reimbursement program subsidizes the adoption of children younger 

than 18 years of age for members of the Coast Guard.692 A Coast Guard member may 

receive reimbursement for the cost of adopting a child up to $2,000 per adoptive child, 

but no more than $5,000 in a calendar year.693 Use of a qualified adoption agency is 

required.694 The Coast Guard member receives benefits only after the adoption is 

final.695 Adoption reimbursement is available to Coast Guard active-duty members and 

members of the Selected Reserve on active duty for at least 180 consecutive days.696

 

682 Ibid. 683 U.S. Coast Guard Support Program, accessed March 31, 2014, http://www.cgsuprt.com. 684 Ibid. 685 Ibid. 686 Ibid. 687 Ibid. 688 Ibid. 689 Ibid. 690 Ibid. 691 Data provided by U.S. Coast Guard, Office of Budget and Programs, e-mail to MCRMC, May 21, 2014. 692 Reimbursement of Adoption Expenses, COMDTINST 1754.9B, 1 (2012). 693 Coast Guard, 14 U.S.C. § 514(e). 694 Coast Guard, 14 U.S.C. § 514. 695 Coast Guard, 14 U.S.C. § 514(c). 696 Reimbursement of Adoption Expenses, COMDTINST 1754.9B, 1 (2012).
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In FY 2013, the Coast Guard spent approximately $54,000 in appropriated funds to 

support the Adoption Reimbursement Program.

697

5.2.1.4.2. Elder Care Resource and Referral698

The Coast Guard Elder Care Resource and Referral program provides services for 

individuals and families who are caring for elderly and aging family members.699 The 

Coast Guard’s CG SUPRT program provides counseling, resource information, 

referrals to elder care facilities, health and wellness coaching, and legal assistance.700

In addition, work-life specialists are located at Health, Safety, and Work-Life (HSWL) 

regional locations.701

Coast Guard work-life specialists use the Office of Personnel Management’s (OPM’s) 

The Handbook of Elder Care in the Federal Workplace as an informational guide.702

These specialists help employees who care for elderly parents and older persons to 

meet obligations to their families, personal responsibilities, and job requirements.703

Elder care information and referral services are available to the following Coast Guard 

members: active-duty Service members and their dependents, select Reservists and 

their dependents, full-time Civil Service employees and their dependents, and full-time 

Exchange System and Morale, Well-Being, and Recreation (MWR) employees and their 

dependents.

704

5.2.1.4.3. Scholarship Support705

Scholarship resources and information assist USCG members and employees with 

finding scholarship information, grants, and loans in support of higher education.706

Family Resource Specialists provide the following services and resources related to the 

scholarship program:

 information on scholarship resources

 application procedures for Coast Guard Foundation Scholarships

 links to scholarship resources707

The Coast Guard scholarship program is available to active-duty members, Reservists, 

retirees, and dependents.708 It is also available to Civil Service employees, Exchange 

System employees, and MWR employees.709

 

697 Data provided by U.S. Coast Guard, Office of Budget and Programs, e-mail to MCRMC, May 21, 2014. 698 The Family Resource Specialist (FRS) is responsible for providing referral, guidance, and support to employees with 

elder care needs as required by Operating Procedures for Work-Life Staffs, COMDTINST 5400.20A, 11-12 (2004). 699 “Health, Safety and Work-Life, Family Support,” U.S. Coast Guard, Human Resources, accessed March 31, 2014, 

http://www.uscg.mil/worklife/elder_care.asp. 700 Ibid. 701 Ibid. 702 Office of Personal Management, The Handbook of Elder Care for the Federal Workplace, accessed March 31, 2014, 

http://www1.opm.gov/policy-data-oversight/worklife/reference-materials/the-handbook-of-elder-care-resources-forthe-federal-workplace/. 703 Ibid. 704 “Health, Safety and Work-Life, Family Support,” U.S. Coast Guard, accessed March 31, 2014, 

http://www.uscg.mil/worklife/elder_care.asp. 705 The Family Resource Specialist (FRS) is responsible for providing information and referral services for scholarships 

available to members of the Coast Guard and their family members as provided for in Operating Procedures for WorkLife Staffs, COMDTINST 5400.20A, 11-12 (2004). 706 “Health, Safety and Work-Life, Family Support,” U.S. Coast Guard, accessed March 31, 2014, 

http://www.uscg.mil/worklife/elder_care.asp.

707 Ibid. 
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5.2.1.4.4. Personal Financial Management Program710

The Personal Financial Management Program (PFMP) provides Coast Guard members 

and their families with access to financial information and resources.711 This support

helps prevent serious financial problems that might cause Coast Guard members to 

lose their security clearance, face criminal sanctions, or be discharged.712

Resources include Employee Assistance Program Coordinators, Command Financial 

Specialists, CG SUPRT, and Qualified Non-Government Educators and Materials.713

More detailed information regarding each of these resources is found on the Personal 

Financial Management programs section of the Coast Guard Office of Work-Life 

Programs website.714

PFMP is available to active-duty Service members and Select Reservists, and their 

families; Civil Service employees; and Exchange system and MWR employees.715

5.2.1.4.5. School Liaison

The School Liaison program provides education support information, referrals, and 

guidance to maximize the opportunity for academic success of Coast Guard-associated 

children.716 The program also assists parents with locating points of contact in the 

schools, making referrals, and maintaining resource materials.717

The School Liaison program is available to the following Coast Guard members: active 

duty, select Reservists, and their family members; Civil Service employees; and 

Exchange System and MWR employees.

718

As stated in Commandant’s Instruction M1700.1, the DOD Education Activity is 

responsible for,

schooling and transportation in support of educating minor dependents of 

uniformed members of the Coast Guard serving on active duty and stationed 

outside the 50 United States, the District of Columbia, the Commonwealth of 

Puerto Rico, and the possessions of the United States excluding the Trust 

Territory of the Pacific Islands and Midway Island. (20 U.S.C. § 921).

Coast Guard overseas commands must comply with DoD guidelines and regulations 

pertaining to overseas dependent schooling.719

 708 Ibid. 709 Ibid. 710 Employee Assistance Program, COMDTINST 1740.7B, 2 (2011), provides that financial consultation shall be done as 

part of the employee assistance program.

711 Personal Financial Management Program, U.S. Coast Guard, accessed April 2, 2014, 

http://www.uscg.mil/worklife/financial.asp. 712 Ibid. 713 Ibid. 714 Ibid. 715 Ibid. 716 “Family Support,” U.S. Coast Guard, accessed March 31, 2014, http://www.uscg.mil/worklife/school_liaison.asp. 717 Ibid. 718 Ibid. 719 Military Civil and Dependent Affairs, COMDTINST M1700.1, 2-16 (2011).
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Commandant’s Instruction M1700.1 also states:

The Secretary of Homeland Security provides for the transportation of 

dependents of Coast Guard personnel between schools located in the same 

area as a Coast Guard facility, and the Coast Guard facility, if it is determined 

that the schools in the area are not accessible by public means of 

transportation on a regular basis (14 U.S.C. § 657). The Commandant has this 

authority from 49 CFR 1.46(r). This authorization applies for transportation 

services in support of educating minor dependents of Coast Guard personnel 

attending schools located in the 50 United States, the District of Columbia, the 

Commonwealth of Puerto Rico, and the possessions of the United States, 

including the Trust Territory of the Pacific Islands and Midway Island.720

The Department of Education (ED) provides financial assistance to local educational 

agencies in federally impacted areas.721 This financial assistance is available to fund 

the transportation of Coast Guard dependents.722 The local educational agency must 

be requested to provide the necessary transportation, from either its own resources or 

from Federal impact funds made available by ED, before the Coast Guard can provide 

funding or Coast Guard-owned transportation.723 The Coast Guard may provide 

funding or Coast Guard-owned transportation only if the local educational agency 

refuses to provide the required transportation and the agency certifies that Federal 

impact funds are either not available or could not be made available if application for 

them was made.724

5.2.1.5. EMPLOYEE ASSISTANCE PROGRAM

The CG SUPRT program assists active-duty Service members, select Reservists, fulltime Civil Service employees and full-time Exchange System and MWR employees, and 

their dependents with a wide range of mental health and other life concerns, such as 

depression, relationship issues, and work stress, that may affect their ability to 

perform on the job or in family environments.725

In FY 2013, the Coast Guard spent approximately $3.5 million in appropriated funds 

to support the Employee Assistance Program.

726

5.2.1.6. FAMILY ADVOCACY PROGRAM

The intent of the Family Advocacy Program is the prevention and reduction of the 

incidence of family violence and the creation of an environment of intolerance for such 

behavior.727

 

720 Ibid, 2-18. 721 Ibid, 2-19. 722 Ibid. 723 Ibid. 724 Ibid. 725 Employee Assistance Program, COMDTINST 1740.7B, 2 (2011). 726 Data provided by U.S. Coast Guard, Office of Budget and Programs, e-mail to MCRMC, May 21, 2014. 727 Coast Guard Family Advocacy Program, COMDTINST 1750.7C, 1 (2006).
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The following services and resources are available within the Family Advocacy 

Program:

 victim safety planning

 domestic violence assessment and rehabilitation

 referrals to mental health providers for diagnostic assessments

 referrals to anger management classes, parenting classes, couples 

communication sessions, and substance abuse programs

 ongoing case management by the Family Advocacy Specialist until successful 

resolution

 any other services/resource required to address the abusive situation728

The Family Advocacy Program is available to the following Coast Guard members:

 active-duty members and their dependents

 retired personnel and their dependents as requested and to the extent 

resources permit

 Reserve personnel while on active duty and their dependents729

5.2.1.7. HEALTH PROMOTION PROGRAM

A healthy, fit, and injury-free Coast Guard workforce is critical to support optimal 

operational readiness. The purpose of the CG Health Promotion Program is to

strengthen and enhance mission performance by providing policies, programs, 

education, direct services, and other resources to Coast Guard members and their 

families.730 By educating and promoting positive health habits, the Health Promotion 

Program helps train and provide a variety of tools to support a versatile and fit 

workforce.731

In FY 2013, the Coast Guard spent approximately $113,000 in appropriated funds to 

support the Health Promotion Program.732

5.2.2. EDUCATION ASSISTANCE

Education Assistance benefits are provided to uniformed Service members by multiple 

agencies including DoD, the Department of Homeland Security (DHS), the Department 

of Veterans Affairs (VA), the Department of Education (ED), and the Department of 

Justice (DOJ).

The primary DHS program for Education Assistance is the Tuition Assistance 

program.

 

728 Ibid, 2-4. 729 Ibid, 2. 730 Coast Guard Health Promotion Manual, COMDITNST M6200.1B (2013). 731 Ibid. 732 Data provided by U.S. Coast Guard, Office of Budget and Programs, e-mail to MCRMC, May 21, 2014.
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5.2.2.1. TUITION ASSISTANCE

These benefits are provided by multiple agencies, and are described in the 

Cross-Agency Benefits section of this report—Section 5.8.1 Education Assistance.

5.2.3. EXCHANGES

Multiple agencies provide exchange benefits for uniformed Service members.

The Military Services operate multiple exchange systems: Army and Air Force 

Exchange Service (AAFES) operates exchanges on Army and Air Force installations.733

AAFES is the largest of the exchange organizations. Navy Exchange Service Command 

(NEXCOM) operates exchanges on Navy bases.734 Marine Corps Community Services 

(MCCS) runs exchanges on Marine Corps installations. MCCS also operates the rest of

Marine MWR operations.735 Similarly, the Coast Guard Exchange Service (CGES), 

which operates exchanges on Coast Guard installations, is part of the Coast Guard 

Community Services Command.736 The Department of Veterans Affairs (VA) operates a 

separate retail system known as the Veteran Canteen Service (VCS).737

In FY 2013, the Coast Guard spent approximately $3.2 million in appropriated funds 

to support the Coast Guard Exchange (CGX) system.738

These benefits are described in greater detail in the Cross-Agency Benefits section of 

this report—Section 5.8.2 Exchanges.

5.2.4. FAMILY SUBSISTENCE SUPPLEMENTAL ALLOWANCE

Family Subsistence Supplemental Allowance (FSSA) benefits are provided to members 

of the Armed Services by multiple agencies including DoD and DHS, and are described 

in the Cross-Agency Benefits section of this report – Section 5.8.3 Family Subsistence 

Supplemental Allowance.

5.2.5. MILITARY HOUSING

Like DoD, the Coast Guard relies on the private sector as the primary source of 

housing for Service members.739 The Coast Guard operates a Rental Partnership 

Program (RPP) to assist members with private-sector housing.740 “Through an 

agreement between housing officers and property owners or managers, a number of 

community-based rental units may be set aside at a fixed rent to provide affordable, 

adequate, community-based housing to military members. Depending on the 

agreement, security deposits, application fees, and credit check fees may be waived 

 

733 Army and Air Force Exchange Service Operations, AR 215-8 and AFI 34-211(I) (2012). 734 Responsibility and Authority for Navy Exchange Operations, OPNAVINST 5450.331A, ¶ 5(a) (2008). 735 MCCS Policy Manual, MCO P1700.27B, ¶ 1001 (2007). 736 See Coast Guard Morale, Well-Being, and Recreation Manual, COMDTINST M1710.13C, Chapter 1, ¶ L (2010). 737 See generally Veterans’ Benefits, 38 U.S.C. §§ 7801-7810. 738 Data provided by U.S. Coast Guard, Office of Budget and Programs (CG-821), e-mail to MCRMC, May 21, 2014. 739 Coast Guard Housing Manual, COMDTINST M11101.13F, 2-1 (2013). 740 Ibid, 2-2.
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and rental costs reduced, generally at or below established BAH rates. Typically, 

monthly rent is paid through allotment.”

741 The Coast Guard Mutual Assistance 

(CGMA) also has housing assistance programs available for active-duty Coast Guard 

personnel.742

5.2.5.1. FAMILY HOUSING

Assignment to Coast Guard owned family housing is mandatory when it is available 

and adequate.743 Assignment to leased housing is not mandatory.744 As of FY 2013, the 

Coast Guard owned and maintained approximately 4,000 military housing units, 

“many of which are not fully occupied because of rental market conditions and an 

extensive backlog of maintenance work affecting habitability.”

745 Generally, the Coast 

Guard occupancy standard for family housing is 95 percent.746

In FY 2013, the Coast Guard spent approximately $35.5 million in appropriated funds 

for operation and maintenance of family housing, including $14.4 million in recurring 

unit level maintenance and $21.2 million in nonrecurring depot level maintenance.747

An additional $9.5 million was spent on the construction of new housing units at Air 

Station Kodiak.748

5.2.5.2. UNACCOMPANIED PERSONNEL HOUSING

In FY 2013, the Coast Guard owned and maintained approximately 246 units of 

Unaccompanied Personnel Housing (UPH).749 Assignment to Coast Guard UPH is 

mandatory for E-5 and below when it is available.750 Single members in pay grade E-6 

assigned ashore may elect to not reside in government quarters if such facilities do not 

meet the minimum standards. Single members in pay grade E-7 and higher assigned 

ashore may elect to not occupy government quarters regardless of adequacy.751 If not 

residing in the UPH, both E-6 and E-7 are then entitled to a housing allowance.

Table 14 shows the minimum standards for single personnel residing in UPH when 

determining adequacy. Although standards for the construction of new UPH units 

include minimum square footage,752 “insufficient space is not a reason to declare 

existing UPH facilities inadequate.”

753

 

741 Ibid, 2-2. 742 Ibid. 743 Ibid, 3-1. 744 Ibid. 745 United States Coast Guard Fiscal Year 2014, Congressional Justification, CG-OE-45 (2014). 746 Coast Guard Housing Manual, COMDTINST M11101.13F, 4-1 (2013). 747 Data provided by U.S. Coast Guard, Office of Budget and Programs, e-mail to MCRMC, May 21, 2014. 748 Ibid. 749 Ibid. 750 Assignment and Release from Government Owned Quarters, PSCINST 11101.2, 2 (2014). 751 Coast Guard Housing Manual, COMDTINST M11101.13F, 7-3 (2013). 752 Shore Facilities Standards Manual (SFSM), Volume 1 Individual Space Standards, COMDTINST M11012.9 with 

Change 1 (1996). 753 Coast Guard Housing Manual, COMDTINST M11101.13F, 7-5 (2013).
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Table 14. Minimum Standards for Single Personnel Residing in

Unaccompanied Personnel Housing754

Category Living Space

E-1 through E-3 Semi-private room with maximum two persons per room 

E-4 and above Private room with private or shared bath

Watchstanders, Students (20 weeks 

or fewer), other Transients No minimum standard

In FY 2013, the Coast Guard spent approximately $9.8 million in appropriated funds 

for operations and support of UPH.755

5.2.6. MILITARY LODGING

Unlike DoD, the Coast Guard does not operate official lodging for Temporary Duty 

(TDY) and Permanent Change of Station (PCS) travelers. The Coast Guard does operate 

recreational lodging programs. As Category C MWR activities, they receive limited APF 

support because they have the business capability of generating enough income to 

cover most of their operating expenses.756 In FY 2013, the Coast Guard spent 

approximately $214K in appropriated funds to operate 23 recreational lodging 

facilities.

5.2.7. MORALE, WELL-BEING, AND RECREATION

The management and operation of the Coast Guard Morale, Well-being, and 

Recreation (MWR) programs is similar to DoD Morale, Welfare, and Recreation 

programs, including the use of three categories of programs: Category A - Mission 

Sustaining Programs, Category B - Basic Community Support Programs, and 

Category C - Revenue Generating Programs.757 Commandant’s Instruction 1710.13C, 

“Aligns MWR activities to achieve parity with DoD MWR activities.”

758 The Coast Guard 

Program Baseline Standards establishes baseline levels of personnel, facilities, 

programs, and equipment for different MWR program sizes.759 These baselines “were 

developed by benchmarking from the other Services to achieve a level of parity with 

DoD MWR programs.”

760

The Coast Guard MWR programs include sports activities and facilities (i.e., bowling, 

golf, tennis, swimming), hobby facilities (i.e., crafts, auto hobby, woodworking), general 

recreation and family support activities (i.e., theaters, child development centers, 

youth activities and recreation areas), military clubs, community centers, and food 

service facilities (i.e., cafeterias and snack bars) in a manner that is comparable to 

DoD.761 The Coast Guard Community Services Command (CSC) manages both the 

 

754 Ibid, 7-6. 755 Data provided by U.S. Coast Guard, Office of Budget and Programs, e-mail to MCRMC, May 21, 2014. 756 Coast Guard Morale, Well-Being, and Recreation Manual, COMDTINST M1710.13C, 4-3 (2010). 757 Ibid, 4-1- 4-4. 758 Ibid, 1, 4-1, and 5-1. 759 Coast Guard Morale, Well-Being, and Recreation Program Baseline Standards (PBS), COMDTINST 1710.2, 3 (2010). 760 Ibid. 761 Coast Guard Morale, Well-Being, and Recreation Manual, COMDTINST 1710.13C, 1-8 (2010).
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Coast Guard Exchange System (CGES) and the Coast Guard MWR programs in a 

manner similar to the Marine Corps, but unlike the other Military Services.762

Although local management functions for the CGES and MWR are consolidated, they 

are financially independent, and the actual cost of services must be allocated to the 

proper program.763

Coast Guard Commanders develop MWR programs based on the assessed needs of 

local patrons.764 Program offerings support military readiness through physical fitness, 

support needs for camaraderie and unit cohesion, promote individual growth and 

development, support family well-being and quality of life, and provide the Coast 

Guard Community with access to programs similar to those in a civilian community.765 

Funding for MWR activities comes from both appropriated and nonappropriated 

sources depending on the category of the MWR activity.766 Nonappropriated funds are 

derived primarily from Coast Guard Exchange System profits as well as fees and 

charges levied for the use of MWR facilities and participation in some MWR 

programs.

767

5.2.7.1 CATEGORY A - MISSION SUSTAINING PROGRAMS

The Coast Guard considers the activities in this category as essential for the physical 

and mental well-being of the military member.768 For these reasons, the Coast Guard 

funds these activities almost entirely with appropriated funds.769 Category A - Mission 

Sustaining Activities include:

 Military Services professional entertainment programs overseas

 MWR consolidated support service offices

 gymnasium/physical fitness/aquatic training facilities

 general libraries information services program

 on-unit park and picnic areas

 recreation centers/rooms

 shipboard activities or unit level programs

 free admission motion pictures

 sports/athletics (self-directed, unit level, and intramural)

 basic social recreation programs

 Warfighter and Family Services Programs

 single Service member programs770

In FY 2013, the Coast Guard spent approximately $3.1 million in appropriated funds 

in support of Category A MWR programs.

771

 

762 Ibid, 1-7-1-8. See also MCCS Policy Manual, MCO P1700.27B, ¶ 1001 (2007). 763 Coast Guard Morale, Well-Being, and Recreation Manual, COMDTINST 1710.13C, 1-7 (2010). 764 Ibid, 1-3. 765 Ibid. 766 Coast Guard Morale, Well-Being, and Recreation Manual, COMDTINST 1710.13C, Encl(5), 1-11 (2010). 767 Coast Guard Morale, Well-Being, and Recreation Manual, COMDTINST 1710.13C, 1-6 (2010). 768 Ibid, 4-1. 769 Ibid. 770 Ibid, 4-1, 4-2, and 5-1 through 5-6. 771 Data provided by U.S. Coast Guard, Office of Budget and Programs, e-mail to MCRMC, May 21, 2014.
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5.2.7.2 CATEGORY B - BASIC COMMUNITY SUPPORT PROGRAMS

Category B - Basic Community Support Programs support the military mission but 

differ from those in Category A because participants pay fees.772 There is limited 

revenue so the Coast Guard also uses some appropriated funding.773 Category B 

activities include the following: 

 amateur radio

 arts and crafts skill development

 automotive skills development

 bowling centers (16 lanes or less)

 child development centers

 community centers

 performing arts (music, drama and theater)

 boating without resale or private boat berthing

 directed outdoor recreation

 recreational information, tickets, tour and travel services

 recreational swimming

 sports programs (above the intramural level)

 youth activities

 camping (primitive or in tents)

 riding stables (government owned or leased)

 outdoor recreational equipment checkout774

In FY 2013, the Coast Guard spent approximately $14,000 in appropriated funds in 

support of Category B MWR programs.

775

5.2.7.3 CATEGORY C - REVENUE GENERATING PROGRAMS

Category C - Revenue Generating Programs generate enough income to cover the 

majority of the operating expenses with minimal appropriated fund support.776

Category C activities include the following: 

 aquatic centers

 aero clubs (not authorized for Coast Guard)

 amusement machine locations and centers

 animal care (kennel or veterinary services)

 Armed Forces Recreation Centers (accommodation/dining and resale facilities)

 bingo

 monte carlo

 bowling centers (over 16 lanes)

 recreational lodging (cabins, cottages, trailers, trailer and/or recreation vehicle 

parks with hook-ups)

 catering

 golf courses and driving ranges

 

772 Coast Guard Morale, Well-Being, and Recreation Manual, COMDTINST 1710.13C, 4-2 (2010). 773 Ibid, 4-2. 774 Ibid, 4-2, 4-3, and 5-6 through 5-10. 775 Data provided by U.S. Coast Guard, Office of Budget and Programs, e-mail to MCRMC, May 21, 2014. 776 Coast Guard Morale, Well-Being, and Recreation Manual, COMDTINST 1710.13C, 4-3 (2010). 
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 Joint Service Facilities and Military Services Recreation Centers

 marinas and boating activities with resale or private boat berthing

 motion pictures (paid admission functions only)

 motorcycle clubs

 equipment rental

 rod and gun clubs

 scuba/diving

 skating rinks

 food and beverage operations, including snack bars, soda fountains, and 

military clubs

 horseback riding program and stables

 temporary lodging facilities

 vehicle storage777

In FY 2013, the Coast Guard spent no appropriated funds in support of Category C 

MWR programs.

778

5.2.7.4 SPECIAL PROGRAMS

The Coast Guard has a number of Special Programs as well. They include the 

following: 

 Armed Forces Sports Calendar

 Inter-Service championships

 International competition

 Sports Participation Grant Program

 Elite Male or Female Athlete of the Year779

The Coast Guard MWR programs are available to the following:

 active-duty personnel and their family members

 members of the ready reserve, reserves in training, members of the National 

Guard, and their family members

 military cadets of Service academies and their families 

 Commissioned Corps of USPHS and their family members

 Commissioned Corps of NOAA on active duty and their family members

 retirees from active duty and their family members

 retirees from Reserves with or without pay and their family members

 honorably discharged veterans with 100 percent service connected disability 

and involuntarily separated Service members under the Transition Assistance 

Management Program and their family members

 Congressional Medal of Honor recipients and their family members

 unremarried surviving spouses of military personnel who died while on active 

duty or while in retired status, and family members

 unremarried former spouses who were married to a military member for at least 

20 years while the military member was on active duty of the armed forces, and 

their family members

 

777 Ibid, 4-3, 4.4, and 5-10 through 5-17. 778 Data provided by U.S. Coast Guard, Office of Budget and Programs, e-mail to MCRMC, May 21, 2014. 779 Coast Guard Morale, Well-Being, and Recreation Manual, COMDTINST 1710.13C, 5-17 to 5-19 (2010).
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 surviving children of a Service member, when not adopted by new parents, 

under 21 years old (or over if they are incapable of supporting themselves, or 

23 years old if they are in full-time study)

 DHS and DoD civilian employees and their family members when stationed 

outside the United States

 U.S. Federal employees when stationed outside the United States

 medical personnel under contract to the Coast Guard or DoD when they are 

residing on the installation 

 military and civilian personnel of foreign nations and their family members 

when on orders from the U.S. Armed Forces, or in overseas areas when the host 

command grants privileges in the best interest of the United States

 paid members of the American Red Cross (ARC), Young Men’s and Women’s 

Christian Association, United Service Organizations (USO), and other private 

organizations when assigned to and serving with the U.S. Armed Forces 

overseas 

 U.S. citizens employed by firms under contract to DHS or DoD working on an 

installation when assigned in areas outside the United States

 DHS and DoD appropriated and nonappropriated funded civilian employees and 

their family members and retired appropriated and nonappropriated funded 

civilian employees and their family members and Coast Guard Auxiliaries

 DHS and DoD contract personnel and technical representatives working full 

time at a Coast Guard unit

 Reserve Officers Training Corps (ROTC) cadets when participating in exercises 

or practice cruises with the Coast Guard

 former prisoners of war (POW) and spouses of current POWs or Service 

members missing in action and their family members

 other Federal employees and contractors when working on the Coast Guard 

installation

 Military Housing Privatization Initiative (MHPI) employees and residents on the 

installation

 foreign national employees

 guests, when specifically invited and accompanied by an authorized patron 

 leaders in the local community designated by the commanding officer

 members of the local community may attend infrequent MWR sponsored events 

or use Category C programs on a continual basis, when authorized and 

specifically documented by the commanding officer on a space-available 

basis780

5.2.7.5. CHILD DEVELOPMENT SERVICES

The Coast Guard provides child development services to assist Coast Guard personnel 

in balancing the competing demands of family life, accomplishing the Coast Guard 

mission, and improving the economic viability of the family unit.781 The Coast Guard 

provides child care in on-site Child Development Centers (CDCs), certified Family 

Child Care homes (FCCHs), and alternative sites, and also refers parents to child care 

programs in the local community.782 Child Development Services (CDS) protects the 

health and safety of children and promotes their physical, social, emotional, creative, 

 

780 Coast Guard Morale, Well-Being, and Recreation Manual, COMDTINST 1710.13C, 3-3 to 3-5 (2010). 781 Child Development Services Manual, COMDTINST M1754.15, 2-1 (1996). 782 Ibid, 2-2 to 2-3. 
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and intellectual development.783 The Coast Guard CDS instruction states, “Child 

development services are not an entitlement but are intended to assist the family who 

must bear the ultimate responsibility for the care and development of the child.”784

To meet the demands for child care, the Coast Guard places first priority on assisting 

personnel who are parents of children younger than age six in locating at least one 

affordable option for quality child care.785 Recruiting and training family child care 

providers is the second priority.786 Assisting personnel with school-age children in 

locating child care is the third priority.787 Parents of children with special needs also 

receive assistance in accessing child care services.788

The Coast Guard requires the facilities used to provide child care and family child care 

homes be maintained in a safe and healthy manner that safeguards the health of 

young children.789 In these settings, there should be protection from hazards, potential 

injuries, and infectious diseases.790 The care settings are intended to be nurturing and 

promote children’s physical and psychological health.791 The Coast Guard Child Care 

Manual identifies the minimum standard for use in planning quality, safe, and healthy 

programs for children.792

In FY 2013, the Coast Guard spent approximately $4.4 million in appropriated funds 

in support of Child Development Services.793 This amount included $577,000 for Child 

Development Centers, $72,000 for Family Child Care Homes, and $3.7 million for 

Community Based Child Care.794

5.2.7.5.1. Child Development Centers

The Coast Guard CDCs are facility-based programs that offer services on a regularly 

scheduled basis at nine795 Coast Guard installations796 for children age six weeks to 

six years.797 Centers may provide drop-in care when space is available798 and offer 

part-day preschool programs for children three to five years of age.799 Programming is 

designed to foster social, emotional, physical, creative, and intellectual growth for 

groups of children.800 The CDCs are licensed by the local/state licensing agency or 

accredited by the National Association for the Education of Young Children.801

 

783 Ibid, 1-2. 784 Ibid, 2-1. 785 Ibid. 786 Ibid, 2-2. 787 Ibid. 788 Ibid, 2-2. 789 Ibid, 1-1. 790 Ibid. 791 Ibid. 792 Ibid. 793 Data provided by U.S. Coast Guard, Office of Budget and Programs, e-mail to MCRMC, May 21, 2014. 794 Ibid. See also Child Development Services Manual, COMDTINST M1754.15, 1-1 (1996). 795 “Office of Work-Life—Child Development Centers Contact List, U.S. Coast Guard, accessed March 31, 2014, 

http://www.uscg.mil/worklife/contact_cdc.asp. 796 Child Development Management Handbook, Commandant Publication P1754.8, cover memo (1990). 797 Child Development Services Manual, COMDTINST M1754.15, 2-1 (1996). See also Child Development Centers, 

U.S. Coast Guard, accessed http://www.uscg.mil/worklife/child_development_centers.asp. 798 Child Development Services Manual, COMDTINST M1754.15, 1-2 (1996). 799 Ibid, 1-4. 800 Ibid, 1-2. 801 Child Development Management Handbook, Commandant Publication P1754.8, 10 (1990).
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5.2.7.5.2. Family Child Care

Caregivers provide Family Child Care (FCC) in their homes on a regularly scheduled 

basis for ten hours or more a week by an individual certified by the Coast Guard and 

who resides in Coast Guard controlled housing.802 The parent and provider negotiate 

the fees.803 Providers may choose to provide night care for children of watchstanders or 

others whose hours make it difficult to obtain care during a normal eight-hour work 

day.804 The instruction suggests “FCC may be especially useful for infants and 

toddlers.”

805

5.2.7.5.3. Separation for Care of Newborns

The temporary separation policy allows active-duty Coast Guard members to 

temporarily separate, and provides a mechanism for return to active duty.806 Under 

this policy, career-oriented officers and enlisted members receive a one-time 

separation from active duty for up to two years to care for newborn children.807 The 

intent is the retention of valuable experience and training of members who might 

otherwise be lost.808

5.2.7.5.4. Child Care Subsidy Benefit

The Child Care Subsidy Benefit program assists Coast Guard members who use any 

Federal child care center, or any state-licensed child care facility.809 This subsidy

includes child development centers as well as in home child care providers.810

The USCG Child Care Subsidy Program helps pay child care costs for active Coast 

Guard members.811 Federal agencies may subsidize child care, for children age 12 and 

younger.812 This program applies to Coast Guard members in situations where both 

parents work, or the member and spouse or partner work or attend school.813

Eligibility for the Coast Guard Child Care Subsidy Program depends on total family 

income (TFI).814 Recipients are responsible for a family portion of their total child care 

costs, and the USCG pays the difference directly to the qualifying child care provider, 

up to the maximum allowed benefit (based on TFI).815 Table 15 summarizes the 

available subsidies.

 

802 Child Development Services Manual, COMDTINST M1754.15, 1-3 (1996). 803 Ibid, 5-1. 804 Ibid, 2-2. 805 Ibid. 806 See Military Separations, COMDTINST M1000.4, § 1.E (2011). 807 Ibid. 808 Ibid. 809 Child Development Services Manual, COMDTINST M1754.15, 4-9 to 4-10 and 5-15 to 5-18 (1996). (The General 

Services Administration (GSA) administers the Child Care Subsidy through an Interagency Agreement entered into 

between GSA and USCG on January 15, 2014. Copy provided by U.S. Coast Guard, Office of Budget and Programs 

(CG 821), e-mail to MCRMC, May 29, 2014.) 810 Ibid. 811 Ibid, 4-9. 812 Administrative Personnel, 5 CFR 792.203. 813 Interagency Agreement Statement of Work entered into between GSA and USCG on January 15, 2014. Copy 

provided by U.S. Coast Guard, Office of Budget and Programs (CG-821), e-mail to MCRMC, May 29, 2014. 814 Child Care Program Subsidy Update, ALCOAST 493/12 (2014). 815 Ibid. Note this update provides a benefit table and average out-of-pocket costs for USCG members.
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Table 15. U.S. Coast Guard Child Care Subsidy Program Benefits - 

Effective January 1, 2014816

Fee 

Category

*Total Family 

Income

Member Min 

Portion Per 

Week/Per Child

Member Min 

Portion Per 

Month/Per 

Child

Max Benefit 

Child #1

Max Benefit 

Child #2

Max Benefit 

Child #3

I 0 - 30,164 $58 $251 $7,800 $6,800 $6,800

II 30,165 - 36,627 $73 $316 $6,630 $5,630 $5,630

III 36,628 - 47,399 $89 $386 $5,320 $4,320 $4,320

IV 47,400 - 59,249 $103 $446 $4,800 $3,800 $3,800

V 59,250 - 75,408 $119 $516 $4,020 $3,020 $3,020

VI 75,409 - 87,207 $130 $563 $3,240 $2,240 $2,240

VII 87,208 - 102,596 $134 $581 $2,560 $1,560 $1,560

VIII 102,597 - 128,245 $138 $598 $1,680 $680 $680

IX 128,246 & Above $142 $615 $900 $0 $0

Coast Guard Child Development Services programs are available to Coast Guard 

personnel, both military and civilian.817

Coast Guard unit child care was originally spouse-sponsored.818 The purpose was so 

that children could play with others of their own age.819 It was also provided so that 

“mothers could keep doctor’s appointments, volunteer their services to community 

projects, and socialize with other spouses.”

820 Over time, the Coast Guard workforce 

became more diverse and services expanded to meet the needs of working parents.821

Coast Guard CDCs operate using both appropriated and nonappropriated funds.822

Coast Guard child care fees have a sliding scale based on total family income.823

“[Coast] Guard fee guidelines indicate fees charged should be between 50 and 

75 percent of the commercial child care rates/fees charged in the local Coast Guard 

center’s geographic area.”

824

5.2.7.6. YOUTH ACTIVITIES

Coast Guard Youth Activities provide planned and self-directed activities and events

responding to the recreational, developmental, social, physiological, psychological, 

cultural, and educational needs of youth through the age of 18.825 These activities 

support the acquisition of lifelong skills and are offered within a physically and 

 

816 “U.S. Coast Guard Child Care Subsidy Program, Benefit Table,” GSA Child Care Information Portal, accessed May 

29, 2014, http://financeweb.gsa.gov/childcare_portal/childcare_coastguard_benefit_table. 817 Child Development Services Manual, COMDTINST M1754.15, 2-1 (1996). 818 Ibid, 1-1. 819 Ibid. 820 Ibid. 821 Ibid. 822 Ibid, 2-3. 823 Ibid, 4-6. 824 Ibid. 825 Coast Guard Morale, Well-Being, and Recreation Manual, COMDTINST 1710.13C, 5-9 (2010).
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emotionally safe environment that includes appropriately trained staff.826 A Youth 

Center or Community Center may serve as the hub for these activities.827

Youth activities vary across the Coast Guard and are not uniformly developed, funded, 

or administered due to the geographic dispersion of Coast Guard units (of 843 units, 

only 73 have more than 100 assigned personnel).828 Most activities focus on recreation, 

fitness, and sports.829

Two commands, Cape Cod and Cape May, have established relationships with the 

local 4-H program.830 Kodiak, Cape Cod, Borinquen, and Petaluma have aligned the 

on-base youth program with the Boys & Girls Clubs of America (B&GCA).831 This 

alignment allows the programs to use the academic, character, citizenship and healthy 

lifestyles programming offered through B&GCA.832 Other units have also aligned with 

B&GCA through the Mission Youth Outreach program.833 This alignment allows activeduty members to enroll their children in B&GCAs “outside the gate” in the local 

community, with the Coast Guard Community Services Command paying the annual 

registration fee.834

In FY 2013, the Coast Guard spent approximately $6,000 in appropriated funds in 

support of youth activities.

835

5.2.8. SUBSISTENCE FEEDING/ESSENTIAL DINING

The Coast Guard operates approximately 395 Coast Guard Dining Facilities (CGDFs) 

to “provide nutritious, well-balanced meals to all authorized personnel.”

836 Consistent 

with the other Armed Services, Coast Guard enlisted personnel either receive an 

allowance, enlisted basic allowance for subsistence (ENL BAS), or are fed by the Coast 

Guard, known as subsistence-in-kind (SIK).837 “SIK is the traditional means to provide 

food service support for all recruits, enlisted members, Officer Candidate School (OCS) 

students, Academy cadets, Class ‘A’ School students, and students attending 

educational enrichment programs. If SIK is unavailable from a Government dining 

facility, a commercial contract to provide SIK is authorized.”

838

As an alternative to SIK, all enlisted personnel who have completed basic training can 

apply for monthly ENL BAS, but only receive it under certain conditions, with the 

approval of their Commanding Officer or Officer in Charge.839 Officers receive officer 

 

826 Ibid. 827 Ibid. 828 Data 2014 USCG Youth Activities Program Operations provided by USCG Office of Work-Life, e-mail to MCRMC, 

April 8, 2014. 829 Coast Guard Morale, Well-Being, and Recreation Manual, COMDTINST 1710.13C, 5-9 (2010). 830 Data 2014 USCG Youth Activities Program Operations provided by USCG Office of Work-Life, e-mail to MCRMC, 

April 8, 2014.

831 Ibid. 832 Ibid. 833 Ibid. 834 Ibid. 835 Data provided by U.S. Coast Guard, Office of Budget and Programs (CG-821), e-mail to MCRMC, May 21, 2014. 836 Coast Guard Food Service Manual, COMDTINST M 4061.5A, 1-1 (2009). 837 Ibid, 1-1. 838 Ibid. 839 Ibid, 1-3.
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basic allowance for subsistence (OFF BAS) and are not required to eat in CGDFs.

840

BAS does not fully pay for meal costs.841

In FY 2013, the Coast Guard spent approximately $38.1 million in appropriated funds 

in support of subsistence feeding.

842

5.3. DEPARTMENT OF VETERANS AFFAIRS 

PROGRAMS

5.3.1. BURIAL AND MEMORIAL BENEFITS

The Department of Veterans Affairs (VA) provides burial and memorial benefits for 

eligible veterans and their dependents. These benefits include burial; headstones, 

markers, and medallions; memorialization on memorial walls; burial flags; presidential 

memorial certificates; reimbursement of burial expenses; plot allowances; and Military 

funeral honors.843 VA maintains more than 3.2 million gravesites at 131 national 

cemeteries in 40 States and Puerto Rico, as well as 33 soldiers’ lots and monument 

sites.844

5.3.1.1. BURIAL

Burial in a VA national cemetery is available at no cost for veterans and certain 

individuals, including, but not limited to, veterans of the Military Services discharged 

from active duty under conditions other-than-dishonorable with at least 24 months of 

service, uniformed Service members who die while on active duty, any member of a 

Reserve Component, and any member of the Army or Air National Guard, whose death 

occurs under honorable conditions while such member is hospitalized or undergoing 

treatment, at the expense of the United States, for injury or disease contracted or 

incurred under honorable conditions while such member is performing active duty for 

training, inactive-duty training, and spouses and dependent children of 

veterans.845 VA operates 131 national cemeteries.846 Burial options are limited to those 

available at a specific national cemetery, and may include an in-ground casket or 

interment of cremated remains in a columbarium, in-ground, or in a scattering area.847

5.3.1.2. HEADSTONES, MARKERS, AND MEDALLIONS

Veterans, active-duty Service members of the Armed Forces, and retired Reservists 

and National Guardsmen buried in a private cemetery, whose deaths occurred on or 

 

840 Ibid. 841 Ibid, 1-4. 842 Data provided by U.S. Coast Guard, Office of Budget and Programs (CG-821), e-mail to MCRMC, May 21, 2014. 843 Veterans’ Benefits, 38 U.S.C. §§ 2301-2308, 2400-2414. 844 “Burial Benefits,” Department of Veterans Affairs, accessed June 17, 2014, 

http://www.cem.va.gov/cem/cems/index.asp. 845 Veterans’ Benefits, 38 U.S.C. § 2402. See also Veterans’ Benefits, 38 U.S.C. § 5303A(b). 846 “Burial Benefits,” Department of Veterans Affairs, accessed June 17, 2014, 

http://www.cem.va.gov/cem/cems/index.asp. 847 See also “Burial Benefits,” Department of Veterans’ Affairs, accessed March 20, 2014, 

http://www.cem.va.gov/burial_benefits/index.asp. 
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after November 1, 1990, are eligible for an inscribed headstone or marker for their 

unmarked grave at any cemetery—national, State veterans, tribal, or private—or VA 

may furnish a medallion to affix to an already existing privately-purchased headstone 

or marker.848 Spouses and dependent children are eligible for a Government headstone 

or marker only if they are buried in a national or State Veteran’s cemetery.849 VA will 

deliver a headstone or marker at no cost, anywhere in the world.850

5.3.1.3. MEMORIALIZATION ON MEMORIAL WALLS

When the remains of an eligible veteran or family member are not available for burial 

because they have not been recovered or identified, were donated to science, buried at 

sea, or cremated and scattered, the decedent is entitled to a memorial headstone or 

marker.851 All new National Cemeteries and existing National Cemeteries with 

expansion projects have a dedicated memorialization wall to display individual 

memorial markers.852

5.3.1.4. BURIAL FLAGS

Upon request, VA provides a U.S. flag to drape the casket of a veteran who received an

other-than-dishonorable discharge.853 This program includes active-duty Service 

members who were veterans of any war, or of service after January 31, 1955, have

served at least their initial obligation; or have been discharged or released from the 

active military, naval, or air service for a disability incurred or aggravated in line of 

duty.854 This provision also includes each deceased member or former member of the 

Selected Reserve who completed his or her initial obligation, was discharged before 

completing his or her obligation for a disability incurred or aggravate in line of duty, or 

died while a member of the Selected Reserve.855 After a burial flag has been used to 

honor the veteran, the flag is given to the veteran’s next of kin.856

5.3.1.5. PRESIDENTIAL MEMORIAL CERTIFICATES

A Presidential Memorial Certificate is an engraved paper certificate, signed by the 

current President, to honor the memory of honorably discharged deceased veterans of 

the Armed Forces.857 Next of kin, relatives and other loved ones may apply for a 

certificate by submitting a Presidential Memorial Certificate Request Form along with a 

copy of the veteran’s military discharge documents or proof of honorable military 

 

848 Veterans’ Benefits, 38 U.S.C. § 2306(d)(4); Schedule for Rating Disabilities, 38 CFR 38.631. 849 Schedule for Rating Disabilities, 38 CFR 38.630(c)(3)(ii). 850 “Federal Benefits for Veterans, Dependents, and Survivors; Chapter 8 – Burial and Memorial Benefits (2014 

Edition)” Department of Veterans Affairs, http://www.va.gov/opa/publications/benefits_book/benefits_chap08.asp, 

March 20, 2014.

851 Veterans’ Benefits, 38 U.S.C. § 2403(a). 852 VA Memorandum, Memorial Walls in VA National Cemeteries, April 13, 2009. 853 Veterans’ Benefits, 38 U.S.C. § 2301, Flags. 854 Veterans’ Benefits, 38 U.S.C. § 2301(a)(1). 855 Veterans’ Benefits, 38 U.S.C. § 2301(f)(1). 856 Veterans’ Benefits, 38 U.S.C. § 2301(b), Flags. 857 Veterans’ Benefits, 38 U.S.C. § 112. 
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service.858 There is no restriction on the number of Presidential Memorial Certificates a 

veteran’s family may request.859

5.3.1.6. REIMBURSEMENT OF BURIAL EXPENSES

Applicants for VA burial allowances may be anyone who paid for a veteran’s burial or 

funeral when the veteran was discharged under conditions other-than-dishonorable.860

Upon request, VA pays a burial and funeral allowance of up to $2,000 for veterans 

who die from a service-connected disability.861 VA will pay a burial and funeral 

allowance of up to $300 for veterans who, at the time of death from nonserviceconnected causes, were entitled to receive pension or compensation, or would have 

been entitled if they were not receiving military retirement pay.862 VA will pay a burial 

and funeral allowance of up to $734 when the veteran’s death occurs in a VA facility, a 

VA-contracted nursing home, or a State veteran’s nursing home.863 In cases in which 

the veteran’s death was not service connected, claims must be filed within two years 

after burial or cremation.864

5.3.1.7. PLOT ALLOWANCES

Upon request, VA pays a plot allowance of up to $734 when:

 the veteran is buried in a cemetery not under U.S. Government jurisdiction, 

and

 the veteran is discharged from active duty because of a disability incurred or 

aggravated in the line of duty, or

 the veteran is receiving compensation or a pension or would have been if the 

veteran was not receiving military retired pay, or

 the veteran dies in a VA facility865

5.3.1.8. MILITARY FUNERAL HONORS

Upon request, DoD will provide military funeral honors consisting of the folding and 

the presenting of the U.S. flag and the playing of “Taps.”866 A funeral honors detail 

consists of two or more uniformed members of the Armed Forces, with at least one 

member from the deceased’s Service branch for Service members with a discharge 

other-than-dishonorable.867

 

858 Ibid. See also “Federal Benefits for Veterans, Dependents and Survivors,” accessed March 19, 2014, Department of 

Veterans Affairs, http://www.va.gov/opa/publications/benefits_book/benefits_chap08.asp. 859 Veterans’ Benefits, 38 U.S.C. § 112(a). 860 See Schedule for Rating Disabilities, 38 CFR 3.1601. 861 Veterans’ Benefits, 38 U.S.C. § 2307. 862 Veterans’ Benefits, 38 U.S.C. § 2302. 863 Veterans’ Benefits, 38 U.S.C. § 2303(a). “Burial and Plot-Interment Allowances,” Department of Veterans’ Affairs, 

accessed June 12, 2014, http://www.benefits.va.gov/BENEFITS/factsheets/burials/Burial.pdf. 864 Schedule for Rating Disabilities, 38 CFR 3.1601(a). 865 Veterans’ Benefits, 38 U.S.C. § 2303. 866 Armed Forces, 10 U.S.C. § 1491(c). 867 Armed Forces, 10 U.S.C. § 1491(b).
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Beneficiaries 

Burial

Any veteran, which includes a person who died in the active military, naval, or air 

service, is eligible for burial in a national cemetery.868 Eligibility also includes any 

member of a Reserve Component “whose death occurs under honorable conditions 

while such member is hospitalized or undergoing treatment, at the expense of the 

United States, for injury or disease contracted or incurred under honorable conditions 

while such member is performing active duty for training, inactive duty training, or 

undergoing that hospitalization or treatment at the expense of the United States.”869

Spouses and dependent children are also eligible if the veteran spouse/parent is 

eligible.870 If the qualifying veteran or Reserve Component member entered service 

after September 7, 1980, he/she must complete the shorter of 24 months of 

continuous active duty or the full period for which the Service member was called to 

active duty.871

Headstones, Markers, and Medallions

Eligibility for Headstone, Marker, and Medallion benefits includes veterans, activeduty members of the Military Services, and retired Reservists and National Guardsmen 

buried in a private cemetery whose deaths occurred on or after November 1, 1990.872

Memorialization on Memorial Walls

Eligibility for memorialization on memorial walls includes veterans or family members 

who are not available for burial because they have not been recovered or identified, 

were donated to science, buried at sea, or cremated and scattered.873

Burial Flag

Eligibility for burial flags includes Service members who served in the Armed Forces 

on active duty after January 31, 1955, retired Reservists and National Guardsmen, 

and members or former members of the Selected Reserve who served their initial 

obligation, or were discharged for a disability incurred or aggravated in the line of 

duty, or died while a member of the Selected Reserve.874

Presidential Memorial Certificates

Presidential memorial certificates may be provided to next of kin, relatives, and other 

loved ones of honorably discharged deceased veterans of the Military Services.

875

Reimbursement of Burial Expenses

Eligibility for reimbursement of burial expenses includes veterans of the Military 

Services who die from service-connected causes; veterans who, at the time of death 

from nonservice-connected causes, were entitled to receive pension or compensation 

or would have been entitled if they were not receiving military retirement pay; and 

 

868 Veterans’ Benefits, 38 U.S.C. § 2402. 869 Ibid. 870 Ibid. 871 Veterans’ Benefits, 38 U.S.C. § 5303A. For a list of exceptions to this general rule, see Veterans’ Benefits, 38 U.S.C. 

§ 5303A(b)(3). 

872 Schedule for Rating Disabilities, 38 CFR 38.631. 873 Veterans’ Benefits, 38 U.S.C. § 2403(a). 874 Veterans’ Benefits, 38 U.S.C. § 2301. 875 Veterans’ Benefits, 38 U.S.C. § 112. 
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veterans whose deaths occur in a VA facility, a VA-contracted nursing home, or a 

State veteran’s nursing home.876

Plot Allowance

Veterans buried in a cemetery not under U.S. Government jurisdiction are eligible for 

a plot allowance if:

 the veteran is discharged from active duty because of a disability incurred or 

aggravated in the line of duty, or

 the veteran is receiving compensation or a pension or would have been if the 

veteran was not receiving military retired pay, or

 the veteran dies in a VA facility877

Military Funeral Honors

Military funeral honors may be provided to members of the Armed Forces with a 

discharge other-than-dishonorable.878

Historical Context 

On July 17, 1862, President Lincoln signed the Omnibus Act of 1862, which 

authorized the president to purchase cemetery grounds that would be used as a 

national cemetery for soldiers who died in the service of the country.879 The National 

Cemetery Administration traces its roots to this historic legislation, and in 1973, 

the Congress created a National Cemetery System under the jurisdiction of the VA.880

The headstone and marker benefit began during the Civil War to mark the graves of 

Union soldiers concurrent with the establishment of Federal national cemeteries.881 In 

1879, the Congress authorized the provision of this benefit for the unmarked graves of 

veterans in cemeteries other than national cemeteries.882 In 1962, President Kennedy 

began the practice of issuing Presidential Memorial Certificates as a way for the 

President of the United States to express appreciation for the service and sacrifice of

individual, deceased, honorably discharged veterans.883 Pub. L. No. 89-88 enacted The 

Presidential Memorial Certificate Program884 and the National Cemetery Administration

(NCA) became responsible for administration of the program.885 The VA State Cemetery 

Grants Program was established by Pub. L. No. 95-476 in 1978 to complement VA’s 

network of national cemeteries.886

 

876 Veterans’ Benefits, 38 U.S.C. §§ 2302, 2303, 2307. 877 Veterans’ Benefits, 38 U.S.C. § 2303(b). 878 Armed Forces, 10 U.S.C. § 1491. 879 Act of July 17, 1982, Chapter 200, § 18, 12 Stat. 594, 596 (1862). 880 National Cemeteries Act of 1973, Pub. L. No. 93-43, 87 Stat. 75 (1973). 881 General Orders No. 75, War Dept., Adjutant General’s Office (1861). 882 Act of February 3, 1879, ch. 44, 20 Stat. 281 (1879). 883 Presidential Memorial Certificates, Department of Veterans Affairs, accessed April 10, 2014, 

http://www.cem.va.gov/pmc.asp. 884 Act of July 24, 1965, Pub. L. No. 89-88, 79 Stat. 264 (1965). 885 Presidential Memorial Certificates, Department of Veterans Affairs, accessed April 10, 2014, 

http://www.cem.va.gov/pmc.asp. 886 Act of October 18, 1978, Pub. L. No. 95-476, § 202(b), 92 Stat. 1497, 1504-1505 (1978). 
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Financial Summary 

In FY 2013, VA’s total expenditure of appropriated funds for burial and memorial 

benefits was $506 million.887 The NCA expended $306 million to provide 124,785 

interments, process 358,572 applications for Government-furnished headstones and 

markers, and issue 654,470 Presidential Memorial Certificates.888 In FY 2013, the 

Veterans Benefits Administration (VBA) paid out $200 million in burial obligations on 

requests for burial allowances, burial plots, service-connected deaths, burial flags, 

headstones and markers, graveliners, and preplaced crypts.889

5.3.2. EDUCATION AND TRAINING ASSISTANCE

Education Assistance benefits are provided to uniformed Service members by multiple 

agencies including DoD, the Department of Homeland Security (DHS), the Department 

of Veterans Affairs (VA), the Department of Education (ED), and the Department of 

Justice (DOJ).

VA programs include:

 Post-9/11 GI Bill

 Yellow Ribbon GI Education Enhancement Program

 Montgomery GI Bill Active Duty

 Montgomery GI Bill Selected Reserve

 Tuition Assistance Top-Up

 GI Bill Kicker

 Reserve Education Assistance Program

 Post-Vietnam Era Veterans Educational Assistance Program

 Work-Study Program

 Vocational Rehabilitation and Employment

 Education and Career Counseling Program

 Survivors’ and Dependents’ Educational Assistance Program

 Marine Gunnery Sergeant John David Fry Scholarship

These benefits are described in the Cross-Agency Benefits section of this report—

Section 5.8.1 Education Assistance.

5.3.3. HOME LOAN GUARANTY

The Department of Veterans Affairs (VA) guarantees loans made by private-sector 

lenders to help eligible Service members, veterans, reservists, National Guardsmen, 

and certain unmarried surviving spouses obtain homes, condominiums, and 

manufactured homes, and to refinance loans using the Home Loan Guaranty 

Program.890 The guaranty amount is what VA can pay a lender, should the loan go to 

foreclosure. VA’s guaranteed home loans have a maximum guaranty amount,

891 which

 

887 FY 2015 Congressional Budget Submission, Volume III, Benefits and Burial Programs and Departmental 

Administration, VBA-4, NCA-6, accessed May 6, 2014, http://www4.va.gov/budget/products.asp. 888 FY 2015 Congressional Budget Submission, Volume III, Benefits and Burial Programs and Departmental 

Administration, VBA-4, NCA-12, NCA-13, accessed May 6, 2014, http://www4.va.gov/budget/products.asp . 889 Ibid, VBA-3. 890 See generally Veterans’ Benefits, 38 U.S.C. §§ 3701-3775. 891 See Veterans’ Benefits, 38 U.S.C. § 3703. 
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is typically 25 percent of the Freddie Mac Conforming Loan Limit as determined 

annually by the Federal Housing Finance Agency.892

5.3.3.1. PURCHASE LOANS

Purchase loans help eligible participants purchase a home at a competitive interest 

rate, often without requiring a down payment or private mortgage insurance.893

VA loans also provide limitations on the fees and charges that are incurred as part of a 

home loan transaction.894

5.3.3.2. CASH OUT REFINANCE

Cash out refinance loans allow participants to take cash out of their home’s equity for 

certain situations, such as to make home improvements.895 The amount of the 

refinance loan may not exceed an amount equal to 90 percent of the reasonable value 

of the home.896

5.3.3.3. INTEREST RATE REDUCTION REFINANCE LOAN 

An Interest Rate Reduction Refinance Loan can help participants obtain a lower 

interest rate by refinancing an existing VA loan.897 The loan applicant must meet 

certain requirements and the refinancing loan will have a restricted dollar amount.898

5.3.3.4. NATIVE AMERICAN DIRECT LOAN 

The Native American Direct Loan Program helps eligible Native American Veterans 

finance the purchase, construction, or improvement of homes on Federal Trust 

Land.899 A Native American Direct Loan may be made only pursuant to specific 

regulatory requirements to include that of a memorandum of understanding between 

VA (or in certain situations another federal department or agency) and a tribal 

organization that has jurisdiction over the veteran.900

5.3.3.5. SPECIALLY ADAPTED HOUSING GRANTS

Specially adapted housing grants help veterans who have certain service-connected 

disabilities build, purchase, or modify their homes to meet their unique housing

needs.901

 

892 See Veterans’ Benefits, 38 U.S.C. § 3710(e)(1)(D)(ii). 893 Veterans’ Benefits, 38 U.S.C. § 3710 (purchase or construction of homes) and 3711 (direct loans to veterans to 

provide housing credit for veterans living in rural areas and small cities and towns).

894 See generally Schedule for Rating Disabilities, 38 CFR 36.4313. 895 See Veterans’ Benefits, 38 U.S.C. § 3710. See also Schedule for Rating Disabilities, 38 CFR 36.4306. 896 Schedule for Rating Disabilities, 38 CFR 36.4306. 897 Schedule for Rating Disabilities, 38 CFR 36.4307. 898 Ibid. 899 See Veterans’ Benefits, 38 U.S.C. § 3761. See also Schedule for Rating Disabilities, 38 CFR 36.4527. 900 Schedule for Rating Disabilities, 38 CFR 36.4257. 901 See generally Schedule for Rating Disabilities, 38 CFR 36.4400-4411.
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Beneficiaries 

Members of the Armed Forces902 who served on active duty for 90 days or more at any 

time during the “Persian Gulf War,” with limited exceptions, are eligible for housing 

loan benefits.903 Members of the Reserves and National Guard may be eligible upon 

completion of six years of service including members of the Selected Reserve who were 

discharged or released earlier due to a service-connected disability.904 Some unmarried 

surviving spouses of veterans may have home loan eligibility.905 Applicable situations 

include the unmarried surviving spouse of a veteran who dies as a result of service or 

service-connected causes; who dies on active duty or from service-connected causes; 

or who is an active-duty member listed as missing in action (MIA) or a prisoner of war 

(POW) for more than 90 days.906 Surviving spouses who remarry may continue to 

remain eligible for VA Home Loans if they meet eligibility requirements.907 Additional 

eligibility requirements can be found in 38 U.S.C. §§ 3701 and 3702.

Historical Context 

The Servicemember Readjustment Act of 1944, also known as the World War II GI Bill, 

provided housing and assistance to veterans and their families by offering home, 

business, and farm loans that required no down payment for up to $2,000 with 

50 percent Federally guaranteed.908 At the end of 1956, the World War II GI Bill had 

helped train and educate 7.8 million veterans and the VA had guaranteed $50.1 billion

for 5.9 million home loans.909

Financial Summary 

In FY 2013, the VA guaranteed 600,023 home loans totaling $134.9 billion in 

guaranteed loans. The VA spent $126.8 million in FY 2013 to administer the Home 

Loan Program.910

5.3.4. LIFE INSURANCE PROGRAMS

The Department of Veterans Affairs (VA) provides life insurance benefits to uniformed

Service members, veterans, and their families. Current programs include Service

members’ Group Life Insurance (SGLI), Servicemembers’ Group Life Insurance 

Traumatic Injury Protection (TSGLI), Family Servicemembers’ Group Life Insurance 

(FSGLI), Veterans’ Group Life Insurance (VGLI), Service-Disabled Veterans’ Life 

Insurance (S-DVI), and Veterans’ Mortgage Life Insurance (VMLI).

 

902 Veterans’ Benefits, 38 U.S.C. § 3701(b)(4) (discussing that the term “veteran” includes an individual serving on 

active duty). See also Veterans’ Benefits, 38 U.S.C. § 3701(c) (Commissioned Officers of NOAA and USPHS are not 

afforded these benefits except in certain situations). 903 Veterans’ Benefits, 38 U.S.C. § 3702 (a)(2). The period of the Persian Gulf War is defined by VA as period beginning 

August 2, 1990, through a date to be set. Veterans’ Benefits, 38 U.S.C. § 101(38). Schedule for Rating Disabilities, 

38 CFR 3.2(1). 904 Veterans’ Benefits, 38 U.S.C. § 3701(b)(5)(A). 905 Veterans’ Benefits, 38 U.S.C. § 3701(b)(2). 906 Veterans’ Benefits, 38 U.S.C. § 3701(b)(3). 907 Ibid. 908 Servicemen’s Readjustment Act of 1944, Pub. L. No. 78-364, §§ 500-503, 58 Stat. 284, 291 (1944). 909 “VA History in Brief,” Department of Veterans Affairs, 14, accessed March 13, 2014, 

http://www.va.gov/opa/publications/archives/docs/history_in_brief.pdf.

910 Department of Veterans Affairs, FY 2015 Congressional Budget Submission, Volume III, Benefits and Burial Programs 

and Departmental Administration, VBA-72, VBA-235, accessed May 6, 2014, 

http://www4.va.gov/budget/products.asp.
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5.3.4.1. SERVICEMEMBERS’ GROUP LIFE INSURANCE 

Servicemembers’ Group Life Insurance (SGLI) is a group term life insurance program 

for uniformed Service members.911 SGLI is available to members of the Military 

Services on active duty, commissioned members of the National Oceanic and 

Atmospheric Administration and the Public Health Service, cadets or midshipmen of 

the U.S. Service Academies and of the Reserve Officer Training Corps (ROTC) while 

engaged in authorized training and practice cruises, members of the Ready 

Reserves/National Guard who are scheduled to perform at least 12 periods of inactive 

training per year, and Ready Reserves/National Guard members who volunteer for a 

mobilization category in the Individual Ready Reserve.912 Members are automatically 

insured for $400,000 but may elect to be covered for a lesser amount, that is evenly 

divisible by $50,000, or to decline coverage altogether.913

Active-duty personnel are covered during the period of active-duty or inactive-duty 

training and for 120 days following separation or release from duty.914 Coverage can be 

extended for up to two years if the Service member is totally disabled at separation.915

Reservists or National Guard members who have been assigned to a unit or position in 

which such person may be required to perform active duty, or active duty for training, 

and each year will be scheduled to perform at least 12 periods of inactive-duty training 

that is creditable for retirement purposes are also covered to include 120 days 

following separation or release from duty.916 Members covered for a period of fewer

than 31 days do not receive 120 days of free coverage after separation unless they 

incur or aggravate a disability during a period of duty.917

5.3.4.1.1. Servicemembers’ Group Life Insurance Traumatic Injury Protection

Servicemembers’ Group Life Insurance Traumatic Injury Protection (TSGLI) is an 

automatic feature (or rider) of SGLI that provides payments to Service members who 

suffer a traumatic injury during service such as amputations, blindness, or

paraplegia.918 TSGLI helps severely injured Service members who have suffered 

physical losses with a one-time payment of up to $100,000.919 The amount varies 

depending on the loss; however, the minimum payment is $25,000.920

TSGLI cannot be declined unless the Service member also declines basic SGLI.921

TSGLI claims are adjudicated by the individual Military Service and a covered Service 

member may receive more than one TSGLI payment for unique incidents.922

 

911 Veterans’ Benefits, 38 U.S.C. §§ 1965-1980A (2014). See also Schedule for Rating Disabilities, 38 CFR 9. 912 Veterans’ Benefits, 38 U.S.C. § 1967. 913 Ibid. 914 Veterans’ Benefits, 38 U.S.C. § 1968. 915 Ibid. 916 See Armed Forces, 10 U.S.C. § 12732 and Veterans’ Benefits, 38 U.S.C. § 1965(5)(B). 917 Veterans’ Benefits, 38 U.S.C. § 1968. 918 See Veterans’ Benefits, 38 U.S.C. § 1980. Schedule for Rating Disabilities, 38 CFR 9.20. 919 Schedule for Rating Disabilities, 38 CFR 9.20(e)(2). 920 Schedule for Rating Disabilities, 38 CFR 9.20(f). 921 Schedule for Rating Disabilities, 38 CFR 9.20(d)(1) (TSGLI exists only as an automatic rider for those who are 

insured under SGLI; if a member declines SGLI, there is no availability to TSGLI). 922 Schedule for Rating Disabilities, 38 CFR 9.2(g).
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5.3.4.2. FAMILY SERVICEMEMBERS’ GROUP LIFE INSURANCE 

Family Servicemembers’ Group Life Insurance (FSGLI) insures spouses and children of 

Service members with SGLI coverage.923 FSGLI provides up to $100,000 of life 

insurance coverage for spouses of Service members with full-time SGLI coverage, not 

to exceed the amount of SGLI the member has in force.924 FSGLI is a Service members’ 

benefit. The member pays the premium and is the only person allowed to be the 

beneficiary of the coverage. Generally, FSGLI spousal coverage ends when the Service 

member elects in writing to terminate coverage on the spouse, the Service member 

elects to terminate his or her own SGLI coverage, the Service member dies, the Service 

member separates from service, or the Service member is divorced from the spouse.925

The insured spouse may convert his or her FSGLI coverage to a permanent policy 

offered by participating private insurers within 120 days of the date of any of the 

termination events noted above.926 FSGLI dependent coverage of $10,000 is also 

automatically provided for dependent children of Service members insured under 

SGLI, with no premium required.927

5.3.4.3. VETERANS’ GROUP LIFE INSURANCE 

Veterans’ Group Life Insurance (VGLI) allows veterans to convert their SGLI to a 

civilian program of lifetime renewable term coverage after separation from Service.

VGLI provides renewable term coverage to: (1) Veterans who had full-time SGLI 

coverage upon separation from active duty or the reserves; (2) Members of the Ready 

Reserves/National Guard with part-time SGLI coverage who incur a disability or 

aggravate a preexisting disability during a period of active duty or a period of inactive 

duty for less than 31 days that renders them uninsurable at standard premium rates; 

and (3) Members of the Individual Ready Reserve and Inactive National Guard.928

VGLI policy holders who are younger than age 60 and have less than $400,000 in 

coverage can purchase up to $25,000 of additional coverage on each five-year 

anniversary of their coverage, up to the maximum $400,000.929 No medical 

underwriting is required for the additional coverage.930 Service members must apply 

for VGLI within one year and 120 days from separation. Service members discharged 

on or after November 1, 2012, who apply for VGLI within 240 days of separation do 

not need to submit evidence of good health, while Service members who apply after the 

240-day period must submit evidence of insurability.931

 

923 Veterans’ Benefits, 38 U.S.C. § 1967. 924 Veterans’ Benefits, 38 U.S.C. § 1967. (“Family Servicemembers’ Group Life Insurance” is the term used by the 

Department of Veterans Affairs when referring to the insurance coverage provided for spouses and children of Service

members. This term does not appear in the U.S. Code provision. See “Family Servicemember’s Group Life Insurance,” 

Department of Veterans Affairs, accessed May 27, 2014, http://benefits.va.gov/insurance/fsgli.asp.) 925 Veterans’ Benefits, 38 U.S.C. § 1968. 926 Veterans’ Benefits, 38 U.S.C. § 1968(b)(3)(A) (“participating company”), 38 CFR 9.1(e) (“converter”), and Schedule for 

Rating Disabilities, 38 CFR 9.9 (“conversion privilege”). 927 Veterans’ Benefits, 38 U.S.C. § 1967. 928 Ibid. See also Schedule for Rating Disabilities, 38 CFR 9.2. 929 Veterans’ Benefits, 38 U.S.C. §§ 1967 and 1977. 930 Veterans’ Benefits, 38 U.S.C. § 1977(a) (the only requirements needed to increase coverage are that the insured be 

a person under the age of 60 and the total amount for which the person is insured does not exceed an amount 

provided for in the law).

931 Veterans’ Benefits, 38 U.S.C. § 1977. 
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5.3.4.4. SERVICE-DISABLED VETERANS’ LIFE INSURANCE 

Service-Disabled Veterans’ Life Insurance (S-DVI) generally provides life insurance 

coverage to veterans who have been given a VA rating for a new service-connected 

disability in the last two years.932 Totally disabled veterans are eligible for free coverage 

and have the opportunity to purchase additional life insurance.933 Veterans who 

separated from Service on or after April 25, 1951, under other-than-dishonorable 

conditions who have service-connected disabilities, even zero percent disability, but 

are otherwise in good health, may apply to VA for up to $10,000 in life insurance 

coverage under the S-DVI program.934 Applications must be submitted within two 

years from the date of being notified of the approval of a new service-connected 

disability by VA.935

Veterans who are totally disabled may apply for a waiver of premiums and additional 

supplemental insurance coverage of up to $30,000.936 However, premiums cannot be 

waived on the additional supplemental insurance. To be eligible for this type of 

supplemental insurance, veterans must meet all of the following three requirements: 

(1) younger than age 65; (2) eligible for a waiver of premiums due to total disability; 

and (3) apply for additional insurance within one year from the date of notification of 

waiver approval on the basic S-DVI policy.937 The premium that veterans pay for S-DVI 

coverage will depend on their age, type of plan (term or permanent), and amount of 

coverage.

5.3.4.5. VETERANS’ MORTGAGE LIFE INSURANCE 

Veterans’ Mortgage Life Insurance (VMLI) is mortgage protection insurance available to 

severely disabled veterans and Service members who have been approved by VA for a 

Specially Adapted Housing Grant (SAH).938 Maximum coverage is the smaller of the 

existing mortgage balance or $200,000 and is payable only to the mortgage 

company.939 Protection is issued automatically following SAH approval, provided the 

veteran submits the mortgage information required to establish a premium and does 

not decline coverage.940 Coverage automatically terminates when the mortgage is paid 

in full or is disposed of through the sale of the property.941

Beneficiaries 

SGLI

Coverage is automatic for most active-duty Service members, Ready Reserve, and 

National Guard members scheduled to perform at least 12 periods of inactive training 

 

932 Veterans’ Benefits, 38 U.S.C. § 1922(a). 933 Ibid. 934 Veterans’ Benefits, 38 U.S.C. § 1922. 935 Ibid. See also 38 CFR 8. 936 Veterans’ Benefits, 38 U.S.C. §§ 1922 and 1922A . 937 Veterans’ Benefits, 38 U.S.C. § 1922A . 938 See Veterans’ Benefits, 38 U.S.C. § 1968(a) and (b). Veterans’ Benefits, 38 U.S.C. § 1977(a),(b), and (h). Schedule for 

Rating Disabilities, 38 CFR 9.2. 939 Veterans’ Benefits, 38 U.S.C. § 2106. 940 Ibid. 941 Ibid. 
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per year, members of the Commissioned Corps of NOAA and USPHS, cadets and 

midshipmen of the U.S. military academies, and ROTC members.942

TSGLI 

All Service members insured by SGLI are automatically covered by TSGLI.943

FSGLI

FSGLI is automatically provided to spouses and dependent children of Service 

members insured under SGLI.944

VGLI

Service members with full-time SGLI coverage are eligible to convert SGLI to VGLI after 

separation from service.945

S-DVI

Service members who were released from active duty under other-than-dishonorable 

conditions after April 25, 1951, have been granted service connection for any disability 

within the last two years, and are in good health except for any service connected 

conditions may be eligible.946

VMLI

Available to veterans who received a Specially Adapted Housing Grant (SAH), have the 

title to the home, and have a mortgage on the home.947

Historical Context948

The United States Government first became involved in the insurance business when 

war broke out in Europe in 1914. Life insurance issued by private life insurers either 

excluded protection against the extra hazards of war, or if such protection was 

included, the premium rates were much higher than normal rates. The Congress 

passed the War Risk Insurance Act in September 1914, providing marine insurance 

protection for merchant ships supplying the allies. The War Risk Insurance Act was 

amended in 1917, to cover merchant marine personnel and provided government life 

insurance to members of the Military Services. More than 4 million policies were 

issued during World War I. The United States Government Life Insurance (USGLI) 

program was established in 1919 and replaced War Risk policies. Individuals could 

keep this coverage after separation from service. This program was suspended in 

1951.

The National Service Life Insurance (NSLI) program was established in 1940 to meet 

the insurance needs of World War II military personnel and veterans. Like USGLI 

coverage, the insured could keep their NSLI coverage after discharge from service. In 

1951, NSLI was replaced by Servicemen’s Indemnity Insurance, which automatically 

covered active-duty Service members for $10,000 at no cost to the individual. This 

program ended in 1956.

 

942 Veterans’ Benefits, 38 U.S.C. §§ 1965 and 1967. 943 Veterans’ Benefits, 38 U.S.C. § 1980A. 944 Veterans’ Benefits, 38 U.S.C. §§ 1967 and 1968. 945 Veterans’ Benefits, 38 U.S.C. § 1977. 946 Veterans’ Benefits, 38 U.S.C. §§ 1917 and 1922. 947 Veterans’ Benefits, 38 U.S.C. §§ 2101, 2101A, and 2106. 948 All information found in this section is taken from Department of Veteran Affairs, 10-11, accessed May 27, 2014, 

http://www.benefits.va.gov/INSURANCE/docs/2014_VALifeBook.pdf. 
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Veterans’ Special Life Insurance (VSLI) was established in 1951 so that discharged 

Service members who had Servicemen’s Indemnity Insurance could replace their 

coverage with VSLI. VSLI was closed to new issues at the end of 1956. In 1974, the 

Veterans’ Group Life Insurance (VGLI) program became available to veterans, 

providing term insurance protection after separation from service for those who had 

SGLI while in the service.

To meet the insurance needs of Vietnam-era Service members, the Government 

entered into a cooperative effort with the private insurance industry. In 1965, the 

Servicemembers’ Group Life Insurance (SGLI) program was established. The SGLI 

program was expanded in 2001 to provide Family Group Life Insurance (FSGLI) and 

again in 2005 to provide Traumatic Injury Protection Insurance (TSGLI).

Financial Summary 

Budget authority is made available automatically to the USGLI and NSLI funds each 

year by virtue of standing legislation. All obligations of the VSLI and Veterans’ 

Reopened Insurance (VRI) funds are paid from offsetting collections and redemption of 

investments in U.S. Treasury securities. All obligations of the Service-Disabled 

Veterans’ Insurance (S-DVI) fund are paid by transfers from the Veterans Insurance 

and Indemnities (VI&I) fund and other offsetting collections. Obligations of the SGLI 

program, which includes TSGLI and FSGLI, are financed from premium collections, 

interest on investments, and extra hazard payments from service branches.949

In FY 2013, the VA insurance program provided $1.3 trillion of life insurance to more 

than 6.7 million individuals.950 In FY 2013, coverage was provided to 2.4 million

Service members, 1.2 million veterans, and 3.1 million spouses and children.951 In 

FY 2013, the Congress appropriated $105 million VI&I fund.952 Table 16 provides a 

financial summary of VA life insurance programs that are open to new issues for 

FY 2013.953

 

949 Department of Veterans Affairs, FY 2015 Congressional Budget Submission, Volume III, Benefits and Burial Programs 

and Departmental Administration, VBA-97, accessed May 27, 2014, http://www4.va.gov/budget/products.asp . 950 Department of Veterans Affairs, FY 2015 Congressional Budget Submission, Volume III, Benefits and Burial Programs 

and Departmental Administration, VBA-96 and VBA-105, accessed May 27, 2014, 

http://www4.va.gov/budget/products.asp.

951 Ibid. 952 Ibid. 953 Information found on chart was provided by Department of Veterans Affairs, Life Insurance Center, e-mail to 

MCRMC, February 27, 2014. 
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Table 16. VA Life Insurance Programs Financial Summary

Life 

Insurance 

Program

Appropriated 

Funds Used 

Outlay

Extra 

Hazards 

Funding (d)

Intake 

Premiums

Covered 

Lives

Number 

of Claims 

Paid

Amount of 

Claims Paid

SGLI a, b $117,972,735 $656,691,899 2,365,500 2,036 $716,258,605

TSGLI a, b $81,650,000 $27,044,774 c 1,404 $64,142,500

FSGLI a, b N/A $93,342,488 3,103,000 2,383 $94,265,025

VGLI a, b N/A $297,088,303 425,990 2,892 $304,614,999

S-DVI $63,514,390 N/A $51,260,890 219,523 9,146 $96,650,000

VMLI $25,444,231 N/A $4,688,377 2,419 213 $30,132,855

Total $88,958,621 $199,622,735 $1,130,116,731 6,116,432 18,074 $1,306,063,984

a. These programs are required by law to be self-supporting except for the costs traceable to the extra hazards of military 

service.

b. Administrative expenses, reinsurance charges, and taxes for these programs totaled $36.3 million in policy year 2013 

(July 1, 2012–June 30, 2013). These expenses were covered by member premiums.

c. SGLI members are automatically covered under TSGLI.

d. Each of the military Services reimburses VA for Extra Hazard costs.

5.3.5. PENSION BENEFITS

The Department of Veterans Affairs (VA) provides needs-based pensions ensuring a 

minimum level of income and standard of living for eligible wartime veterans and their 

survivors.954 The Veterans Pension and Survivors Pension Benefit programs provide 

benefits that may be increased through Aid, Attendance, and Housebound 

Allowances.955 

5.3.5.1. VETERANS PENSION BENEFIT PROGRAM

The Veterans Pension Benefit Program assists veterans and their families with 

financial challenges by providing supplemental income.956 This program is a tax-free 

monetary benefit payable to low-income wartime veterans.957 Relevant household 

income and net worth determine the level of monetary benefit.958 The VA website 

identifies these criteria.959

5.3.5.2. SURVIVORS PENSION BENEFIT PROGRAM

The Survivors Pension Benefit Program, is a tax-free pension payable to a low-income, 

unremarried surviving spouse and/or unmarried child(ren) of a deceased veteran with 

wartime service.960

 

954 Veterans’ Benefits, 38 U.S.C. §§ 1501-1562. 955 Veterans’ Benefits, 38 U.S.C. §§ 1521(d), (e), (f); 1541(d), (e). 956 “Veterans Pension Program,” Department of Veterans Affairs, accessed April 8, 2014, 

http://www.benefits.va.gov/pension/#. 957 Veterans’ Benefits, 38 U.S.C. § 5301(a)(1). 958 Veterans’ Benefits, 38 U.S.C. §§ 1521-1522. 959 “Veterans Pension Rate Table,” Department of Veterans Affairs, accessed March 18, 2014, 

http://www.benefits.va.gov/PENSION/current_rates_veteran_pen.asp. 960 Benefits, 38 U.S.C. §§ 1541-1542. 
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5.3.5.3. AID, ATTENDANCE, AND HOUSEBOUND ALLOWANCES

Veterans and survivors who have dependents, need the aid and attendance (A&A) of 

another person, or are housebound, may qualify for additional amounts of pension or 

may gain eligibility for a pension for which they are otherwise ineligible.961 Veterans 

who marry each other may quality for adjustments to their pension amounts.962

Beneficiaries 

In FY 2013, VA provided pension benefits to 308,995 veterans with an average 

disbursement of $11,639.963 A total of 206,952 survivors received pension benefits 

with an average payment of $7,680.964

Veterans Pension Benefit Program

Pension benefits are needs-based and a veteran’s countable family income must fall 

below the annual limit set by law.965 To be eligible, veterans must have at least 90 days 

of active-duty service, including at least one day during a wartime period, and be 

discharged from service under other-than-dishonorable conditions.966 A veteran’s 

length of service must be at least 24 months or for the full period of mobilization (with 

some exceptions) if the active-duty service occurred after September 7, 1980.967 The 

veteran must also be age 65 or older, or have a permanent and total nonservice 

connected disability and meet any of the following criteria because of the disability:

 a long-term care patient in a nursing home

 a recipient of Social Security disability benefits

 unemployable for life968

The veteran must meet the above service requirements for surviving spouses and 

children to be eligible for the Survivors Pension.969 Once basic eligibility for pension is 

met, the veteran’s entitlement is subject to income and net worth limitations.970

Additional amounts may be available to a veteran who has dependents or who, due to 

disability, is in need of aid and attendance of another person or is housebound.971 The 

VA website lists current income and net worth limitations.972

Survivors Pension Benefit Program (for a Surviving Spouse)

A surviving spouse of a wartime veteran has basic eligibility for a death pension if he 

or she meets the income and net worth limitations.973 Additional amounts may be 

 

961 Veterans’ Benefits, 38 U.S.C. §§ 1521(d), (e), (f); 1541(d), (e). 962 Veterans’ Benefits, 38 U.S.C. § 1521(f). 963 Department of Veterans Affairs, FY 2015 Congressional Budget Submission, Volume III, Benefits and Burial Programs 

and Departmental Administration, VBA-4, accessed May 27, 2014, http://www4.va.gov/budget/products.asp. 964 Ibid. 965 Veterans’ Benefits, 38 U.S.C. § 1521. (Each subsection sets forth the requirements for receiving pensions at the rate 

prescribed by that subsection. That rate is then reduced by the beneficiary’s annual income.) 

966 Veterans’ Benefits, 38 U.S.C. § 1521(j). 967 Veterans’ Benefits, 38 U.S.C. § 5303A. 968 Schedule for Rating Disabilities, 38 CFR 3.3. See also VA Benefits Website, “Veterans Pension” Fact Sheet, accessed 

April 8, 2014, http//benefits.va.gov/BENEFITS/factsheets/limitedincome/livepension.pdf. 969 Veterans’ Benefits, 38 U.S.C. § 1541(a). 970 Veterans’ Benefits, 38 U.S.C. § 1522. 971 Veterans’ Benefits, 38 U.S.C. §§ 1521(c)-(f). 972 “Veterans Pension Rate Table,” Department of Veterans Affairs, accessed March 18, 2014, 

http://www.benefits.va.gov/PENSION/current_rates_veteran_pen.as. 973 Veterans’ Benefits, 38 U.S.C. §§ 1541, 1543.
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available to a surviving spouse who has dependents or who, due to disability, is in 

need of aid and attendance of another person, or is housebound.974

Survivors Pension Benefit Program (for a Surviving Child)

In general, a surviving child of a wartime veteran has basic eligibility for a death 

pension if the following criteria are met: the child is unmarried and younger than

18 years of age; or the child is between the age of 18 and 23 years and attending an 

accredited school; or prior to reaching 18 years of age, the child became permanently 

incapable of self-support.975 Additional details and definitions are found in 38 U.S.C. 

§ 101.

976 A child’s entitlement is subject to income and net worth limitations.977 

Aid, Attendance, and Housebound Allowances

Veterans and survivors who need the aid and attendance (A&A) of another person or 

are housebound may qualify for additional amounts of pension.978 Because pension at 

the A&A and housebound rates is based upon a higher income limit, a claimant 

ineligible for basic pension due to excessive income may, nevertheless, qualify for 

pension benefits if he or she establishes entitlement to A&A or is housebound.979

Veterans or surviving spouses may qualify for pension at the A&A rate if they meet the 

following criteria: 

 They require the aid of another person to perform activities of daily living, such 

as bathing, feeding, dressing, toileting, adjusting prosthetic devices, or 

protecting themselves from the hazards of their daily environment.

980

 They are bedridden, in that their disability or disabilities require that they 

remain in bed apart from any prescribed course of convalescence or 

treatment.

981

 They are a patient in a nursing home due to mental or physical incapacity.

982

 They have a corrected visual acuity of 5/200 or less, in both eyes, or concentric 

contraction of the visual field to five degrees or less.

983

Veterans may qualify for pension at the housebound rate if they meet the following 

criteria: 

 they have a single permanent disability evaluated as 100-percent disabling and 

due to a disability or disabilities, they are permanently and substantially 

confined to their immediate premises984

 or they have a single permanent disability evaluated as 100-percent disabling 

and another disability or disabilities, independently evaluated as 60-percent or 

more disabling985

 

974 Veterans’ Benefits, 38 U.S.C. §§ 1541(c)-(e). 975 Veterans’ Benefits, 38 U.S.C. §§ 101(4), 1542. 976 Veterans’ Benefits, 38 U.S.C. § 101. 977 Veterans’ Benefits, 38 U.S.C. § 1543. 978 Veterans’ Benefits, 38 U.S.C. §§ 1521(d)-(f); 1541(d)-(e). 979 Ibid. 980 Schedule for Rating Disabilities, 38 CFR 3.352(a). 981 Ibid. 982 Schedule for Rating Disabilities, 38 CFR 3.351(c)(2). 983 Schedule for Rating Disabilities, 38 CFR 3.351(c)(1). 984 Veterans’ Benefits, 38 U.S.C. § 1521(e). Schedule for Rating Disabilities, 38 CFR 3.351(d). 985 Ibid. 
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Surviving spouses who have one or more disabilities and are permanently and 

substantially confined to their immediate premises may qualify for pension at the 

housebound rate.986

Historical Context 

In 1636, Plymouth enacted the first colonial law regarding pensions.987 In 1789, the 

Continental Congress passed the first federal pension legislation.988 After that, laws 

established pension benefits that not only included veterans but also dependents 

affected by the War of 1812.989 Benefits were also extended for survivors.990 In 1818, 

the Service Pension Law established that veterans’ benefits would be based on need.991

The General Pension Act of 1862 took this benefit even further by providing disability 

payments based on degree of disability and rank.992 Additionally, this act created more 

abundant benefits for dependent relatives, children, and widows.993

The current VA pension program, which is a need-based program for members and 

surviving spouses was established in 1978.994 The veteran and survivor pension 

program supports the following societal values:

 assure a level of income above the minimum subsistence level, allowing wartime 

veterans and their survivors to live their lives in dignity and not to have to turn 

to welfare assistance;

 provide the greatest pension for those with the greatest need, while preserving 

incentives to work; and

 guarantee regular increases to pensions that fully account for increases in the 

cost of living995

Financial Summary 

In FY 2013, $5.2 billion was spent on veteran pensions. Of this, veterans received a 

total of $3.6 billion and survivors received $1.6 billion.

996

5.3.6. TRANSITION SERVICES

5.3.6.1. TRANSITION ASSISTANCE PROGRAM

Transition Assistance services prepare separating uniformed Service members and 

their families for reentry into the civilian work force.997 These benefits are provided by 

 

986 Veterans’ Benefits, 38 U.S.C. § 1541(e). Schedule for Rating Disabilities, 38 CFR 3.351(f). 987 David Pulsifer, ed., Records of the Colony of New Plymouth in New England (Boston: William White, 1861), 13. 

“VA History in Brief,” Department of Veterans Affairs, 3, accessed March 13, 2014, 

http://www.va.gov/opa/publications/archives/docs/history_in_brief.pdf.

988 Act of September 29, 1789, ch. 24, 1 Stat. 95 (1789). 989 See Act of February 14, 1871, ch. 50, 16 Stat. 411 (1871). 990 Ibid. 991 Act of March 18, 1818, ch. 19, 3 Stat. 410 (1818). 992 Act of July 14, 1862, ch. 166, 12 Stat. 566 (1862). 993 Ibid. 994 Veterans’ and Survivors’ Pension Improvement Act of 1978, Pub. L. No. 95-588, 92 Stat. 2497 (1978). 995 H.R. Rep. No. 95-1225, at 4 (1978), reprinted in 1978 U.S.C.C.A.N. 5583, 5585. 996 Department of Veterans Affairs, FY 2015 Congressional Budget Submission, Volume III, Benefits and Burial Programs 

and Departmental Administration, VBA-4, accessed May 27, 2014, http://www4.va.gov/budget/products.asp. 997 Military Family Readiness, DoDI 1342.22, 23 (2012).
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multiple agencies, and are described in the Cross-Agency Benefits section of this 

report—Section 5.8.4 Transition Assistance.

5.3.7. VETERAN CANTEEN SERVICES

Multiple agencies provide exchange benefits for uniformed Service members.

The Armed Forces operate multiple exchange systems: Army and Air Force Exchange 

Service (AAFES) operates exchanges on Army and Air Force installations.998 Navy 

Exchange Service Command (NEXCOM) operates exchanges on Navy bases.999 Marine 

Corps Community Services (MCCS) runs exchanges on Marine Corps installations. 

MCCS also operates the rest of Marine MWR operations.1000 Similarly, the Coast Guard 

Exchange Service (CGES), which operates exchanges on Coast Guard installations, is 

part of the Coast Guard Community Services Command.1001 The Department of 

Veterans Affairs (VA) operates a separate retail system known as the Veteran Canteen 

Service (VCS).1002

The Cross-Agency Benefits section of this report describes these benefits in greater 

detail—Section 5.8.2 Exchanges.

5.4. DEPARTMENT OF EDUCATION PROGRAMS

5.4.1. EDUCATION ASSISTANCE

Education Assistance benefits are provided to uniformed Service members by multiple 

agencies including DoD, the Department of Homeland Security (DHS), the Department 

of Veterans Affairs (VA), the Department of Education (ED), and the Department of 

Justice (DOJ).

ED programs include:

 In-State Tuition for members of the Military Services on active duty and 

dependents

 Cancellation of Federal Student Loan

 Public Service Loan Forgiveness Program

 Military Service Loan Deferment

 Loan Deferments After Active Duty

 Iraq and Afghanistan Service grant or Additional Federal Pell Grant Funds

These benefits are described in the Cross-Agency Benefits section of this report—

Section 5.8.1 Education Assistance.

 

998 Army and Air Force Exchange Service Operations, AR 215-8 and AFI 34-211(I) (2012). 999 OPNAVINST 5450.331A, Responsibility and Authority for Navy Exchange Operations, ¶ 5(a), May 6, 2008. 1000 MCCS Policy Manual, MCO P1700.27B, ¶ 1001 (2007). 1001 See Coast Guard Morale, Well-Being, and Recreation Manual, COMDTINST M1710.13C, Chapter 1, ¶ L (2010). 1002 See generally Veterans’ Benefits, 38 U.S.C. §§ 7801-7810. 
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5.4.2. FEDERAL IMPACT AID

The Congress authorizes financial assistance to local school districts through the 

Department of Education (ED) under the Federal Impact Aid Program.

1003 Impact Aid 

assists local school districts that have lost property-tax revenue due to the presence of 

tax-exempt Federal property or that have experienced increased expenditures due to 

the enrollment of federally-connected children.

1004 

Impact Aid authorizes assistance to:

 local school districts with concentrations of eligible children residing on

- Indian lands

- military installations 

- low-rent housing properties

- other Federal properties

 and, to a lesser extent, concentrations of children who

- have parents in the Armed Forces, or 

- are employed on eligible Federal properties, but do not live on Federal 

property1005

School districts use Impact Aid for a wide variety of expenses, including salaries for

teachers and teacher aides, textbooks, computers, and other equipment, after-school

programs and remedial tutoring, Advanced Placement classes, special enrichment 

programs, and capital expenses.

1006

There are five categories of Impact Aid. The categories include the following: 

 Payments for Federal Property. School districts receive payments when they 

experience a substantial and continuing financial burden due to the acquisition 

of real property by the United States.

1007 These payments assist local school 

districts that have lost a portion of their local tax base because of Federal 

ownership of property.1008 To be eligible, a school district must demonstrate that 

the Federal Government has acquired, since 1938, real property with an 

assessed valuation of at least 10 percent of all real property in the district at the 

time of acquisition.1009

 Basic Support Payments. School districts can receive payments when they

educate children who reside on Federal property.1010 These may be the children 

of members of the Armed Forces, children who reside on Indian lands, children 

who reside on Federal property or in federally-subsidized, low-rent housing, and 

children whose parents work on Federal property.1011 In general, to be eligible 

for assistance, a local school district must educate at least 400 such children in 

 

1003 Education, 20 U.S.C. §§ 7701-7714. 1004 Education, 20 U.S.C. § 7701. 1005 Education, 20 U.S.C. § 7701-7714. 1006 About Impact Aid, Department of Education, accessed April 28, 2014, 

http://www2.ed.gov/about/offices/list/oese/impactaid/whatisia.html#b. 1007 Education, 20 U.S.C. § 7701(1). 1008 Education, 20 U.S.C. § 7701(5). 1009 Education, 20 U.S.C. § 7702(a). 1010 Education, 20 U.S.C. § 7703. 1011 Education, 20 U.S.C. § 7703(a)(1).
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average daily attendance or the federally-connected children must make up at 

least three percent of the school district’s total average daily attendance.1012 

 Heavily Impacted Districts. “Heavily Impacted Districts” that enroll certain 

percentages of federally-connected children and meet other specific statutory 

criteria, receive increased formula payments.1013

 Disability Payments. School districts receive payments for the additional costs 

that federally-affiliated (or Indian land) students with special needs impose on 

the district.1014 Any military-affiliated (or Indian land) child eligible to receive 

Individuals with Disabilities Education (IDEA) funds and an individual 

education plan is eligible.1015 These payments are in addition to Basic Support 

Payments and IDEA Act funds that are provided on behalf of these children.1016

Payments for children with disabilities must be used to cover the extra costs of 

educating these children.1017

 Construction. School districts receive payments when they need special 

assistance with capital expenditures for construction activities because of the 

enrollments of substantial numbers of children who reside on Federal land.1018

Construction grants go to local school districts that educate high percentages of 

certain federally-connected children, both children living on Indian lands and 

children of members of the Armed Forces.

1019 These grants help pay for the 

construction and repair of school buildings.1020 Formula grants are available to 

the local school districts based on the number of eligible federally-connected 

children they educate.1021 Competitive grants are also available for emergency 

repairs and modernization.1022

Local Education Agencies (LEAs) provide parents with a survey in which the Federal

status of parents is documented to determine the total number of federally-connected 

students in each LEA.1023 The U.S. Department of Education uses this anonymous 

information to determine if the LEA meets the minimum requirements for receiving 

Impact Aid funding.1024 The enrollment of federally-connected children in the LEA 

must be at least three percent of the enrollment or 400 as computed in average daily 

attendance.1025 Thus, not all LEAs educating federally-connected children are eligible 

to receive Impact Aid.1026

For the purposes of this program, “Federal property” includes not only military bases 

and similar Federal installations, but also Indian Reservation (Trust) and/or “Treaty” 

lands, Alaskan village lands, land used for federally-subsidized low-rent housing 

 

1012 Education, 20 U.S.C. § 7703(b)(1)(B). 1013 Education, 20 U.S.C. § 7703(b)(2). 1014 Education, 20 U.S.C. § 7703(d)(1). 1015 Ibid. 1016 Ibid. 1017 Education, 20 U.S.C. § 7703(d)(2). 1018 Education, 20 U.S.C. § 7701(5). 1019 Education, 20 U.S.C. § 7707(a)(2). 1020 Education, 20 U.S.C. § 7707(a)(4). Education, 20 U.S.C. § 7713(3). 1021 Education, 20 U.S.C. § 7707(a)(3). 1022 Education, 20 U.S.C. § 7707(b). 1023 Education, 34 CFR 222.35. 1024 Ibid. 1025 Education, 34 CFR 222.36(a)(1). 1026 Education, 34 CFR 222.36.
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projects (not including the Section 8 housing programs administered by Department of 

Housing and Urban Development (HUD), and land used to provide housing for 

homeless children at a closed military base as long as the land remains under Federal 

ownership.

1027

Beneficiaries 

LEAs are the beneficiaries of the Federal Impact Aid payments.1028 With the exception 

of additional payments for children with disabilities and construction payments, 

school districts may use the funds in whatever manner they choose in accordance 

with their local and State requirements.1029

Historical Context 

The Impact Aid program was first created through Pub. L. No. 81-815 and Pub. L. 

No. 81-874.

1030 President Harry S. Truman signed legislation that formed the bedrock 

of Federal education programs in 1950.

1031 This program supports local school 

districts with large numbers of children who live on military bases, Indian lands, lowrent housing properties, and other Federal properties, or those children with parents 

in the uniformed services or those employed on eligible Federal properties.1032

Financial Summary 

The maximum amount of Impact Aid funds issued is the sum of the weighted student 

units multiplied by the greater of the following:

 one-half of the average per-pupil State expenditure in which the educational 

agency is located for the third fiscal year preceding the fiscal year when the 

determination was made

 one-half of the average per-pupil expenditure of all of the States for the third 

fiscal year preceding the fiscal year for which the determination was made

 the local contribution rate as identified by 34 CFR 222.40

 the average per-pupil State expenditure where the local educational agency is 

located, multiplied by the local contribution percentage1033

In FY 2013, Basic Support Payments (Section 8003(b)) were $1.1 billion, which 

included payments for Heavily Impacted Districts (Section 8003(b)(2)).1034 That same 

fiscal year there was $46 million in payments for Disability Payments (8003(b)) and 

$63 million in Payments for Federal Property (Section 8002).1035 There was 

$16.5 million in Construction Payments (Section 8007) for which a discretionary 

competition took place for grant funding.1036 This financial information represents the 

 

1027 Education, 20 U.S.C. § 7713(5). 1028 Education, 20 U.S.C. § 7701. 1029 “About Impact Aid,” Department of Education, accessed April 28, 2014,

http://www2.ed.gov/about/offices/list/oese/impactaid/whatisia.html#b. 1030 Act of September 23, 1950, Pub. L. No. 81-815, 64 Stat. 967 (1950). Act of September 30, 1950, Pub. L. No. 81-

874, 64 Stat. 1100 (1950).

1031 Ibid. 1032 Department of Education, Office of Elementary and Secondary Education, “About Impact Aid,” accessed June 13, 

2014, http://www2.ed.gov/about/offices/list/oese/impactaid/whatisia.html.

1033 Education, 20 U.S.C. § 7703(b)(1)(C). 1034 Department of Education, “Distribution of Impact Aid Funds,” briefing to MCRMC, May 1, 2014. 1035 Ibid. 1036 Ibid.
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full amount of Impact Aid for Federally connected children, including those on Indian 

lands.1037

The Congress put the Learning Opportunity Threshold (LOT) formula in place to 

ensure fair distribution of available funds.1038 The Department of Education uses a 

complex formula provided by law to determine distribution of the appropriated 

funds.1039 They consider the local contribution rate as well as the district’s 

expenditures in this calculation.1040 For FY 2013, funding was such that the

department could only distribute 80 percent of the amount authorized by LOT for all 

eligible categories.1041

The U.S. Department of Education provides the data that is used to determine LEA 

eligibility for the Supplemental Impact Aid Program to the Educational Partnership 

Branch of Department of Defense Education Activity (DoDEA), which works with the 

U.S. Department of Education to clarify or resolve any funding eligibility issues.1042

5.5. DEPARTMENT OF LABOR PROGRAMS

5.5.1. VETERANS’ EMPLOYMENT AND TRAINING SERVICE 

The Veterans’ Employment and Training Service (VETS) assists veterans and 

separating Service members in preparing for careers, connecting with potential 

employers, and protecting their employment rights.1043

5.5.1.1. EMPLOYMENT SERVICES FOR VETERANS – STATE GRANTS

Employment Services for Veterans take place in One-Stop Career Centers, which are 

part of State Workforce Agencies/Employment Commissions. The funding for these 

services comes from a number of grants to the States under the Wagner-Peyser Act 

(WPA),1044 the Workforce Investment Act (WIA),

1045 and the Jobs for Veterans State 

Grants (JVSG) program. WPA and WIA programs and funding benefit all job seekers, 

but the regulations stipulate that veterans (and eligible spouses) shall receive priority 

service.1046 “The JVSG program functions mainly as a staffing grant,1047 providing 

salaries and benefits for state merit employees who provide specialized services to 

veterans with significant barriers to employment, and in limited circumstances, 

 

1037 Ibid. 1038 Education, 20 U.S.C. § 7703(b)(3)(B). 1039 Education, 20 U.S.C. § 7703(b)(3). 1040 Ibid. 1041 Department of Education, “Distribution of Impact Aid Funds,” briefing to MCRMC, May 1, 2014. 1042 “Impact Aid Supplemental Program,” Department of Education, accessed June 1, 2014, 

http://www.militaryk12partners.dodea.edu/impact.cfm?colId=supplement. 1043 “VETS Vision and Mission Statement,” Department of Labor VETS, accessed April 17, 2014, 

http://www.dol.gov/vets/aboutvets/mission/mission.htm. 1044 Wagner-Payser Act, Pub. L. No. 30-73d, 48 Stat. 113 (1933) (codified at 29 U.S.C. § 49). 1045 Armed Forces, 10 U.S.C. §§ 1143, 1144. See also Education, 20 U.S.C. § 9201. Labor, 29 U.S.C. § 2913. 1046 Veterans’ Benefits, 38 U.S.C. Chapters 41 and 42 and implemented in Employees’ Benefits, 20 CFR parts 601, 651,

652, 653, 658, and 1001. The grants are based on funding formulas provided at Education, 20 CFR 1001. Public 

Contracts and Property Management, 41 CFR 60-300 covers the affirmative action nondiscrimination obligations of 

contractors toward protected veterans. 1047 Education, 20 CFR 1001.
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transitioning Service members who were wounded and injured.”

1048 The JVSG 

program funds two distinct positions, the Disabled Veterans’ Outreach Program 

(DVOP) specialist1049 and the Local Veterans’ Employment Representative (LVER).1050

Services such as job search assistance workshops, career counseling, résumé 

assistance, and job referrals are provided as a priority to all veterans and eligible 

spouses.1051 In addition to these core support services, DVOP specialists develop 

expertise in the services that are specifically relevant to disabled veterans1052 and 

LVERs directly contact businesses, Federal agencies, and associations of contractors 

and employers to encourage the hiring and advancement of qualified veterans.1053

In FY 2013, DOL reported approximately $161.3 million in grants, funding 1,922

state-level employees (full-time equivalents), at an average cost of approximately 

$84,000 per employee, who assisted 450,843 job-seeking veterans.1054 These

employees provided an additional level of support known as intensive services to 

39.2 percent of those veterans.1055

5.5.1.2. TRANSITION ASSISTANCE PROGRAM

Transition Assistance services prepare separating uniformed Service members and 

their families for reentry into the civilian work force.1056 These benefits are provided by 

multiple agencies, and are described in the Cross-Agency Benefits section of this 

report—Section 5.8.4 Transition Assistance.

5.5.1.3. HOMELESS VETERANS’ REINTEGRATION PROJECT

The Homeless Veterans’ Reintegration Program (HVRP) is exclusively committed to 

providing employment assistance to the homeless veteran population.1057 The HVRP 

mission is to help homeless veterans reintegrate themselves into the workforce by 

providing employment-focused services, such as job development, résumé preparation, 

and career counseling, but it does not focus solely on finding employment. HVRP is 

also designed to provide supportive services such as clothing, transportation 

assistance, referrals to temporary and permanent housing, and referrals to medical 

and substance-abuse treatments, all in an effort to help homeless veterans reintegrate 

into society. Formerly homeless veterans are typically available to help provide 

outreach in areas of peer coaching and counseling.1058

 

1048 Department of Labor, “FY 2014 Congressional Budget Justification, Veteran’s Employment and Training Service, 

accessed June 1, 2014, VETS-21, http://www.dol.gov/dol/budget/2014/PDF/CBJ-2014-V3-05.pdf. 1049 Veterans’ Benefits, 38 U.S.C. § 2003A, 20 CFR 1001. 1050 Veterans’ Benefits, 38 U.S.C. § 4104, 20 CFR 1001. 1051 Veterans’ Benefits, 38 U.S.C. § 4215. 1052 Education, 20 CFR 1001. Education, 20 CFR 1001, 1001.123. 1053 Department of Labor, Employment Services for Veterans Brochure, accessed February 25, 2014, 

http://www.dol.gov/vets/Education%20and%20Outreach/Program%20Brochures/Production%20PDFs/EMPLOYMEN

T%20NEW%20TEXT%20WEB.pdf. 1054 Department of Labor, FY 2014 Congressional Budget Justification, Veteran’s Employment and Training Service, 

accessed June 1, 2014, VETS-20, VETS-22, http://www.dol.gov/dol/budget/2014/PDF/CBJ-2014-V3-05.pdf. 1055 Ibid, VETS-20. 1056 Military Family Readiness, DoDI 1342.22, 23 (2012). 1057 Veterans’ Benefits, 38 U.S.C. §§ 2021-2023. See also Veterans’ Benefits, 38 CFR 63. 1058 Department of Labor, Homeless Veterans’ Reintegration Program Fact Sheet 4, accessed February 24, 2014, 

http://www.dol.gov/vets/programs/hvrp/homeless_veterans_fs.htm.
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In FY 2013, $36 million was provided for 35 new HVRP grants, 90 option year HVRP 

grant extensions, 22 Homeless Female Veterans and Veterans with Families grants, 

and 90 Stand Down grants.1059 In FY 2013, DOL reported that HRVP provided 

services to 17,480 veteran participants, placing 64.8 percent into employment, at an 

average cost of $3,000 per placement.1060

HVRP was originally authorized in July 1987, under Section 38 of the Stewart B. 

McKinney Homeless Assistance Act1061 and followed by the Homeless Veterans 

Assistance Act of 2001.1062 Today, the program is authorized under 38 U.S.C. § 2021. 

Grants can be provided to State and Local Workforce Investment Boards, State and 

State Agencies, local public agencies, private nonprofit organizations (including faithbased and community organizations) and for-profit/commercial entities. Some grants 

are specifically focused on supporting Homeless Female Veterans and Homeless 

Veterans with Families (HFVVWF).1063

5.5.1.4. VETERANS WORKFORCE INVESTMENT PROGRAM

The Veterans Workforce Investments Program (VWIP) provides competitive grants to 

support lifelong learning and skills development programs designed to improve overall 

competitiveness in the workforce for currently eligible veterans and targeted veteran 

subgroups with severe employability barriers.1064 The FY 2012 cost of VWIP was 

approximately $14.6 million, which funded all continuation grants and 12 new 

grantees.1065

Because of the relatively small number of veterans served, and the increasing costs of 

the VWIP program, the DOL determined funding would be more efficiently utilized by 

redirecting it to programs with stronger accountability measures, as well as the 

implementation of veteran training activities mandated in the VOW to Hire Heroes Act 

(Pub. L. No. 112-56). Grants provided with FY 2012 funding were limited to a period of 

performance of three years to support this transition with the period of performance 

ending in FY 2014. There was no request for VWIP funding in FY 2014.1066

5.5.1.5. NATIONAL VETERANS’ TRAINING INSTITUTE

The National Veterans’ Training Institute (NVTI) was established by the Office of the 

Assistant Secretary for Veterans’ Employment and Training (OASVET) in 1986 to 

provide specialized training and professional skills enhancement of State Employment 

Agency and other staff who specialize in providing services to veterans.1067 This 

 

1059 Department of Labor, FY 2014 Congressional Budget Justification, Veteran’s Employment and Training Service, 

accessed June 1, 2014, VETS-37, http://www.dol.gov/dol/budget/2014/PDF/CBJ-2014-V3-05.pdf. 1060 Ibid. 1061 Stewart B. McKinney Homeless Assistance Act, Pub. L. No. 100-77, 101 Stat. 482 (1987) (now codified at 

38 U.S.C. § 2021). 1062 Homeless Veterans Comprehensive Assistance Act of 2001, Pub. L. No. 107-95, 115 Stat. 103 (2001). 1063 Veterans’ Benefits, 38 U.S.C. § 2021 A. See also Department of Labor, FY 2015 Congressional Budget Justification, 

Veteran’s Employment and Training Service, VETS-38, May 21, 2014, http://www.dol.gov/dol/budget/2015/PDF/CBJ2015-V3-05.pdf . 1064 Veterans’ Workforce Investment Programs, 29 U.S.C. § 2913. 1065 Department of Labor, FY 2014, Congressional Budget Justification, Veteran’s Employment and Training Service, 

VETS-47 and VETS-48, accessed April 18, 2014, http://www.dol.gov/dol/budget/2014/PDF/CBJ-2014-V3-05.pdf. 1066 Ibid. 1067 Veterans’ Benefits, 38 U.S.C. § 4109. 
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training is designed to benefit veterans through improved levels of support from the 

people providing veteran services.

In FY 2013, $3.3 million was spent to provide training for 3,974 DVOP specialists, 

LVER staff, other state staff, VETS federal staff, and other federal staff members.1068

5.5.1.6. FEDERAL ADMINISTRATION – UNIFORMED SERVICES 

EMPLOYMENT AND REEMPLOYMENT RIGHTS ACT ENFORCEMENT

The Uniformed Services Employment and Reemployment Rights Act of 1994, 38 U.S.C. 

§§ 4301-4335 (USERRA), as amended, prohibits discrimination in employment based 

on an individual’s prior service in the uniformed services, an individual’s current 

service in the uniformed services, or intent to join the uniformed services.1069

There are three levels of Federal assistance available to individuals who believe that 

their USERRA rights may have been violated. Employer Support of the Guard and 

Reserve (ESGR) Ombudsmen services are the most informal level at which resolution 

can be sought. If the issue cannot be resolved by the ESGR Ombudsman, or if the 

individual prefers to bypass informal resolution, VETS formally investigates 

complaints received and attempts to resolve those complaints. If following the VETS’ 

investigation and attempts at resolution the claimant is not fully satisfied with the 

outcome, VETS informs the individual of his or her right to have the case referred for 

consideration of legal representation at no cost to the claimant. Referrals are made to 

the Department of Justice (DOJ) in cases involving a private, local government, or 

State employer, or to the Office of Special Counsel (OSC) in cases involving a Federal 

employer.1070

USERRA enforcement and VETS agency administration cost $36.3 million for FY 2013.

This total included the investigation of an estimated 1,144 USERRA claims, as well as 

509 Veterans’ Preference complaints, and 138 USERRA complaints.

1071 The 

administrative costs included oversight and management of all previously cited VETS 

programs and grants, as well as the following:

 participation in committees and boards supporting civilian certifications or 

licenses for veterans

 provision of small Stand Down grants ($7,000 to $10,000) for veteran 

employment events1072

 coordination with the VA (Department of Veterans Affairs’ Office of Vocational 

Rehabilitation and Employment) as part of the Vocational Rehabilitation and 

 

1068 Department of Labor, FY 2015, Congressional Budget Justification, Veteran’s Employment and Training Service, 

VETS-46, accessed May 21, 2014, http://www.dol.gov/dol/budget/2015/PDF/CBJ-2015-V3-05.pdf. 1069 Veterans’ Benefits, 38 U.S.C. §§ 4301-4335. See also DOL, USERRA FY 2012, Annual Report to Congress, 

December 2013, http://www.dol.gov/vets/programs/userra/2012USERRAReport.pdf. 1070 Veterans’ Benefits, 38 U.S.C. §§ 4301-4335. See also 20 CFR 1002. Department of Labor, USERRA FY 2012, Annual 

Report to Congress, December 2013, 1, accessed June 1, 2014, 

http://www.dol.gov/vets/programs/userra/2012USERRAReport.pdf.

1071 Department of Labor, FY 2015 Congressional Budget Justification, Veteran’s Employment and Training Service,

VETS-52, VETS-53, VETS-54, accessed May 21, 2014, http://www.dol.gov/dol/budget/2015/PDF/CBJ-2015-V3-

05.pdf. 1072 76 Fed. Reg. 13236 (March 10, 2011).
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Employment Initiative to improve the way vocational rehabilitation services are 

provided to disabled veterans (“Chapter 31” recipients)1073

 administration of the Federal Contractor Program1074 requiring Federal 

contractors/subcontractors with a contract of $100,000 or more to take 

affirmative action to hire and promote qualified covered veterans1075

Beneficiaries 

Employment Services for Veterans – State Grants

Veterans of the uniformed services and transitioning Service members are eligible for 

veteran employment services.1076 Spouses of veterans who have total service-connected 

disabilities or who died as a result of service-connected disabilities are also eligible.1077

Although nonveterans may receive similar support, the eligible individuals previously 

mentioned are given priority of service; therefore, they receive access to a particular 

program or service either before or instead of those who are not eligible for priority of 

service.1078

Transition Assistance Program

The Transition Assistance Program (TAP) meets the needs of separating Service 

members when they are transitioning into civilian life by offering job-search assistance 

and related services.1079 This program assists Service members in making the initial 

transition from military service to the civilian workplace with less difficulty.1080 The 

VOW to Hire Heroes Act of 2011 enlarged this transition assistance opportunity by 

changing the definition of veteran. This new definition allows for Service members 

serving on active military duty to be treated as veterans, disabled veterans, and 

preference eligible when they apply for Federal service.1081

Homeless Veterans’ Reintegration Project

All homeless veterans are eligible for Homeless Veterans’ Reintegration Project (HVRP) 

services.1082

Veterans Workforce Investment Program

All veterans of the uniformed services are eligible for the support provided through 

Veterans Workforce Investment Program (VMIP) grants. The grants are not made 

directly to veterans, but rather to organizations serving veterans.1083

 

1073 Vocational Rehabilitation and Employment Fact Sheet, http://www.dol.gov/vets/programs/vre/vre.pdf, April 18, 

2014.

1074 Veterans’ Benefits, 38 U.S.C. § 4212. See also Public Contracts and Property Management, 41 CFR 60-250, 60-

300. 1075 Veterans’ Benefits, 38 U.S.C. § 4212. 1076 Veterans’ Benefits, 38 U.S.C. §§ 4213, 4215. 1077 Ibid. See also Education, 20 CFR 1001.101, 1001.162. 1078 Veterans’ Benefits, 38 U.S.C. § 4215(a). See also “Homeless Veterans’ Reintegration Program,” Department of 

Labor, accessed March 20, 2014, http://www.dol.gov/vets/programs/fact/Homeless_veterans_fs04.htm. See also

Department of Labor, “Employment for Service Veterans,” accessed March 20, 2014, 

http://www.dol.gov/vets/Education%20and%20Outreach/Program%20Brochures/EMPLOYMENT%20NEW%20TEXT.

pdf. 1079 Veterans’ Benefits, 38 U.S.C. §§ 4100–4114. See also Armed Forces, 10 U.S.C. Chapter 58. 1080 “VETS Fact Sheet 1: Transition Assistance,” Department of Labor, accessed April 18, 2014, 

http://www.dol.gov/vets/programs/tap/tap_fs.htm. 1081 Veterans’ Benefits, 38 U.S.C. § 4100. 1082 Veterans’ Benefits, 38 U.S.C. §§ 2021-2023. Schedule for Rating Disabilities, 38 CFR 63. 1083 Labor, 29 U.S.C. § 2913. See also Employees’ Benefits, 20 CFR 662.200. Department of Labor, FY 2014 

Congressional Budget Justification, Veteran’s Employment and Training Service, accessed April 18, 2014, 

http://www.dol.gov/dol/budget/2014/PDF/CBJ-2014-V3-05.pdf. 
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National Veterans’ Training Institute

This training is available to Local Veterans’ Employment Representatives and Disabled 

Veterans’ Outreach Program specialists, many of whom (approximately 70 percent) are 

veterans of the uniformed services.1084

Federal Administration – Uniformed Service Employment and Reemployment 

Rights Act Enforcement

To be protected under the Uniformed Service Employment and Reemployment Rights 

Act (USERRA), one must have served or be currently serving in the uniformed services, 

with enhanced protection given to disabled veterans. This includes job rights for 

Reserve Component members.1085

Historical Context 

It was not until the end of the Civil War that the Congress formalized hiring 

preferences for veterans. In 1865, the Congress passed a law stating that, “Persons 

honorably discharged from the military or naval service by reason of disability 

resulting from wounds or sickness incurred in the line of duty shall be preferred for 

appointments to civil offices, provided they are found to possess the business capacity 

necessary for the proper discharge of the duties of such offices.”

1086 The Deficiency Act 

of 1919 granted preference to all honorably discharged veterans (regardless of the 

existence of a service-connected disability), their widows, and the wives of injured 

veterans.1087 “That hereafter in making appointments to clerical and other positions in 

the executive branch of the Government, in the District of Columbia or elsewhere 

preference shall be given to honorably discharged soldiers, sailors, and Marines, and 

widows of such, and to the wives of injured soldiers, sailors, and Marines, who 

themselves are not qualified, but whose wives are qualified to hold such positions.”

1088

Veterans’ preference in its present form comes from the Veterans’ Preference Act of 

1944,1089 as amended, and is now codified in various provisions of the United States 

Code.1090 By law, veterans who are disabled or who served on active duty in the Armed 

Forces during certain specified time periods or in military campaigns are entitled to 

preference over others in hiring from competitive lists of eligibles and also in retention 

during reductions in force. In addition to receiving preference in competitive 

appointments, veterans may be considered for special noncompetitive appointments 

for which only they are eligible.1091

The National Defense Act of 2006 enlarged hiring preference for veterans by including 

those who served on active duty for more than 180 consecutive days in the time period 

between September 11, 2001, and the final date of Operation IRAQI FREEDOM, and

 

1084 Veterans’ Benefits, 38 U.S.C. § 4109. See also “Training: Applying,” National Veterans’ Training Institute, accessed 

March 20, 2014, http://www.nvti.ucdenver.edu/home/home.htm. 1085 Veterans’ Benefits, 38 U.S.C. § 4303. See also Department of Labor, Uniformed Services Employment and 

Reemployment Rights Act (USERRA), accessed February 25, 2014, 

http://www.dol.gov/vets/Education%20and%20Outreach/Program%20Brochures/Production%20PDFs/USERRA%20

WEB.pdf. 1086 Eleventh Report of the United States Civil Service Commission, July 1, 1893 to June 30, 1894 (Washington, DC: 

Government Printing Office, 1894), 95.

1087 Third Deficiency Appropriation Act, FY 1919, ch. 6, 41 Stat. 35 (1919). 1088 Ibid. 1089 Veterans Preference Act of 1944, Pub. L. No. 78-359, 58 Stat. 387 (1944). 1090 Government Organization and Employees, 5 U.S.C. § 2108a. Veterans’ Benefits, 38 U.S.C. § 4212. Veterans’ 

Benefits, 38 U.S.C. § 4214. 1091 “ Veterans Services,” Office of Personnel Management, accessed May 1, 2014, http://www.opm.gov/policy-dataoversight/veterans-services/vet-guide/. See also Government Organization and Employees, 5 U.S.C. §§ 2108, 2108(a). 

See also Veterans’ Benefits, 38 U.S.C. §§ 4211, 4214.
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were discharged from active military duty under honorable conditions.1092 The law 

further expanded the definition of veteran in 2011 to include Service members on 

active military duty.1093

An Assistant Secretary position was created in 1980 to replace the Deputy Assistant 

Secretary for Veterans’ Employment.1094 The Office of the Assistant Secretary for 

Veterans’ Employment and Training (OASVET) was established in 1981.1095 The intent 

of the Congress was to establish leadership at DOL for services to veterans at the 

policy-making level, and thereby ensure (1) job and job-training counseling service 

programs, (2) employment placement service programs, and (3) job-training placement 

service programs for eligible veterans.1096

Financial Summary 

In FY 2013, VETS was appropriated approximately $251 million, which included 

approximately $161 million in State Grants, $14 million for the Transition Assistance 

Program, $36 million for the Homeless Veterans’ Reintegration Program, $3 million for 

the National Veterans’ Employment and Training Service Institute, and $36 million in 

Federal Administration and USERRA Enforcement.1097

5.6. SMALL BUSINESS ADMINISTRATION

PROGRAMS

5.6.1. OFFICE OF VETERANS BUSINESS DEVELOPMENT

The Small Business Administration (SBA) was established in 1953 to aid, counsel, 

assist, and protect the interests of small business concerns and to preserve free 

competitive enterprise to maintain and strengthen the overall economy of the

nation.1098 The Office of Veterans Business Development (OVBD) within the SBA 

provides assistance to small business concerns owned and controlled by veterans and 

service-disabled veterans.1099 Approximately 2.4 million veteran-majority-owned firms 

in the United States generate more than $1.2 trillion in receipts and employ 

approximately 5.8 million people.1100

 

1092 National Defense Authorization Act for FY 2006, Pub. L. No. 109-163, § 1111, 119 Stat. 3136, 3451 (2006). 1093 Government Organization and Employees, 5 U.S.C. § 2108a. 1094 Veterans’ Rehabilitation and Education Amendments of 1980, Pub. L. No. 96-466, 94 Stat. 2171 (1980). 1095 Secretary’s Order No. 5-81 (1981). 1096 “VETS History,” Department of Labor, accessed March 20, 2014, 

http://www.dol.gov/vets/aboutvets/history/history.htm. 1097 Department of Labor, FY 2015, Congressional Budget Justification, Veteran’s Employment and Training Service, 

VETS-11, VETS-22, VETS-27, VETS-39, VETS-46, and VETS-51, accessed May 21, 2014, 

http://www.dol.gov/dol/budget/2015/PDF/CBJ-2015-V3-05.pdf. 1098 Small Business Act of 1953, Pub. L. No. 83-163, 67 Stat. 232 (1953) (as codified in 15 U.S.C. §§ 631 [et seq.]). 1099 Commerce and Trade, 15 U.S.C. § 657b. 1100 Small Business Administration, FY 2015 Congressional Budget Justification and FY 2013 Annual Performance 

Report, 80, accessed June 1, 2014, http://www.sba.gov/content/fiscal-year-2015-congressional-budget-justificationand-fiscal-year-2013-annual-performance-report. 
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5.6.1.1. BOOTS TO BUSINESS (TRANSITION ASSISTANCE 

PROGRAM)1101

Transition Assistance services prepare separating uniformed Service members and 

their families for reentry into the civilian work force.1102 These benefits are provided by 

multiple agencies, and are described in the Cross-Agency Benefits section of this 

report—Section 5.8.4 Transition Assistance.

5.6.1.2. ENTREPRENEURSHIP BOOT CAMP FOR VETERANS WITH 

DISABILITIES PROGRAM

SBA partnered with various colleges and universities to create entrepreneurship 

training that offers a one-year “boot camp” for service-disabled veterans of the wars in 

Iraq and Afghanistan who want to start or grow small businesses, called the 

Entrepreneurship Boot Camp for Veterans with Disabilities (EBV) program.1103 They 

trained more than 240 service-disabled veterans in FY 2013.1104 SBA indicated that in 

FY 2014 it will expand the EBV program, increasing both the number of course 

offerings and the number of participating business schools in the consortium, and 

include three offerings for all veterans, including those who are not disabled.1105

5.6.1.3. WOMEN VETERANS IGNITING THE SPIRIT OF 

ENTREPRENEURSHIP PROGRAM

The Women Veterans Igniting the Spirit of Entrepreneurship (VWISE) is a training 

program in entrepreneurship and small business management for female veterans 

that provides them with the opportunity to learn the business skills necessary to 

create a successful business venture. VWISE is open to all female veterans, activeduty female Service members, and female partners/spouses of active-duty Service 

members and veterans.1106 Since the program’s inception, 56 percent of VWISE 

graduates have started their own businesses.1107

5.6.1.4. YELLOW RIBBON REINTEGRATION PROGRAM 

In 2008, the Congress directed the Secretary of Defense to create a program focused 

on reintegration of National Guard and Reserve combat veterans that would provide 

 

1101 Armed Forces, 10 U.S.C. Chapter 58, authorizes the comprehensive transition assistance benefits and services for 

separating Service members and spouses. 1102 Military Family Readiness, DoDI 1342.22, 23 (2012). 1103 See generally Commerce and Trade, 15 U.S.C. § 637(b)(17) (provides authority generally to enter into agreements 

with academic institutions for the establishment and outreach programs for disabled veterans). 1104 Small Business Administration, FY 2015 Congressional Budget Justification and FY 2013 Annual Performance 

Report, 81, accessed June 1, 2014, http://www.sba.gov/content/fiscal-year-2015-congressional-budget-justificationand-fiscal-year-2013-annual-performance-report. 1105 Small Business Administration, FY 2014 Congressional Budget Justification and FY 2012 Annual Performance 

Report, 66, accessed June 1, 2014, http://www.sba.gov/content/fiscal-year-2014-congressional-budget-justificationand-fiscal-year-2012-annual-performance-. 1106 See generally 15 U.S.C. §§ 631(h), 637(b)(17), and 656. 1107 Small Business Administration, FY 2015 Congressional Budget Justification and FY 2013 Annual Performance 

Report, 82, accessed June 1, 2014, http://www.sba.gov/content/fiscal-year-2015-congressional-budget-justificationand-fiscal-year-2013-annual-performance-report.
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these veterans with a variety of services needed throughout the deployment cycle.1108

Entrepreneurship is one of the modules offered through the Yellow Ribbon 

Reintegration Program (YRRP) designed to acquaint Reserve Component and National 

Guardsmen and their families with the career opportunities that entrepreneurship and 

small business ownership offer. SBA’s involvement in YRRP includes providing a brief 

presentation on the business/technical assistance programs and services the agency 

offers and distributing information on the full range of programs and services the 

agency offers Reserve Component members and National Guardsmen.1109

Beneficiaries 

Those eligible for SBA benefits include veterans, service-disabled veterans, Reserve

and National Guard members, and discharging active-duty Service members and their 

families.

1110

Historical Context 

The SBA OVBD was created in 1999.1111 Congressional findings leading to its creation 

highlighted the vital role veterans fill in small businesses as well as the risks they take 

fighting to protect the American dream of freedom and prosperity.1112 In their findings 

the Congress also highlighted how medical advances and new medical technologies 

allow service-disabled veterans to more actively participate in the formation and 

expansion of small businesses.1113

Financial Summary 

The SBA OVBD expended approximately $9 million assisting 101,839 veterans at a 

cost of $89.37 per veteran in FY 2013.1114

5.7. DEPARTMENT OF JUSTICE PROGRAMS

5.7.1. EDUCATION ASSISTANCE

Education Assistance benefits are provided to uniformed Service members by multiple 

agencies including DoD, the Department of Homeland Security (DHS), the Department 

of Veterans Affairs (VA), the Department of Education (ED), and the Department of 

Justice (DOJ).

 

1108 National Defense Authorization Act for FY 2008, Pub. L. No. 110-181, § 582, 122 Stat. 122 (2008), as codified in 

Armed Forces, 10 U.S.C. § 10101 note. 1109 For discussion of implementation of the YRRP, see DoD Yellow Ribbon Reintegration Program (YRRP), 

DoDI 1342.28 (2011). (Discussion of SBA-provided services is found at page 12 of the DoDI, as well as generally 

throughout the Instruction.)

1110 Small Business Administration, FY 2015 Congressional Budget Justification and FY 2013 Annual Performance 

Report, 80, accessed June 1, 2014, http://www.sba.gov/content/fiscal-year-2015-congressional-budget-justificationand-fiscal-year-2013-annual-performance-report. 1111 Veterans Entrepreneurship and Small Business Development Act of 1999, Pub. L. No. 106-50, Title II, § 201(b)(2), 

413 Stat. 233, 235 (1999). 1112 Ibid, § 101. 1113 Ibid. 1114 Small Business Administration, FY 2015 Congressional Budget Justification and FY 2013 Annual Performance 

Report, 81, accessed June 1, 2014, http://www.sba.gov/content/fiscal-year-2015-congressional-budget-justificationand-fiscal-year-2013-annual-performance-report.
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DOJ enforces the following: 

5.7.1.1. SERVICEMEMBERS CIVIL RELIEF ACT INTEREST RATE 

CAP

The Servicemembers Civil Relief Act (SCRA) Interest Rate Cap is described in the 

Cross-Agency Benefits section of this report—Section 5.8.1 Education Assistance.

5.8. CROSS-AGENCY BENEFITS

Some QoL benefits are delivered to Service members, veterans, and their families by 

more than one Federal Agency. This approach integrates the complimentary expertise 

of these agencies while allowing them to customize the benefit for their beneficiaries. 

Table 17 summarizes benefits administered by more than one Federal Agency.

Table 17. Cross-Agency Benefit Administration

Benefit DoD DHS VA DOL SBA DOJ ED

Education Assistance X X X X X

Exchanges X X X

Family Subsistence 

Supplemental Allowance X X 

Transition Assistance X X X X X

5.8.1. EDUCATION ASSISTANCE

Service members and veterans have access to many education programs through DoD, 

the Department of Homeland Security (DHS), the Department of Veterans Affairs (VA) 

and other Federal agencies. Some programs are only available for Service members 

while on active duty, while others are only available after departure from service. 

Additionally, there are programs available that can be accessed during both periods of 

time.

The following information includes a description of education benefits that are 

available to active-duty Service members through DoD, DHS, the Department of 

Education (ED), and the Department of Justice (DOJ). Also included is a description of 

education and training benefits available to Service members, dependents, and 

survivors through the VA and ED. 

Some forms of education assistance are not addressed because they are outside of the 

Commission’s scope of study. These include education and training obtained while on 

duty, education and training in connection with military service, and Professional 

Military Education.
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5.8.1.1. OFF-DUTY AND VOLUNTARY EDUCATION PROGRAMS 

AVAILABLE TO ACTIVE-DUTY SERVICE MEMBERS

Active-duty Service members can elect to participate in voluntary education programs 

during their off-duty time for adult or post-secondary education studies.1115 These 

programs include tuition assistance, voluntary education programs,1116 and loan 

repayment.1117

5.8.1.1.1. Tuition Assistance 

The Armed Forces offer financial assistance for tuition and fees for voluntary, off-duty 

educational programs1118 in support of Service members’ personal and professional 

goals through Tuition Assistance (TA).1119 TA is available to active-duty Service 

members, Reservists, and National Guardsmen in an active-duty status.1120 Services 

may pay all or a portion of tuition and expenses for TA participants.1121 “TA may be 

used for high school completion and approved courses from accredited undergraduate 

or graduate education programs or educational institutions. Approved courses are 

those that are part of an identified course of study leading to a postsecondary 

certificate or degree and nondegree-oriented language courses integral to the Defense 

Language Transformation Roadmap.”

1122 Expenses TA does not include are books, 

flight training, retaking the same course, and continuing education units (CEUs).1123

“TA funding will only be paid to educational institutions accredited by an accrediting 

organization recognized by ED, approved for VA funding, and certified to participate in 

federal student aid programs through the ED under Title IV of [...]the Higher 

Education Act of 1965.”

1124 Tuition is paid directly to the school by the Service.1125 To 

be eligible for TA, enlisted Service members must have enough time remaining in 

service to complete the course for which they applied.1126 After the completion of a 

course, an officer using TA must fulfill at least an additional two-year active-duty

service obligation.1127 Each military Service pays all or a portion of the charges of an 

educational institution for education during the member’s off-duty periods.1128 When 

an educational institution’s charges are equal to or less than the established cap per 

semester-hour of credit or its equivalent, the responsible Service pays the entire 

amount charged by the educational institution.1129 When an educational institution’s 

charges exceed the established cap per semester-hour of credit, or equivalent, the 

responsible Service will pay no more than the established cap per semester-unit (or 

 

1115 Voluntary Education Programs, DoDI 1322.25 (2014). 1116 Voluntary Education Programs for Military Personnel, DoDD 1322.08E (2007). 1117 Armed Forces, 10 U.S.C. § 2171. 1118 Armed Forces, 10 U.S.C. § 2007. 1119 “Tuition Assistance,” Military OneSource, accessed April 7, 2014, http://www.militaryonesource.mil/voluntaryeducation?content_id=268274. 1120 Armed Forces, 10 U.S.C. § 2007. Voluntary Education Programs, DoDI 1322.25, 16-17 (2014). 1121 Armed Forces, 10 U.S.C. § 2007. 1122 Voluntary Education Programs, DoDI 1322.25, 16-17 (2014). 1123 “Tuition Assistance,” Military OneSource, accessed April 11, 2014, http://www.militaryonesource.mil/voluntaryeducation?content_id=268274. 1124 Voluntary Education Programs, DoDI 1322.25, May 23, 2014, 15. 1125 “Tuition Assistance,” Military OneSource, accessed April 11, 2014, http://www.militaryonesource.mil/voluntaryeducation?content_id=268274.

1126 “Tuition Assistance,” Military OneSource, accessed April 11, 2014, http://www.militaryonesource.mil/voluntaryeducation?content_id=268274.

1127 Armed Forces, 10 U.S.C. § 2007(b)(1). 1128 Voluntary Education Programs, DoDI 1322.25, 16-17 (2014). 1129 Ibid, 15.
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equivalent).1130 The TA rate, credit-cap, and annual per capita ceiling are reviewed 

annually in consideration of inflation and other effects.1131 The Under Secretary of 

Defense for Personnel and Readiness (USD(P&R)), in coordination with the Military 

Departments, reviews the uniform semester-hour (or equivalent) TA caps and annual 

TA ceilings to determine possible changes for the upcoming fiscal year.1132

The military Services may set additional requirements for TA eligibility, such as 

training qualifications and time in service.1133

Army:

 A soldier is not eligible for TA until a year after graduating from initial entry 

training.

 A soldier is required to wait until after completing 10 years of military service to 

qualify for a post-baccalaureate degree unless a BA degree was earned without 

using TA.

 There is a cap of 130 semester hours for baccalaureate degree completion and 

39 semester hours for a master’s degree.

 Soldiers who have been flagged for adverse action or who fail the Army Physical 

Fitness Test or weight standards are not eligible to use TA.

 Soldiers are authorized one post-secondary certificate or diploma such as 

welding or computer certification when using TA.1134

Navy:

 A sailor is not eligible for TA until after a year at their first permanent duty 

station assignment.1135

 TA is only approved for courses scheduled for one academic term at a time.1136

 TA is not authorized for the same course previously funded by TA.1137

 TA covers a maximum of 16 semesters.1138

Marine Corps:

 A Marine is eligible for TA only after 24 months of service on active duty.1139

 First-time TA applicants can only take one course to start, “unless 

documentation is provided that the Marine has at least an associate degree or 

at least 60 academic credits and a minimum GPA of 2.5.”

1140

 TA cannot be authorized for duplicate degrees (e.g., second associate degree).1141

 Generally, a Marine using TA must maintain a minimum 2.5 GPA.1142

 

1130 Ibid, 16. 1131 Ibid. 1132 Ibid, 2-3. 1133 Ibid, 16-17. 1134 “Tuition Assistance Changes to Take Effect for 2014,” U.S. Army, accessed April 11, 2014, 

http://www.army.mil/article/116405/Tuition_assistance_changes_to_take_effect. Official service publication AR 621-5 

does not reflect these changes at this time.

1135 “Tuition Assistance,” U.S. Navy College Program, accessed April 11, 2014, 

https://www.navycollege.navy.mil/ta_info.aspx#eligibility. Official service publication does not reflect this current 

information. Voluntary Education (VOLED) for Navy Sailors, OPNAVINST 1560.9A (2008). 1136 Ibid. 1137 Ibid. 1138 Ibid. 1139 Tuition Assistance Guidelines Update, MARADMIN 611/13 (2013), accessed June 20, 2014, 

http://www.marines.mil/news/messages/TAbid/13074/article/154558/tuition-assistance-TA-guidelinesupdate.aspx. 1140 Ibid. 1141 Ibid. 1142 Ibid.
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 The Marine Corps TA budget is divided into fiscal quarters. Once quarterly 

funds are exhausted, TA approvals are deferred until the following quarter. 

When TA funds are available, approvals are limited to classes that begin during 

that quarter.1143

Air Force:

 Airmen who are on a “control roster” for substandard performance, such as 

receiving a referral or failing a physical fitness test, cannot take classes until 

the action against them has been resolved.1144

 TA cannot be authorized for duplicate degrees (e.g., second associate degree).1145

Coast Guard:

 Member must be on active duty or a Reservist on long-term orders greater than 

180 days.1146

 Members are limited to six credit hours per fiscal quarter.1147

 A member using TA must maintain a minimum 2.0 GPA for undergraduate 

degree coursework and a minimum 3.0 GPA for graduate degree coursework.1148

 TA cannot be authorized for duplicate degrees (e.g. second associate degree).1149

 TA is not authorized for the same course previously funded by TA.1150

In the 1950s, TA was created as a means to provide education benefits to persons who 

were on active duty.1151 At that time, VA education benefits were only available to 

veterans.1152 The National Defense Authorization Act for FY 2001 amended the tuition 

assistance statute, which previously capped tuition and expenses at 75 percent.1153 In 

October of 2000, Pub. L. No. 106-398, § 1602 authorized the military Services, 

including all active, Reserve, and National Guard components, to pay TA up to 

100 percent of the cost of tuition and related charges.1154

5.8.1.1.2. Voluntary Education Support

5.8.1.1.2.1. Joint Services Transcript

The American Council on Education College Credit for Military Service Program 

provides a service that validates military occupational experience and training for 

 

1143 Ibid. 1144 Department of the Air Force, U.S. Air Force Fact Sheet: Tuition Assistance, accessed April 11, 2014, 

http://www.arpc.afrc.af.mil/library/factsheets/factsheet_print.asp?fsID=8487&=1. “New Tuition Assistance Rules 

Beginning Oct. 1,” Air Force Times, accessed April 11, 2014, 

http://www.airforcetimes.com/article/20130829/EDU02/308290043/New-tuition-assistance-rules-beginning-Oct-1. 1145 Ibid. 1146 Increased Tuition Assistance Annual Cap and Summary of Coast Guard Tuition Assistance Policy, ALCOAST 

148/14 (2014).

1147 Tuition Assistance Expanded to Include Masters Degrees, ALCOAST 065/14 (2014). 1148 Performance, Training and Education Manual, COMDTINST M1500.10C, 11-9 (2009). 1149 Ibid. Increased Tuition Assistance Annual Cap and Summary of Coast Guard Tuition Assistance Policy, ALCOAST 

148/14 (2014). 1150 Performance, Training and Education Manual, COMDTINST M1500.10C, 11-9 (2009). 1151 Department of Veterans Affairs, Part V: Chapter 10 - Tuition Assistance Top-up, accessed April 11, 2014, 

http://www.benefits.va.gov/warms/docs/admin22/m22_4/part05/ch10.htm#s1004.

1152 Ibid. 1153 Pub. L. No. 106–398, §1 [[div. A], title XVI, §1602(a)(1)], 114 Stat. 1654A-1, 1654A-358 (2000) (amending 10 U.S.C. 

§ 2007)( added subsec. (a) and struck out former subsec. (a) which read as follows: “The Secretary of a military 

department may not pay more than 75 percent of the charges of an educational institution for the tuition or expenses 

of a member of the armed forces enrolled in such institution for education or training during his off-duty periods...). 1154 National Defense Authorization Act, FY 2001, Pub. L. No. 106-398, § 1602; 114 Stat. 1654,1654A-358 (2000).
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college credit.1155 The American Council on Education (ACE) facilitates communication 

between DoD and higher educational institutions by reviewing Service members’ 

military training to award college credits for that experience.1156 The joint services 

transcript (JST) is an official education transcript tool for documenting the 

recommended ACE college credits for a variety of professional military education

courses, training courses, and occupational experiences of Service members across 

the Services.1157 The JST consolidates data from legacy documents such as the 

Army/ACE Registry Transcript System, the Sailor/Marine ACE Registry Transcript 

System, the Community College of the Air Force (CCAF) transcript, and the Coast 

Guard Institute transcript.1158 The Military Services must provide their members with 

a JST.1159 At a minimum, the JST includes documented military student data, courses, 

and military occupations evaluated by ACE, including descriptions, learning 

outcomes, and equivalent college credit recommendations, as well as national collegelevel exam results.1160 The U.S. Air Force continues to use the CCAF to document its 

members’ academic and military credit.1161

5.8.1.1.2.2. Servicemembers Opportunity Colleges Degree Network System

The Servicemembers Opportunity Colleges (SOC) Degree Network is a consortium of 

more than 1,800 colleges and universities providing educational opportunities to 

Service members who may have difficulty in completing college programs due to 

frequent military moves.1162 An educational institution granting undergraduate 

academic credit must adhere to SOC Principles and Criteria regarding the 

transferability of credit, the awarding of credit for military training and experience, 

and residency requirements.1163

5.8.1.1.2.3. Examinations Program

The Defense Activities for Non-Traditional Education Support (DANTES) is responsible 

for managing and facilitating the delivery of a wide variety of examinations including 

the General Equivalency Diploma test, college admissions, and credit-by-examination 

programs.1164

5.8.1.1.2.4. College Loan Repayment Program

The Military Services provide a Loan Repayment Program (LRP) as a special enlistment 

incentive offered to highly qualified applicants at the time of enlistment.1165 Under the 

LRP, the Army and Navy repay up to $65,000 for a Service member’s qualifying 

 

1155 Voluntary Education Programs, DoDI 1322.25 (2014). “College Credit for Military Service,” American Council on 

Education, accessed June 1, 2014, http://www.acenet.edu/higher-education/topics/s/College-Credit-for-MilitaryService.aspx. 1156 “Guide to the Evaluation of Educational Experiences in the Armed Services,” American Council on Education,

accessed April 11, 2014, http://www.acenet.edu/news-room/Pages/Military-Guide-Online.aspx#. 1157 Voluntary Education Programs, DoDI 1322.25, 67 (2014). 1158 Ibid. 1159 Ibid, 13. 1160 Ibid, 13-14. 1161 Ibid, 14. 1162 Ibid, 68. National Defense, 32 CFR 68.3. 1163 Voluntary Education Programs, DoDI 1322.25, 28 (2014). “SOC Consortium Publications/Forms/Resources,” SOC 

Consortium, accessed June 1, 2014, http://www.soc.aascu.org/socconsortium/PublicationsSOC.html. 1164 Voluntary Education Programs, DoDI 1322.25, 32 (2014). Voluntary Education Programs for Military Personnel, 

DoDD 1322.08E (2007). 1165 Armed Forces, 10 U.S.C. § 2171. See also “College Loan Repayment Program (LRP),” My Army Benefits, accessed 

April 11, 2014, 

http://myarmybenefits.us.army.mil/Home/Benefit_Library/Federal_Benefits_/College_Loan_Repayment_Program_(LR

P).html?serv=147. 
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student loans.1166 The Air Force has a similar college loan repayment program for 

enlisted Airmen with federally-insured student loans.1167 Use of individual contracting 

for LRP requires that the Service member incurred one of the following loans: 

Federally Insured Student Loans Subsidized, Unsubsidized Stafford Loans, National 

Direct Student Loans, Perkins Loans, Consolidated Loans (only loans incurred for the 

use of the individual contracting for the LRP), or Parent Loans for Undergraduate 

Students (PLUS).1168

5.8.1.2. ED AND DOJ EDUCATION BENEFITS AVAILABLE TO 

ACTIVE-DUTY SERVICE MEMBERS

The following are education benefits provided to Service members on active duty by 

Federal agencies outside of DoD, DHS, and VA.

5.8.1.2.1. In-State Tuition for Members of the Armed Forces on Active Duty and 

Dependents (enforced by ED) 

Members of the Military Services on active duty assigned to a permanent duty station 

for a period of more than 30 days, and their dependents, are eligible for in-State 

tuition rates at public universities/colleges in the State of the permanent duty station 

or domicile.1169

5.8.1.2.2. ED Cancellation of Federal Student Loan

Members of the Military Services serving in hostile-fire or imminent-danger pay areas 

for at least one year are eligible for cancellation of all or a portion of their Federal 

Perkins Loans or National Direct Student Loans (NDSL).1170 This benefit does not apply 

to Stafford Loans or PLUS Loans.1171 Service members with Federal Perkins Loans may 

have up to 15 percent of their loans canceled for each year of service in an area of 

hostilities that qualifies for special pay.1172

5.8.1.2.3. ED Public Service Loan Forgiveness Program 

Members of the Military Services employed by the military on a full-time basis for 

10 years may apply to have an eligible direct loan discharged.1173 A Service member 

may obtain loan forgiveness under this program after 120 separate monthly payments 

if he/she is not in default on the loan for which forgiveness is requested.1174

 

1166 “College Loan Repayment Program (LRP),” My Army Benefits, accessed April 11, 2014, 

http://myarmybenefits.us.army.mil/Home/Benefit_Library/Federal_Benefits_/College_Loan_Repayment_Program_(LR

P).html?serv=147. See also “Loan Repayment Program Frequently Asked Questions,” Navy Recruiting Command, 

accessed April 11, 2014, http://www.cnrc.navy.mil/EIncentives/N5311%20EB/EB/FAQ/LRP%20ADOBE.pdf. 1167 Voluntary Education Program, AFI 36-2306 (2011). 1168 Armed Forces, 10 U.S.C. § 2171. See also “Loan Repayment Program Frequently Asked Questions,” Navy 

Recruiting Command, accessed April 11, 2014, 

http://www.cnrc.navy.mil/EIncentives/N5311%20EB/EB/FAQ/LRP%20ADOBE.pdf. 1169 Education, 20 U.S.C. § 1015d. 1170 Education, 20 U.S.C. § 1087ee(a)(2)(D). See also 34 CFR 674.59. 1171 Education, 20 U.S.C. § 1087ee(a)(1). See also “Cancellation of Federal Student Loans,” My Army Benefits, accessed 

April 11, 2014, 

http://myarmybenefits.us.army.mil/Home/Benefit_Library/Federal_Benefits_/Cancellation_of_Federal_Student_Loans

.html?serv=147. 1172 Education, 20 U.S.C. § 1087ee(a)(2)(D). See also Department of Education, Perkins Cancellation IFAP, 6-82,

accessed April 11, 2014, http://www.ifaed.gov/fsahandbook/attachments/0910FSAHbkVol6Ch5Oct2.pdf. 1173 Education, 20 U.S.C. § 1087e(m). Education, 34 CFR 685.219. 1174 Ibid.
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5.8.1.2.4. ED Military Service Loan Deferment

Borrowers in the Military Services may be eligible to postpone federal student loan 

repayment for up to three years while serving on active duty during a war, other 

military operation, or national emergency. Eligibility for this program includes the six 

months following demobilization.1175 Service members in hostile areas that qualify 

them for special pay may be eligible for 0 percent interest on Direct Loans made on or 

after October 1, 2008, for up to 60 months.1176

5.8.1.2.5. Servicemembers Civil Relief Act Interest Rate Cap (enforced by DOJ)

Under Servicemembers Civil Relief Act (SCRA), interest on federal student loans 

obtained prior to military service is limited to 6 percent during periods of active duty 

for members of the Military Services.

1177

5.8.1.3. VA EDUCATION PROGRAMS AVAILABLE TO ACTIVE-DUTY 

AND SEPARATED SERVICE MEMBERS

The following education programs are funded and administered by VA and are 

provided to both active-duty and separated Service members.

5.8.1.3.1. Post-9/11 GI Bill

Education assistance may be available to active-duty uniformed Service members and 

veterans with an honorable discharge who have at least 90 days of aggregate service 

after September 10, 2001, or to individuals who have a minimum of 30 continuous 

days of service discharged due to a Service-connected disability.1178 The Post-9/11 GI 

Bill covers all tuition and fees for in-State students or up to $19,198.31 of tuition and 

fees at private or foreign schools per academic year.1179 The maximum amounts of 

tuition and fees payable for the upcoming academic year are published by the first of 

August of each calendar year.1180 The maximum amounts payable, as published, will 

be effective for each term, quarter, or semester that begins during the academic 

year.1181 The amount covered for the beneficiary varies based on time in service.1182 A 

Service member is eligible to receive up to 40 percent of the maximum amount payable 

after 90 aggregate days of creditable active-duty service but less than 6 months of 

such service.1183 A Service member is eligible for 100 percent of the maximum amount 

payable under this GI bill after 36 aggregate months on active duty.1184

In addition, participants may receive a monthly housing allowance equal to the basic 

allowance for housing payable to an E-5 with dependents in the same ZIP code as the 

 

1175 Education, 20 U.S.C. § 1078(b)(1)(M). 1176 Department of Education, For Members of the U.S. Armed Forces: What you need to know about your federal student 

loan benefits, accessed June 1, 2014, https://studentaid.ed.gov/sites/default/files/military-student-loan-benefits.pdf. 1177 War and National Defense, 50 U.S.C. App. § 527. 1178 Post-9/11 Veterans Educational Assistance Act of 2008, Pub. L. No. 110-252, § 5001, 122 Stat. 2323, 2357 (2008) 

(codified at Veterans’ Benefits, 38 U.S.C. § 3311). Schedule for Rating Disabilities, 38 CFR 21.9500, 21.9520, and 

21.9640.

1179 Veterans’ Benefits, 38 U.S.C. § 3313. See also “Education and Training,” Department of Veterans Affairs, accessed 

June 1, 2014, http://www.benefits.va.gov/gibill/resources/benefits_resources/rates/ch33/Ch33rates080113.asp. 1180 Schedule for Rating Disabilities, 38 CFR 21.9620. 1181 Ibid. 1182 Veterans’ Benefits, 38 U.S.C. §§ 3311and 3313. Schedule for Rating Disabilities, 38 CFR 21.9520, 21.9525, and 

21.9640. “Federal Benefits for Veterans, Dependents, and Survivors, Chapter 5 Education and Training,” Department 

of Veterans Affairs, accessed June 1, 2014, http://www.va.gov/opa/publications/benefits_book/benefits_chap05.asp. 1183 Schedule for Rating Disabilities, 38 CFR 21.9640. 1184 Ibid. “Federal Benefits for Veterans, Dependents, and Survivors, Chapter 5 Education and Training,” Department of 

Veterans Affairs, accessed June 1, 2014, http://www.va.gov/opa/publications/benefits_book/benefits_chap05.asp.
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school. They receive an annual stipend for books and supplies. They may also receive 

a one-time rural relocation benefit payment.1185 Approved educational programs under 

this GI Bill include graduate and undergraduate degrees, vocational and technical 

training, on-the-job training, flight training, correspondence training, licensing and 

national testing programs, entrepreneurship training, and tutorial assistance.1186 This 

GI bill provides up to 36 months of education benefits,1187 which may be used for up to 

15 years following separation from active duty.1188 After officers commissioned through 

a Service Academy or an ROTC program have completed their service obligation, they 

are eligible to start completing service toward earning Post-9/11 GI benefits.1189

Additionally, a period of service counted under the Loan Repayment Program may not 

be counted as a period of service for entitlement to educational assistance under the 

Post-9/11 GI Bill.1190

The uniformed services may allow Service members the opportunity to transfer their 

Post-9/11 GI Bill benefit to their spouse or dependents.1191 Most Service members 

eligible for the Post-9/11 GI Bill are eligible to transfer their benefit if they have at 

least six years of military service and agree to serve four additional years, or have at 

least 10 years of service and are unable to complete four additional years of service 

due to certain circumstances.1192 For specific qualification details on eligibility 

requirements for transferability please refer to DoD Instruction 1341.13.1193

When a Service member transfers part or all of the benefit to a spouse, one or more 

children, or any combination of spouse and children,

1194 the Service member must 

(1) designate the dependent or dependents to whom such entitlement is being 

transferred; (2) designate the number of months of entitlement to be transferred to 

each dependent; and (3) specify the beginning date and ending date of the period for 

which the transfer is effective for each dependent.1195 After designating a dependent as 

a transferee, the Service member retains the right to revoke or modify the transfer at 

any time.1196 A spouse may start to use the benefit once it is transferred and the 

Service member completes at least six years of active-duty service.

1197 A spouse may 

use the benefit for up to 15 years after the Service member’s last separation from 

active duty.1198 A child may not use the benefit until he or she has attained a 

secondary school diploma (or equivalency certificate), or reached 18 years of age.1199

Children are entitled to the monthly stipend and books and supplies stipend even 

 

1185 Veterans’ Benefits, 38 U.S.C. § 3313.Schedule for Rating Disabilities, 38 CFR 21.9640. Veterans’ Benefits, 38 

U.S.C. § 3318. Schedule for Rating Disabilities, 38 CFR 21.9660. 1186 Schedule for Rating Disabilities, 38 CFR 21.9590. “Post-9/11 GI Bill,” Department of Veterans Affairs, 

http://www.benefits.va.gov/gibill/post911_gibill.asp. 1187 Veterans’ Benefits, 38 U.S.C. § 3312. 1188 Veterans’ Benefits, 38 U.S.C. § 3321. Schedule for Rating Disabilities, 38 CFR 21.9530. 1189 Post-9/11 GI Bill, DoDI 1341.13 (2013). 1190 Veterans’ Benefits, 38 U.S.C. § 3322(b). 1191 Veterans’ Benefits, 38 U.S.C. § 3319. Schedule for Rating Disabilities, 38 CFR 21.9570. 1192 Veterans’ Benefits, 38 U.S.C. § 3319. Schedule for Rating Disabilities, 38 CFR 91.9570(l). 1193 Post-9/11 GI Bill, DoDI 1341.13 (2013). 1194 Veterans’ Benefits, 38 U.S.C. § 3319(c). Post-9/11 GI Bill, DoDI 1341.13 (2013). Schedule for Rating Disabilities, 

38 CFR 21.9570(b). 1195 Veterans’ Benefits, 38 U.S.C. § 3319(d). Schedule for Rating Disabilities, 38 CFR 21.9570(d). 1196 Veterans’ Benefits, 38 U.S.C. § 3319. Schedule for Rating Disabilities, 38 CFR 21.9570(f). Post-9/11 GI Bill, 

DoDI 1341.13, 11 (2013). 1197 Veterans’ Benefits, 38 U.S.C. § 3319. Post-9/11 GI Bill, DoDI 1341.13, 11 (2013). 1198 Veterans’ Benefits, 38 U.S.C. § 3319. Schedule for Rating Disabilities, 38 CFR 21.9530(d). 1199Veterans’ Benefits, 38 U.S.C. § 3319; Schedule for Rating Disabilities, 38 CFR 21.9625(j).
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while the eligible Service member is on active duty.1200 Children are also not subject to 

the 15-year delimiting date, but may not use the benefit after reaching 26 years of 

age.1201 Although VA funds the Post-9/11 GI Bill benefits, DoD sets the policies and 

procedures for transferability.1202

5.8.1.3.2. Yellow Ribbon GI Education Enhancement Program

With this program, approved institutions of higher learning and the VA, partially or 

fully fund tuition and fee expenses that exceed the established limits under the 

Post-9/11 GI Bill.1203 The school of attendance must accept the VA’s invitation to 

participate in the program, state how and how much student tuition will be waived (up 

to 50 percent), and how many participants will be accepted into the program during 

the current academic year.1204 VA will match the school’s percentage (up to 50 percent) 

to reduce or eliminate out-of-pocket costs for eligible participants.1205 The student 

must be a veteran receiving benefits at the 100 percent benefit rate payable, a 

transfer-of-entitlement-eligible dependent child, or a transfer-of-entitlement eligible 

spouse of a veteran.1206 A list of schools participating in the Yellow Ribbon Program is 

available on the VA Education and Training website.1207

5.8.1.3.3. Montgomery GI Bill Active Duty

The Montgomery GI Bill Active Duty provides education benefits to members of the 

Military Services who (1) first entered active duty after June 30, 1985,

1208 (2) have a 

remaining entitlement under the Vietnam Era GI Bill,1209 (3) were involuntarily 

separated under the Voluntary Separation Incentive or Special Separation Benefit 

program,1210 and (4) are Veterans Educational Assistance Program (VEAP)1211

participants who elected to convert to the Montgomery GI Bill during the open window 

periods.1212

Service members enroll and pay $100 per month for 12 months. They are then 

entitled to receive a monthly education benefit once they have completed a minimum 

of three years, if their original obligation was for three years, or two years if that was 

their initial obligation.1213 Before using their Montgomery GI Bill Benefits, Service 

members must also complete a high school diploma or the equivalent of 12 semester 

hours in a program of education leading to a standard college degree.

1214 This benefit 

can be used for degree programs, certificate or correspondence courses, cooperative 

training, independent study programs, apprenticeship or on-the-job training, and 

 

1200 Schedule for Rating Disabilities, 38 CFR 21.9570(k). “Transfer Post-9/11 GI Bill to Spouse and Dependents,” 

Department of Veteran Affairs, http://www.benefits.va.gov/gibill/post911_transfer.asp. 1201 Veterans’ Benefits, 38 U.S.C. § 3319(h)(5)(A); Schedule for Rating Disabilities, 38 CFR 21.9530(e). 1202 Veterans’ Benefits, 38 U.S.C. § 3319. 1203 Veterans’ Benefits, 38 U.S.C. § 3317. Schedule for Rating Disabilities, 38 CFR 21.9700. “Yellow Ribbon Program,” 

Department of Veteran Affairs, accessed April 10, 2014, http://www.benefits.va.gov/gibill/yellow_ribbon.asp. 1204 Veterans’ Benefits, 38 U.S.C. § 3317(c). 1205 Veterans’ Benefits, 38 U.S.C. § 3317(d). 1206 Veterans’ Benefits, 38 U.S.C. § 3317. Schedule for Rating Disabilities, 38 CFR 21.9700(b). 1207 “Yellow Ribbon Program,” Department of Veteran Affairs, accessed April 10, 2014, 

http://www.benefits.va.gov/gibill/yellow_ribbon.asp.

1208 Veterans’ Benefits, 38 U.S.C. § 3011(a)(1). 1209 Schedule for Rating Disabilities, 38 CFR 21.7045. 1210 Veterans’ Benefits, 38 U.S.C. §§ 3018A, B. Schedule for Rating Disabilities, 8 CFR 21.7045. 1211 Veterans’ Benefits, 38 U.S.C. § 3018C. 1212 Veterans’ Benefits, 38 U.S.C. § 3018. See also Montgomery GI Bill (MGIB) Program, DoDD 1322.16 (2002). 1213 Veterans’ Benefits, 38 U.S.C. § 3011(b) (if the Service member becomes eligible for the Montgomery GI Bill under 

Veterans’ Benefits, 38 U.S.C. § 3011(a)(1)(A), then the $100 reduction in pay for 12 months is applicable. Otherwise, it 

is not).

1214 Veterans’ Benefits, 38 U.S.C. § 3011(a)(2). 
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vocational flight training programs.1215 The monthly benefit paid is based on the type 

of training and length of service.1216 Beneficiaries are entitled to up to 36 months1217 of 

education benefits, payable for up to 10 years following separation from active duty.1218

Like the Post-9/11 GI Bill, the Montgomery GI Bill benefit is also now transferable to 

spouses and children of eligible Service members after serving 10 years in the Armed 

Forces, or six years with a four year commitment.1219 Transferability was not originally 

included in the Montgomery GI Bill,1220 but was added in the National Defense 

Authorization Act for FY 2002.1221

5.8.1.3.4. Montgomery GI Bill Selected Reserve

The Montgomery GI Bill is also available to members of the Selected Reserve if they 

meet the eligibility requirements.1222 Specific eligibility requirements include a fouryear obligation to serve in the Selected Reserve. This obligation must be signed after 

June 30, 1985. Other requirements include:

 completing a two-year obligation as an active-duty Service member

 attaining a high school diploma or equivalency certificate

 earning an honorable discharge

 retiring

 transferring to the Ready Reserve

 continued active duty

 or, Selected Reserve service1223

If Selected Reserve members meet these established requirements, they are entitled to 

the same benefits as the Montgomery GI Bill active-duty beneficiaries.1224

5.8.1.3.5. Tuition Assistance Top-Up

VA can pay the difference between the total cost of a college course and the amount of 

Tuition Assistance that is paid by the Service for the course. This can be done if a 

Service member is approved for Tuition Assistance by a Service and is eligible for the 

Montgomery GI Bill Active Duty or Post-9/11 GI Bill.1225 If a Service member receives 

the Top-Up benefit, his or her GI Bill benefits are reduced.1226 Montgomery GI Bill 

beneficiaries are charged one month of entitlement for each payment received that is 

equal to the full time monthly rate for the GI Bill.1227 Post-9/11 GI Bill beneficiaries are 

charged based on the amount of time a member is enrolled.1228

 

1215 Veterans’ Benefits, 38 U.S.C. § 3014(a) provides that “the Secretary shall pay to each individual entitled to basic 

educational assistance who is pursuing an approved program of education a basic educational assistance allowance to 

help meet, in part, the expenses of such individual’s subsistence, tuition, fees, supplies, books, equipment, and other 

educational costs.” Veterans’ Benefits, 38 U.S.C. § 3002 provides that the term “program of education” has the same 

meaning as that found in Veterans’ Benefits, 38 U.S.C. § 3452(b). 1216 Veterans’ Benefits, 38 U.S.C. § 3015. Schedule for Rating Disabilities, 38 CFR 21, Subpart K - All Volunteer Force 

Educational Assistance Program (Montgomery GI Bill—Active Duty) § 21.7072. 1217 Veterans’ Benefits, 38 U.S.C. § 3013 (a)(1). 1218 Veterans’ Benefits, 38 U.S.C. § 3031(a). 1219 Veterans’ Benefits, 38 U.S.C. § 3020. 1220 Servicemen’s Readjustment Act of 1944, Pub. L. No. 78-346, 58 Stat. 291 (1944). 1221 National Defense Authorization Act for FY 2002, Pub. L. No. 107-107, § 654, 115 Stat. 1012, 1153 (2001). 1222 Veterans’ Benefits, 38 U.S.C. § 3012. 1223 Veterans’ Benefits, 38 U.S.C. § 3012(a). 1224 Ibid. 1225 Floyd D. Spence National Defense Authorization Act for FY 2001, Pub. L. No. 106-398 §1602(b) (2000). 1226 Schedule for Rating Disabilities, 38 CFR 21.7075. See also Schedule for Rating Disabilities, 38 CFR 21.7076(b)(10). 1227 Ibid. 1228 Veterans’ Benefits, 38 U.S.C. § 3313(e)(4). 
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5.8.1.3.6. GI Bill Kicker

The Secretary of a Military Department may increase the amount of educational 

assistance paid to an individual who has a skill or specialty (1) for which there is a 

critical shortage of personnel, (2) for which there is difficulty recruiting, or, (3) in the 

case of critical units, for which there is difficulty retaining personnel.1229 Kickers can 

increase the monthly payment rate for the Post-9/11 GI Bill and the Montgomery GI 

Bill by as much as $950 a month.1230

5.8.1.3.7. Reserve Education Assistance Program 

The Reserve Education Assistance Program (REAP) was designed to provide 

educational assistance to members of the Reserve Components called or ordered to 

active duty in response to a war or national emergency (contingency operation) as 

declared by the President or the Congress. They need to have been activated on or 

after September 11, 2001, for at least 90 consecutive days.1231 REAP can be used for 

college or university degree programs, vocational programs, independent study or 

distance learning programs, correspondence courses, flight training, on-the-job 

training and apprenticeship programs, licensing and certification test reimbursement, 

and entrepreneurship courses.1232 The amount payable under REAP is a percentage of 

the Montgomery GI Bill-Active Duty rate based on the number of continuous days 

served on active duty.1233 REAP cannot be used with other VA educational benefits.1234

Generally, a Service member remains entitled to educational assistance for 10 years. 

The 10-year time period begins on the date the person separates from the Selected 

Reserve.1235 REAP education benefits can be transferred to eligible members’ 

dependents.1236 

5.8.1.3.8. Post-Vietnam Era Veterans Educational Assistance Program 

Post-Vietnam Era Veterans Educational Assistance Program (VEAP) is the education 

assistance program developed for Vietnam Era veterans and is a voluntary 

contribution and matching program.1237 To be eligible, individuals must have initially 

entered active duty in the Military Services on or after January 1, 1977, and before 

July 1, 1985. They need to have enrolled and contributed to the program, before 

April 1, 1987.1238 Individuals on active duty can enroll and contribute between $25 

and $100 a month up to a total of $2,700.1239 The Government matches contributions 

on a 2-for-1 basis.1240 Programs covered under VEAP include secondary school 

diploma (or equivalent), standard college degree, certificate, apprenticeship/on-the-job 

training programs, and in certain circumstances, correspondence, vocational flight 

 

1229 Armed Forces, 10 U.S.C. § 16131(i). Veterans’ Benefits, 38 U.S.C. § 3015(d)(1). Veterans’ Benefits, 38 U.S.C. 

§ 3316(a). A detailed discussion of all three of these authorities can be found at Schedule for Rating Disabilities, 38 

CFR 21.9650.

1230 Schedule for Rating Disabilities, 38 CFR 21.9650. 1231 Armed Forces, 10 U.S.C. §16161. Armed Forces, 10 U.S.C. § 16163. 1232 Armed Forces, 10 U.S.C. § 16162(b) states all education assistance programs approved in chapter 30, Title 38 

U.S.C. are approved for REA. 

1233 Armed Forces, 10 U.S.C. §§ 16131(c), 16136. 1234 Armed Forces, 10 U.S.C. § 16163(d) & (e). 1235 Armed Forces, 10 U.S.C. § 16164. 1236 Armed Forces, 10 U.S.C. § 16163a. 1237 Veterans’ Education and Employment Assistance Act of 1976, Pub. L. No. 94-502, § 404, 90 Stat. 2383, 2393 

(1976) (now codified at Veterans’ Benefits, 38 U.S.C. § 3201, et seq.). 1238 Veterans’ Benefits, 38 U.S.C. § 3221. Veterans’ Benefits Improvement and Health Care Authorization Act of 1986, 

Pub. L. No. 99-576, § 309, 100 Stat. 3248, 3270 (1986) terminated new enrollments into VEAP; however, those who 

were eligible to contribute into VEAP as of July 1, 1985 had until April 1, 1987 to enroll).

1239 Veterans’ Benefits, 38 U.S.C. § 3222(a). 1240 Veterans’ Benefits, 38 U.S.C. § 3222(b).
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training, remedial, deficiency, and refresher training programs.1241 Benefit entitlement 

is 1 to 36 months depending on the number of monthly contributions.1242 Beneficiaries 

have 10 years from their separation from active duty to use their VEAP benefits.1243 If 

the entitlement is not used after the 10-year period, the veteran may apply for a 

refund of his or her unused contributions to the fund.1244

5.8.1.3.9. Work-Study Program

Participants who are enrolled in VA education or training programs at the threequarter or full-time rate may be eligible for a work-study program. They work for VA 

and receive hourly wages equal to the Federal minimum wage or their State’s 

minimum wage, whichever is greater.1245 Students under the Work-Study Program 

must be supervised by a VA employee, and all duties performed must relate to VA.1246

5.8.1.4. VA TRAINING PROGRAMS AVAILABLE TO ACTIVE-DUTY 

AND SEPARATED SERVICE MEMBERS

The following are training programs funded and administered by VA that are provided 

to both active-duty and separated Service members.

5.8.1.4.1. Vocational Rehabilitation and Employment 

Vocational Rehabilitation and Employment (VR&E) assists veterans with serviceconnected disabilities to prepare for, find, and keep suitable jobs and achieve 

independence in daily living.1247 To be eligible, a veteran must (1) have a VA serviceconnected disability rated at least 20 percent with an employment handicap, or 

(2) have a service-connected disability rating of 10 percent with a serious employment 

handicap.1248 A VA counselor must decide if an individual has an employment 

handicap based upon the results of a comprehensive evaluation.1249 The counselor and 

veteran work together to develop a rehabilitation plan after an entitlement decision is 

made.1250 The rehabilitation plan specifies the rehabilitation services provided.1251

Rehabilitation services offered in the program include, but are not limited to 

educational, vocational, psychological, employment, and personal adjustment 

counseling, prosthetic appliances, eyeglasses, and other corrective and assistive 

devices, and services to a veteran’s family as necessary to effectively rehabilitate such 

a veteran.1252 The basic period of eligibility in which VR&E services may be used is up 

to 12 years after separation from active duty.1253 VR&E includes a program called 

 

1241 Veterans’ Benefits, 38 U.S.C. § 3231 provides entitlement to eligible veterans for assistance for “programs of 

education.” Veterans’ Benefits, 38 U.S.C. § 3201 provides that “program of education” is given the same definition as 

that found in Veterans’ Benefits, 38 U.S.C. § 3452(b). 1242 Veterans’ Benefits, 38 U.S.C. § 3231(a)(2). 1243 Veterans’ Benefits, 38 U.S.C. § 3232(a)(1). 1244 Veterans’ Benefits, 38 U.S.C. § 3232(b). Failure to use benefits during the 10-year period results in automatic 

disenrollment after one year after the 10 year expiration. Following disenrollment, the veteran is notified and can apply 

for a refund, if funds remain.

1245 Veterans’ Benefits, 38 U.S.C. § 3485. 1246 See Veterans’ Benefits, 38 U.S.C. § 3485(a)(4) (describing “qualifying work-study activity”). 1247 This program is authorized in chapter 31 of Title 38, U.S. Code. 1248 Veterans’ Benefits, 38 U.S.C. § 3102(a). 1249 Schedule for Rating Disabilities, 38 CFR 21.50. 1250 Veterans’ Benefits, 38 U.S.C. § 3106. (The plan is developed in accordance with Veterans’ Benefits, 38 U.S.C. 

§ 3107.

1251 Veterans’ Benefits, 38 U.S.C. § 3107(a). The rehabilitation plan also includes long-range rehab goals, projected 

start and end dates, and objective evaluation criteria and procedures.

1252 Veterans’ Benefits, 38 U.S.C. § 3104 (contains an exhaustive list of services offered under the program). 1253 Veterans’ Benefits, 38 U.S.C. § 3103(a).
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VetSuccess on Campus, which provides outreach and transition services for Service 

members and veterans as they transition from military service to college. The program 

provides coordinated delivery of on-campus benefits assistance and counseling which 

leads to completion of their education.1254

5.8.1.4.2. Education and Career Counseling Program

Service members and veterans receive personalized counseling and support to help 

guide their career paths, ensure most effective use of their VA benefits, and achieve 

their goals.1255 This program is part of the VA’s training and rehabilitation program. 

Those who benefit from this program include (1) veterans with service-connected 

disabilities rated at 20 percent or more, (2) veterans hospitalized or receiving 

outpatient medical care, services, or treatment for a service-connected disability 

pending discharge from the active military, and (3) veterans with a service-connected 

disability rated at 10 percent and determined to have a serious employment 

handicap.1256 Counseling services include assistance with career and education 

choices, benefits coaching, and personalized support.1257

5.8.1.5. ED EDUCATION BENEFITS AVAILABLE TO SEPARATED 

SERVICE MEMBERS

The following includes ED education programs available to veterans after active-duty 

service.

5.8.1.5.1. Loan Deferments After Active Duty

Certain Service members are eligible to postpone repayment of education loans. These 

include activated Service members in the Reserve and National Guard as well as

retirees who have been activated. They must be borrowers with a Federal Perkins loan, 

an NDSL, or a Defense loan and be enrolled in school (or were enrolled in school 

within the six months preceding activation). They are eligible to postpone loan 

repayment during the 13 months following the conclusion of such service.1258

5.8.1.6. VA AND ED EDUCATION BENEFITS AVAILABLE TO 

SURVIVORS AND DEPENDENTS

The following includes education benefits funded and administered by VA and ED that 

are provided to survivors and dependents.

5.8.1.6.1. VA Survivors’ and Dependents’ Educational Assistance Program 

The VA Survivors’ and Dependents’ Educational Assistance (DEA) program provides 

education and training opportunities to the spouse or child of (1) a Military Service 

member, (2) a veteran who is permanently and totally disabled due to a service-related 

 

1254 VetSuccess on Campus, Department of Veterans Affairs, accessed April 11, 2014, 

https://www.vetsuccess.va.gov/public/vetsuccess_on_campus.html. 1255 Veterans’ Benefits, 38 U.S.C. § 3104. Schedule for Rating Disabilities, 38 CFR 21.100. 1256 Veterans’ Benefits, 38 U.S.C. § 3102. Schedule for Rating Disabilities, 38 CFR 21.100(a). “Department of Veterans 

Affairs Education and Vocational Counseling,” Department of Veterans Affairs, accessed April 11, 2014, 

http://www.benefits.va.gov/vocrehab/edu_voc_counseling.asp. 1257 Schedule for Rating Disabilities, 38 CFR 21.100(b). “Department of Veterans Affairs Education and Vocational 

Counseling,” Department of Veterans Affairs, accessed April 11, 2014, 

http://www.benefits.va.gov/vocrehab/edu_voc_counseling.asp.

1258 Education, 20 U.S.C. § 1098f. 
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condition, or (3) a veteran who died while on active duty or as a result of a servicerelated condition.1259 The program offers up to 45 months1260 of education benefits, 

which may be used for degree and certificate programs, apprenticeship, and on-thejob training.1261 Effective October 1, 2012, the payment rate for DEA for institution 

training became $1,003 a month for full-time school attendance.1262

5.8.1.6.2. VA Marine Gunnery Sergeant John David Fry Scholarship

Post-9/11 GI Bill benefits have been extended to children of those who died in the line 

of duty while serving in the Armed Forces on or after September 11, 2001.1263 Eligible 

children are entitled to 36 months of educational assistance1264 and have 15 years to 

use the benefit beginning on their 18th birthday1265 but cannot participate in the 

Yellow Ribbon Program.1266

5.8.1.6.3. ED Iraq and Afghanistan Service Grant or Additional Federal Pell 

Grant Funds

Children whose parent or guardian died as a result of Armed Forces service in Iraq or 

Afghanistan after September 11, 2001, may be eligible for additional aid.1267 To be 

eligible, at the time of a parent or guardian’s death the dependent must have been 

younger than 24 years old or enrolled at least part-time at an institution of higher 

education.1268 If dependents are not eligible for a Pell Grant, they are eligible to receive 

the Iraq and Afghanistan Service Grant.1269 The maximum amount of the Iraq and 

Afghanistan Service Grant is the same as the maximum Pell Grant award.1270 An Iraq 

and Afghanistan Service Grant is not treated as estimated financial assistance.1271

 

1259 Veterans’ Benefits, 38 U.S.C. §§ 3500-3501. 1260 Veterans’ Benefits, 38 U.S.C. § 3511. 1261 Ibid. Department of Veterans Affairs, Dependent Education Assistance Program Pamphlet, 12, Accessed June 1, 

2014, http://www.benefits.va.gov/gibill/docs/pamphlets/ch35_pamphlet_2.pdf. 1262 Other training programs rates vary. These rates are available at “Survivors and Dependents, Department of 

Veterans Affairs, accessed June 1, 2014, 

http://www.benefits.va.gov/gibill/resources/benefits_resources/rates/ch35/ch35rates100113.asp. 1263 Supplemental Appropriations Act, 2009, Pub. L. No. 111-32, § 1002, 123 Stat. 1859, 1889 (2009). 1264 Veterans’ Benefits, 38 U.S.C. §3312(a). 1265 Supplemental Appropriations Act, 2009, Pub. L. No. 111-32, § 1002, 123 Stat. 1859, 1889 (2009). 1266 Department of Veterans Affairs, Post-9/11 GI Bill: Marine Gunnery Sergeant John David Fry Scholarship, accessed 

May 29, 2014, http://www.benefits.va.gov/gibill/docs/factsheets/fry_scholarship.pdf. 1267 Education, 20 U.S.C. § 1070h. 1268 Education, 20 U.S.C. § 1070h(a). 1269 Education, 20 U.S.C. § 1070h(c). 1270 Education, 20 U.S.C. § 1070h(d)(3). 1271 Education, 20 U.S.C. § 1070h(e).
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Beneficiary and Financial Summary 

Table 18. Beneficiary and Financial Summary of

VA Education Programs for FY 2013

Program Beneficiaries FY 2013 Cost

Tuition Assistance (TA) Active-duty Armed Forces members, active Reservists, 

and National Guardsmen, except for National Guard

members assigned to the Inactive National Guard.1272

$536M1273

DoD Voluntary Education 

Support: Joint Services Transcript 

and American College of 

Education College Credit for 

Military Service Program, 

Servicemembers Opportunity 

Colleges Degree Network System,

and Examinations Program 

Members of the military Services serving on active 

duty and members of the Selected Reserve 

(SELRES).1274

$141M1275

Armed Forces College Loan 

Repayment Program 

Offered as a special enlistment incentive to highly 

qualified armed forces applicants at the time of 

enlistment.1276

$166.5M1277

In-State Tuition for Members of 

the Armed Forces on Active Duty 

and Dependents 

Members of the Armed Forces on active duty assigned 

to a permanent duty station for a period of more than 

30 days and their dependents.1278

N/A

Cancellation of Federal Student 

Loan

Armed Forces members in hostile fire or imminent 

danger pay areas for at least one year.1279

N/A

Public Service Loan Forgiveness 

Program

Members of the Armed Forces employed by the 

military on a full-time basis for 10 years.1280

N/A

Military Service Loan Deferment Armed Forces members serving on active duty during 

a war, other military operation, or national 

emergency, and for six months following 

demobilization.1281

N/A

 

1272 Armed Forces, 10 U.S.C. § 2007. Voluntary Education Programs, DoDI 1322.25 (2014). 1273 Data provided by Department of Defense OSD(P&R), e-mail to MCRMC, May 14, 2014. 1274 Voluntary Education Programs, DoDI 1322.25 (2014). 1275 Data provided by Department of Defense OSD(P&R), e-mail to MCRMC, May 14, 2014. 1276 Armed Forces, 10 U.S.C. § 2171. “College Loan Repayment Program (LRP),” My Army Benefits, accessed April 11, 

2014, 

http://myarmybenefits.us.army.mil/Home/Benefit_Library/Federal_Benefits_/College_Loan_Repayment_Program_(LR

P).html?serv=147. See also “Loan Repayment Program Frequently Asked Questions,” U.S. Navy Recruiting Command, 

accessed April 11, 2014, http://www.cnrc.navy.mil/EIncentives/N5311%20EB/EB/FAQ/LRP%20ADOBE.pdf. 

Voluntary Education Program, AFI 36-2306 (2011). 1277 U.S. Navy. Department of the Navy Fiscal Year 2015 Budget Estimates Justification of Estimates March 2014 Military 

Personnel, Navy, 90, Accessed June 1, 2014, http://www.finance.hq.navy.mil/FMB/15pres/MPN_BOOK.pdf. 

U.S. Navy. Department of the Navy Fiscal Year 2015 Budget Estimates Justification of Estimates March 2014 Military 

Personnel, Marine Corps, 16, Accessed June 1, 2014, http://www.finance.hq.navy.mil/FMB/15pres/MPMC_BOOK.pdf. 

Department of the Army, Fiscal Year (FY) 2015 President’s Budget Submission March 2014, Military Personnel Army, 21,

85, accessed June 1, 2014, 

http://asafm.army.mil/Documents/OfficeDocuments/Budget/budgetmaterials/fy15/milpers//mpa.pdf. Department 

of the Army, Fiscal Year (FY) 2015 President’s Budget Submission March 2014, Reserve Personnel, Army, 83, accessed 

June 1, 2014, http://asafm.army.mil/Documents/OfficeDocuments/Budget/budgetmaterials/fy15/milpers//rpa.pdf. 

Department of the Air Force, Fiscal Year (FY) 2015 Budget Estimates Military Personnel Appropriation, March, 2014, 21, 

accessed June 1, 2014, http://www.saffm.hq.af.mil/shared/media/document/AFD-140310-009.pdf. Air National 

Guard, Fiscal Year 2015 Budget Estimates Appropriation 3850 National Guard Personnel, Air Force, March 2014, 85, 

http://www.saffm.hq.af.mil/shared/media/document/AFD-140310-018.pdf. 1278 Education, 20 U.S.C. § 1015d. 1279 Education, 20 U.S.C. § 1087ee(a)(2)(D). See also Schedule for Rating Disabilities, 38 CFR 674.59. 1280 Education, 20 U.S.C. § 1087(e)(m); 34 CFR 685.219. 1281 Education, 20 U.S.C. § 1078(b)(1)(M).
SECTION 5

QUALITY OF LIFE BENEFITS

PAGE 263

Program Beneficiaries FY 2013 Cost

Servicemembers Civil Relief Act 

(SCRA) Interest Rate Cap 

(enforced by Department of 

Justice)

Armed Forces members on active duty.1282 N/A

Post-9/11 GI Bill Active-duty uniformed services members and veterans 

with an honorable discharge who have at least 90 days 

of aggregate service after September 10, 2001, or to 

individuals who have a minimum of 30 continuous 

days of service discharged due to a service-connected 

disability.1283

$10.2B1284

Yellow Ribbon GI Education 

Enhancement Program

Veterans receiving benefits at the 100 percent benefit 

rate payable, a transfer-of-entitlement-eligible 

dependent child, or a transfer-of-entitlement eligible 

spouse of a veteran.1285

Included in 

Post-9/11 GI Bill 

Costs

Montgomery GI Bill Active Duty Members of the Armed Forces who (1) first entered 

active duty after June 30, 1985,1286 (2) members with a 

remaining entitlement under the Vietnam Era GI 

Bill,1287 (3) members who were involuntarily separated 

under the Voluntary Separation Incentive or Special 

Separation Benefit program,1288 and (4) former 

Veterans Educational Assistance Program (VEAP) 

participants who elected to convert to MGIB during 

the open window periods.1289

$775M1290

 

1282 War and National Defense, 50 U.S.C. App. § 527. 1283 Veterans’ Benefits, 38 U.S.C. § 3311. Schedule for Rating Disabilities, 38 § CFR 21.9500. Schedule for Rating 

Disabilities, 38 CFR 21.9520. Schedule for Rating Disabilities, 38 § CFR 21.9640. 1284 Department of Veterans Affairs, Congressional Budget Submission for FY 2015 Volume III Benefits and Burial 

Programs and Departmental Administration, VBA-32, accessed June 1, 2014, 

http://www.va.gov/budget/docs/summary/Fy2015-VolumeIIIBenefitsBurialProgramsAndDeptmentalAdministration.pdf. 1285 Veterans’ Benefits, 38 U.S.C. § 3317. Schedule for Rating Disabilities, 38 CFR 21.9700(b). 1286 Veterans’ Benefits, 38 U.S.C. § 3011(a)(1). 1287 Schedule for Rating Disabilities, 38 CFR 21.7045. 1288 Veterans’ Benefits, 38 U.S.C. § 3018A. Veterans’ Benefits, 38 U.S.C. § 3018B. Schedule for Rating Disabilities, 

38 CFR 21.7045. 1289 Veterans’ Benefits, 38 U.S.C. § 3018C. 1290 Department of Veterans Affairs, Congressional Budget Submission for FY 2015, Volume III Benefits and Burial 

Programs and Departmental Administration, VBA-32, Veterans/Servicemembers (30), accessed June 1, 2014,

http://www.va.gov/budget/docs/summary/Fy2015-VolumeIIIBenefitsBurialProgramsAndDeptmentalAdministration.pdf. 
MILITARY COMPENSATION AND RETIREMENT MODERNIZATION COMMISSION

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Program Beneficiaries FY 2013 Cost

Montgomery GI Bill Selected 

Reserve

The Montgomery GI Bill is also available to members 

of the Selected Reserve if they meet the eligibility 

requirements.1291 This obligation must be signed after 

June 30, 1985. Other requirements include:

• completing a two-year obligation as an activeduty Service member

• attaining a high school diploma or equivalency 

certificate 

• earning an honorable discharge

• retiring

• transferring to the Ready Reserve

• continued active duty 

• or, Selected Reserve service1292 

If a Selected Reserve member meets these established 

requirements they are entitled to the same benefits as 

the Montgomery GI Bill active-duty beneficiaries.1293

$153M1294

Tuition Assistance Top-Up Service members approved for Tuition Assistance by a 

Service and who are eligible for the Montgomery GI 

Bill for Active Duty or Post-9/11 GI Bill.1295

Included in 

Post-9/11 and 

Montgomery 

GI Bill Costs

GI Bill Kicker Service members eligible for the Post-9/11 GI Bill or 

the Montgomery GI Bill who the Secretary of a Military 

Department determines has a skill or specialty for 

which (1) there is a critical shortage of personnel, 

(2) there is difficulty recruiting, or, (3) in the case of 

critical units, there is difficulty retaining personnel.1296

Included in 

Post-9/11 and 

Montgomery 

GI Bill Costs

Reserve Education Assistance 

Program (REAP)

Members of the Reserve Component called or ordered 

to active duty in response to a war or national 

emergency (contingency operation) declared by the 

President or the Congress, who were activated for at 

least 90 days after September 11, 2001.1297

$70M1298

 

1291 Veterans’ Benefits, 38 U.S.C. § 3012. 1292 Veterans’ Benefits, 38 U.S.C. § 3012(a). 1293 Ibid. 1294 Department of Veterans Affairs, Congressional Budget Submission for FY 2015, Volume III Benefits and Burial 

Programs and Departmental Administration, VBA-33, Reservists (1606), accessed June 1, 2014, 

http://www.va.gov/budget/docs/summary/Fy2015-VolumeIIIBenefitsBurialProgramsAndDeptmentalAdministration.pdf. 1295 Floyd D. Spence National Defense Authorization Act for FY 2001, §1602(b), 114 Stat. 1654A-1, 1645A-358 (2000). 1296 Armed Forces, 10 U.S.C. § 16131. 1297 Armed Forces, 10 U.S.C. § 16163. 1298 Department of Veterans Affairs, Congressional Budget Submission for FY 2015, Volume III Benefits and Burial 

Programs and Departmental Administration, VBA-33, Reservists (1607), accessed June 1, 2014, 

http://www.va.gov/budget/docs/summary/Fy2015-VolumeIIIBenefitsBurialProgramsAndDeptmentalAdministration.pdf. 
SECTION 5

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Program Beneficiaries FY 2013 Cost

Post-Vietnam Era Veterans 

Educational Assistance Program 

(VEAP)

Members of the Armed Forces who have initially 

entered active duty in the Armed Forces on or after 

January 1, 1977, and before July 1, 1985, and enrolled 

and contributed before April 1, 1987.1299

$615K1300

Work-Study Program Participants who are enrolled in VA education, 

training, or rehabilitation programs at the threequarter or full-time rate1301

$40M1302

Vocational Rehabilitation and 

Employment (VR&E)

Veteran with a VA service-connected disability rated at 

least 20 percent with an employment handicap, or a

veteran with a service-connected disability rating of 

10 percent with a serious employment handicap.1303

$940M1304

Education and Career Counseling 

Program

Those who benefit from this program include 

(1) veterans with service-connected disabilities rated 

at 20 percent or more, (2) veterans hospitalized or 

receiving outpatient medical care, services, or 

treatment for a service-connected disability pending 

discharge from the active military, and (3) veterans 

with a service-connected disability rated at 10 percent

and determined to have a serious employment 

handicap are entitled to this program as part of the 

VA’s training and rehabilitation program.1305

N/A

Loan Deferments After Active 

Duty

Activated Service members in the Reserve and 

National Guard as well as retirees who have been 

activated. They must be borrowers with a Federal 

Perkins loan, an NDSL, or a Defense loan and be 

enrolled in school (or were enrolled in school within 

the six months preceding activation). 

N/A

Survivors’ and Dependents’

Educational Assistance Program 

(DET)

These include the spouse or child of (1) an armed 

forces member, or (2) veteran who is permanently and 

totally disabled due to a service-related condition, or 

(3) veterans who died while on active duty or as a 

result of a service-related condition.

$483M1306

 

1299 Veterans’ Benefits, 38 U.S.C. § 3221. The Veterans’ Benefits Improvement and Health Care Authorization Act of 

1986, Pub. L. No. 99-576, § 309, 100 Stat. 3248, 3270 (1986) terminated new enrollments into VEAP. However, those 

who were eligible to contribute into VEAP as of July 1, 1985 had until April 1, 1987 to enroll. 1300 Department of Veterans, Affairs Congressional Budget Submission for FY 2015, Volume III Benefits and Burial 

Programs and Departmental Administration, VBA-66, accessed June 1, 2014, 

http://www.va.gov/budget/docs/summary/Fy2015-VolumeIIIBenefitsBurialProgramsAndDeptmentalAdministration.pdf. 1301 Veterans’ Benefits, 38 U.S.C. § 3485. 1302 Department of Veterans Affairs, Congressional Budget Submission for FY 2015, Volume III Benefits and Burial 

Programs and Departmental Administration, VBA-32, accessed June 1, 2014, 

http://www.va.gov/budget/docs/summary/Fy2015-VolumeIIIBenefitsBurialProgramsAndDeptmentalAdministration.pdf. 1303 Veterans’ Benefits, 38 U.S.C. § 3102(a). 1304 Department of Veterans Affairs, Congressional Budget Submission for FY 2015, Volume III Benefits and Burial 

Programs and Departmental Administration (Total Obligations: VR&E Program), VBA-32, accessed June 1, 2014, 

http://www.va.gov/budget/docs/summary/Fy2015-VolumeIIIBenefitsBurialProgramsAndDeptmentalAdministration.pdf. 1305 Veterans’ Benefits, 38 U.S.C. § 3102. Schedule for Rating Disabilities, 38 CFR 21.100(a). “Department of Veterans 

Affairs Education and Vocational Counseling,” Department of Veterans Affairs, accessed April 11, 2014, 

http://www.benefits.va.gov/vocrehab/edu_voc_counseling.asp. 1306 Department of Veterans Affairs, Congressional Budget Submission for FY 2015, Volume III Benefits and Burial 

Programs and Departmental Administration, Dependents’ Education and Training (35), VBA-33, accessed June 1, 

2014, http://www.va.gov/budget/docs/summary/Fy2015-VolumeIIIBenefitsBurialProgramsAndDeptmentalAdministration.pdf. 
MILITARY COMPENSATION AND RETIREMENT MODERNIZATION COMMISSION

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Program Beneficiaries FY 2013 Cost

Marine Gunnery Sergeant John 

David Fry Scholarship

Children of those who died in the line of duty while 

serving in the Armed Forces on or after September 11, 

2001.

Included in 

Post-9/11 Cost

Iraq and Afghanistan Service 

Grant or Additional Federal Pell 

Grant Funds

Children whose parent or guardian who died as a 

result of Armed Forces service in Iraq or Afghanistan 

after September 11, 2001 may be eligible 

additional aid. To be eligible, at the time of a parent

or guardian

for 

’s 

’s death, the dependent must have been 

less than 24 years old or enrolled at least part-time at 

a college or career school. If surviving dependents are 

eligible to receive a Pell Grant, they will also receive an 

Expected Family Contribution (EFC), a measure of a 

family’s financial strength, of zero, which maximizes 

Pell Grant eligibility and can increase eligibility for 

other federal student aid programs. If dependents are 

not eligible for a Pell Grant, they are eligible to receive 

the Iraq and Afghanistan Service Grant.1307

N/A

Historical Context 

The War Risk Insurance Act Amendments of 1917 established veteran education and 

employment benefits for those injured in the line of duty.1308 This act provided 

opportunities for veterans to take rehabilitation and vocational training courses and 

also allowed injured Service members to remain in service while training for new 

jobs.1309 Veterans with missing limbs, as well as those with sight, hearing and other 

permanent disabilities, received the educational benefits.1310 The eligibility date began 

when the United States entered World War I on April 6, 1917.1311

In 1944, the Congress passed the Servicemen’s Readjustment Act.1312 This bill 

provided education and training assistance.1313 The act also included a payment of up 

to $500 annually for tuition, fees, books, and supplies.1314 President Roosevelt signed 

the bill into law on June 22, 1944.1315 Additionally, passage of the Veterans’ Preference 

Act of 1944 provided veterans with hiring preference when Federal funds were 

spent.1316

 

1307 Education, 20 U.S.C. § 1070h(c). 1308 War Risk Insurance Act Amendments: Pub. L. No. 65-20, 40 Stat. 102 (1917) and Pub. L. No. 65-90, 40 Stat. 398 

(1917) (amending the War Risk Insurance Act, Pub. L. No. 63-193, 38 Stat. 711 (1914)). 1309 War Risk Insurance Act Amendments, Pub. L. No. 65-90, § 304, 40 Stat. 398, 407 (1917). 1310 Ibid. 1311 Ibid. 1312 Servicemens’ Readjustment Act of 1944, Pub. L. No. 78-346, 58 Stat. 284 (1944). 1313 Ibid, ch. IV, 58 Stat. 284, 287 (1944). 1314 Ibid, § 400, 58 Stat. 284, 289 (1944). 1315 Ibid. 1316 Veterans’ Preference Act of 1944, Pub. L. No. 78-359, 58 Stat. 387 (1944). “Veteran’s Preference in Federal 

Employment,” Catalog of Federal Domestic Assistance, accessed June 1, 2014, 

https://www.cfda.gov/index?s=program&mode=form&tab=core&id=b1ff5bf592742fe9e466f2cdd55bcd95. 
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The Veterans’ Readjustment Assistance Act of 1952 provided benefits for Service 

members from the Korean War era.1317 The bill provided unemployment insurance, job

placement, home loans, and transition benefits.1318

The Veterans’ Readjustment Benefits Act (commonly referred to as the Vietnam GI 

Bill), which provided support for Vietnam veterans, was passed in 1966.1319 Veterans 

had to serve on active duty for more than 180 consecutive days and were entitled to 

one month of educational assistance for each month of service.1320

The Post-Vietnam Era Veterans’ Educational Assistance Act of 1977 provided benefits 

for those who entered military service after December 31, 1976.1321 The Emergency 

Veterans’ Job Training Act of 1983 provided support for veterans seeking 

employment.1322 This act reimbursed an employer for training costs not to exceed 

50 percent of a veteran’s starting wage, up to a maximum of $10,000.1323 Normal 

reimbursement time was a period of nine months, and disabled veterans received 

reimbursement for fifteen months.1324 The Veterans’ Educational Assistance Act of 

1984, commonly known as the Montgomery GI Bill, was passed in 1984.1325 A Service 

member who completed three years of active duty, or two years of active duty and four 

years in the Reserve, would benefit from $300 monthly for 36 months.1326

The Post-9/11 Veterans’ Education Assistance Improvements Act of 2008, which 

established the Post-9/11 GI Bill, became law on June 30, 2008.1327 The Post-9/11 

Veterans’ Education Assistance Improvements Act of 2010 was enacted in January 

2011.1328 This act expands eligibility for members of the National Guard, including 

service under Title 32 or in the full-time Active Guard and Reserve (AGR).1329

5.8.2. EXCHANGES

The exchange systems of the U.S. Armed Forces operate thousands of retail activities 

on military installations in all 50 states, five U.S. territories, and more than 

30 countries.1330 These activities include hundreds of large retail (department) stores, 

small convenience stores and mini-marts, military clothing stores, and a variety of 

 

1317 Veterans’ Readjustment Assistance Act of 1952, Pub. L. No. 82-550, 66 Stat. 663 (1952). 1318 Ibid. 1319 Veterans’ Readjustment Benefits Act of 1966, Pub. L. No. 89-358, 80 Stat. 12 (1966). 1320 Ibid. 1321 Veterans’ Education and Employment Assistance Act of 1976, Pub. L. No. 94-502, 90 Stat. 2383 (1976). “PostVietnam Era Veterans’ Educational Assistance,” Catalog of Federal Domestic Assistance, accessed June 1, 2014, 

https://www.cfda.gov/index?s=program&mode=form&tab=core&id=5416942197b7deb937e302a5303b2876. 1322 Emergency Veterans’ Job Training Act of 1983, Pub. L. No. 98-77, 97 Stat. 443 (1983). 1323 Ibid. 1324 Ibid. 1325 Veterans’ Educational Assistance Act of 1984, Pub. L. No. 98-525, Title VII, 98 Stat. 2492, 2553 (1984). 1326 Ibid. 1327 Post-9/11 Veterans Educational Assistance Act of 2008, Pub. L. No. 110-252, § 5001, 122 Stat. 2323, 2357 (2008). 1328 Post-9/11 Veterans Educational Assistance Improvements Act of 2010, Pub. L. No. 111-377, § 3, 124 Stat. 4106 

(2011).

1329 Ibid. 1330 Army and Air Force Exchange Service, 2012 Annual Report, 1, accessed June 8, 

2014, http://aafes.imirus.com/Mpowered/book/vaar12/i1/1. Navy Exchange Command, Navy Exchange Program of 

the Navy Exchange Service Command, Financial Statements, February 2, 2013 and January 28, 2012, accessed June 

8, 2014, https://www.mynavyexchange.com/command/about_us/Annual%20Report12.pdf. Coast Guard Exchange 

data provided by Coast Guard Exchange Service via Office of Budget and Programs (CG-821), May 5, 2014. U.S. Marine 

Corps Exchange data provided by Deputy Director, Plans, Policy and Analysis NAF Business and Support Services 

Division (MR) HQMC, M&RA, May 5, 2014.
MILITARY COMPENSATION AND RETIREMENT MODERNIZATION COMMISSION

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other services and concessions such as automobile garages and service stations, 

alcoholic beverage stores, barber and beauty shops, restaurants, flower shops, 

laundries, dry cleaning facilities, tailor shops, theaters, and vending machines.

1331 In 

addition to those co-located with the main stores in mini-malls and food courts, many 

smaller retail activities are distributed across installations and military housing 

areas.1332 Supplementing traditional “brick and mortar” stores, the exchanges deliver 

services via the Internet, and provide a variety of mobile outlets to meet the needs of 

Service members involved in training exercises and military operations, including 

those at sea1333 and in combat zones.1334

According to 10 U.S.C. § 2481, the purpose of the exchange system is to “enhance the 

quality of life of members of the uniformed services, retired members, and dependents 

of such members, and to support military readiness, recruitment, and retention.”

1335

These goals are accomplished by supplying discounted U.S. goods and services in 

locations that are convenient to those living or working on or near military 

installations, including installations overseas. Merchandise is competitively priced as 

compared to commercial retailers and sales are not subject to state or local sales tax, 

or Value Added Tax (VAT).1336

Unlike the commissaries, the exchange systems have significant flexibility when 

setting the price of merchandise and are not externally directed to maintain a specific 

level of discount. In 2012, the Army and Air Force Exchange Service (AAFES) reported 

that, based on a market basket survey, patrons were saving an average of 27 percent 

over major retailers, and more than 5 percent compared to its largest discount 

competitor.1337 This survey did not factor in the difference attributable to sales tax, 

which can provide exchange patrons an additional discount.1338 Similarly, in FY 2013, 

a market basket survey that included approximately 385 items in 8 geographically 

dispersed markets (i.e., Bethesda, Everett, Great Lakes, Jacksonville, Norfolk, Pearl 

Harbor, Pensacola, and San Diego), estimated an average savings of 21.73 percent for 

Navy Exchange (NEX) shoppers.1339

AAFES, the largest of the exchange organizations, operates exchanges on Army and 

Air Force installations.1340 The Army Post Exchange (PX) and Air Force Base 

 

1331 Armed Services Exchange Regulations, DoDI 1330.21 (2005). 1332 Army Air Force Exchange Service, AAFES 2012 Annual Report, 2, accessed May 8, 2014, 

http://www.shopmyexchange.com/AboutExchange/PublicAffairs/. See also Armed Services Exchange Regulations, 

DoDI 1330.21, 2 (2005). 1333 “Who We Are,” Navy Exchange, accessed February 19, 2014, 

https://www.mynavyexchange.com/work4us/who_we_are.html. 1334 “Military Exercises & Contingencies,” Exchange, accessed February 19, 2014, 

http://www.shopmyexchange.com/aboutexchange/installations.htm/. 1335 Armed Forces, 10 U.S.C. § 2481(b). 1336 Armed Services Exchange Policy, DoDI 1330.09, Section 4.17 (2005). It should be noted, however, that pursuant to 

4 U.S.C. § 104, Congress specifically permits the collection of State taxes on gasoline and other fuels sold through 

Exchanges on United States military or other reservations when such fuels are not for the exclusive use of the United 

States. 

1337 Army Air Force Exchange Service, AAFES Media Advisory 12-059, Don’t Shop ‘til you Drop – Survey Says Make the 

Exchange your First Stop!, October 10, 2012, accessed May 7, 2014, http://publicaffairssme.com/pressrelease/?p=1000. (According to AAFES, the market basket survey was conducted by an independent 

consulting firm, RetailData. It included 365 commonly purchased items. Local and national prices were analyzed at 

more than 120 retailers, including major grocery, drug, discount, big box and specialty stores.)

1338 Ibid. 1339 NEXCOM Fall 2013 Savings by Market report, survey conducted by RetailData, LLC, December 19, 2013, e-mail to 

MCRMC, May 21, 2014. 1340 Army and Air Force Exchange Service Operations, AR 215-8 and AFI 34-211(I) (2012). 
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QUALITY OF LIFE BENEFITS

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Exchange (BX), have been combined and rebranded as the Exchange. On Navy bases, 

they are known as the Navy Exchange (NEX), and are operated by the Navy Exchange 

Service Command (NEXCOM).1341 On Marine Corps installations, the Marine Corps 

Exchange (MCX) is operated as part of Marine Corps Community Services (MCCS), 

which also runs the Marine Morale, Welfare, and Recreation (MWR) operations.1342

Similarly, the Coast Guard Exchange Service (CGES), which operates Coast Guard 

exchanges (CGX) on Coast Guard installations, is part of the Coast Guard Community 

Services Command (CSC).1343

The Department of Veterans Affairs (VA) operates a separate retail system known as 

the Veteran Canteen Service (VCS).1344 VCS provides retail and food services as part of 

the VA Health Care system to benefit veterans receiving care, their families, caregivers, 

VA employees, volunteers, and visitors.1345

Table 19 summarizes the number of main retail stores operated by each organization, 

inside and outside of the continental United States.1346

Table 19. Number of Exchange Main Stores (FY 2012)

CONUS OCONUS Total

AAFES 116 59 175

NEXCOM 73 32 105

MCCS 15 3 18

CGES 63 5 68

VCS 172 2 174

Total 439 101 540

Though managed as separate organizations, senior representatives of the various 

Armed Forces exchanges, along with representatives of the DeCA, meet at least 

quarterly as members of the Cooperative Efforts Board (CEB).1347 The CEB “is a 

strategic planning and action committee that leads the DoD Military Resale Agencies’ 

efforts to develop proposals to improve the efficiency and effectiveness across resale 

organizations.”

1348

Collectively, the Armed Forces exchanges directly employ more than 60,000 people, 

approximately one quarter of whom are military spouses and other military family 

members.1349 Unlike the commissaries, which are staffed by U.S. Government civil 

 

1341 Responsibility and Authority for Navy Exchange Operations, OPNAVINST 5450.331A (2008). 1342 MCCS Policy Manual, MCO P1700.27B, ¶ 1001 (2007). 1343 Coast Guard Morale, Well-Being, and Recreation Manual, COMDTINST M1710.13C, 1-7 (2010). 1344 Veterans’ Benefits, 38 U.S.C. § 7801. 1345 Ibid. 1346 Army and Air Force Exchange Service, 2012 Annual Report, 1, accessed June 8, 2014, 

http://aafes.imirus.com/Mpowered/book/vaar12/i1/1. Navy Exchange Command, Navy Exchange Program of the 

Navy Exchange Service Command, Financial Statements, February 2, 2013 and January 28, 2012, accessed June 8, 

2014, https://www.mynavyexchange.com/command/about_us/Annual%20Report12.pdf. Coast Guard Exchange data 

provided by Coast Guard Exchange Service via Office of Budget and Programs (CG-821), e-mail to MCRMC, May 5, 

2014. U.S. Marine Corps Exchange data provided by Deputy Director, Plans, Policy and Analysis NAF Business and 

Support Services Division (MR) HQMC, M&RA, e-mail to MCRMC, May 5, 2014. 1347 Cooperative Efforts Board Guiding Charter, March 28, 2012, provided by Navy Exchange Service Command, e-mail

to MCRMC, May 21, 2014.

1348 Ibid. 1349 Army and Air Force Exchange Service, 2012 Annual Report, 1, accessed June 8, 

2014, http://aafes.imirus.com/Mpowered/book/vaar12/i1/1. Navy Exchange Command, Navy Exchange Program of 

the Navy Exchange Service Command, Financial Statements, February 2, 2013 and January 28, 2012, accessed June 
MILITARY COMPENSATION AND RETIREMENT MODERNIZATION COMMISSION

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servants, the exchanges are primarily staffed by NAF employees, for whom most costs 

(e.g., salaries, benefits, retirement) are covered by exchange revenue. Active-duty 

military personnel are assigned in sufficient numbers for military exchanges to provide 

a trained cadre to meet wartime and deployment requirements and to perform some

managerial functions.1350 For example, AAFES, an organization with more than 

43,000 civilian employees, has 72 authorized military positions.1351

In some cases, exchanges are managed together with other related organizations and 

functions. In addition to overseeing the Navy Exchange (NEX), the Navy Exchange 

Service Command (NEXCOM) manages the Ships Stores Program, Uniform Program 

Management Office, Navy Clothing and Textile Research Facility (NCTRF), Navy Lodge 

Program (for permanent change of station lodging) and Telecommunications Program

Office.1352 Similarly, AAFES manages the military clothing sales stores (MCSS). The 

Army and Air Force reimburse AAFES for all costs associated with the MCSS using 

appropriated funds.1353 The Semper Fit and Exchange Services Division (MR) and the 

Marine and Family Services Programs Division (MFS) are both managed under the 

Marine Corps Community Services (MCCS), enabling a sharing of support services and 

close coordination between the MCX and the MWR system that MCX distributions

partially fund.1354 The Coast Guard also manages exchanges and MWR functions 

together under the Community Services Command (CSC).1355

AAFES offers the Military Star CardTM as part of a cooperative effort between the 

exchange services. This credit card is tailored to Service members and their families, is 

accepted at all the Armed Forces exchanges, and includes features such as reduced 

interest rates during military deployments.1356 The Military Star CardTM is an internal 

(private label) credit card managed by AAFES and thus no processing fees are paid to 

private credit card companies.

1357 Although managed by AAFES, income received from 

this card may be distributed to the other exchange systems (i.e., NEX, MCX, CGX).1358

Each exchange receives the interest income generated from the accounts receivable 

balance of its respective Service members, less operating expenses of the Military Star 

CardTM program.1359

 8, 2014, https://www.mynavyexchange.com/command/about_us/Annual%20Report12.pdf. Coast Guard Exchange 

data provided by Coast Guard Exchange Service via Office of Budget and Programs (CG-821), May 5, 2014. U.S. Marine 

Corps Exchange data provided by Deputy Director, Plans, Policy and Analysis NAF Business and Support Services 

Division (MR) HQMC, M&RA, May 5, 2014.

1350 Armed Services Exchange Regulations, DoDI 1330.21, 35 (2005). 1351 “Leadership,” Army and Air Force Exchange Service, accessed May 16, 2014, 

http://www.shopmyexchange.com/AboutExchange/Leadership/. 1352 Navy Exchange Service, Navy Exchange Service Command 2011 Annual Report, 2, accessed May 8, 2014, 

https://www.mynavyexchange.com/command/about_us/Annual%20Report11.pdf. See also “Our Team,” Navy 

Exchange Services Command (NEXCOM), accessed April 29, 2014, 

https://www.navsunavy.mil/navsup/ourteam/nexcom/about_us. 1353 Morale, Welfare, and Recreation, Army and Air Force Exchange Service Operations, AR 215–8/AFI 34–211(I), 17 

(2012).

1354 MCCS Policy Manual, MCO P1700.27B (2007). 1355 Coast Guard Morale, Well-Being, and Recreation Manual, COMDTINST M1710.13C, 1-7 (2010). 1356 “Exchange Credit,” AAFES Exchange, accessed February 19, 2014, 

http://www.shopmyexchange.com/ExchangeCredit/. See also “Military Star Card,” AAFES Exchange, accessed May 8, 

2014, http://www.mymcx.com/index.cfm/services/star-card/starcard/. 1357 “Military Star Card,” Marine Corps Exchange, accessed May 8, 2014, 

http://www.mymcx.com/index.cfm/services/star-card/. 1358 Data provided by Navy Exchange Command (NEXCOM), e-mail to MCRMC, May 16, 2014. 1359 Ibid.
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In addition to contributing to MWR programs, military exchanges support various DoD 

policies, initiatives, and goals. For example, exchanges support DoD health and fitness 

initiatives with their pricing, placement, display, and advertising of tobacco and 

smoking cessation products.1360 Alcohol pricing and displays are also aligned with DoD 

efforts to prevent alcohol abuse.1361 Additionally, exchange supplies and distribution 

systems sometimes play an important role in DoD responses to natural disasters in 

the United States and abroad.1362 Exchange programs also currently support wounded 

warrior programs,

1363 motorcycle safety initiatives,1364 and the use of alternative 

fuels.1365

Overseas exchanges provide additional services and benefits including the following: 

 For U.S. military and government personnel assigned overseas, the exchange is 

a source for U.S. retail merchandise that may not be locally available 

(e.g., clothing, music, books, and magazines).

 Overseas exchanges supply gasoline at prices approximating those in the Unites 

States.1366

 AAFES and NEXCOM contract directly with select American automobile 

manufacturers and motorcycle manufacturers to sell their vehicles in overseas 

exchanges.1367

 Overseas exchanges provide lunches to Department of Defense Dependents 

Schools (DoDDS).1368 Approximately 4 million lunches were provided in 

FY 2013.1369

The exchanges have expanded their service delivery model to better serve eligible 

patrons who may not have convenient access to traditional exchange facilities. These 

expanded offerings include online shopping and a variety of small and portable retail 

options, some of which can be deployed to disaster and combat zones.

AAFES, NEX, and CGX offer an online shopping alternative accessible from any 

location via the Internet.1370 The MCX is currently partnered with AAFES to provide 

this service to Marines and their families.1371 Purchases made online are tax free and 

can often times qualify for free shipping.1372

 

1360 Armed Services Exchange Services, DoDI 1330.21, ¶ 6.4.3 (2005). 1361 Ibid, ¶ E5.2. 1362 Navy Exchange, Navy Exchange Service Command 2011 Annual Report, 2, accessed May 8, 2014, 

https://www.mynavyexchange.com/command/about_us/Annual%20Report11.pdf. 1363 Army Air Force Exchange Service, AAFES 2012 Annual Report, 9, accessed May 8, 2014, 

http://www.shopmyexchange.com/AboutExchange/PublicAffairs/. 1364 “Motorcycle Safety,” AAFES Exchange, accessed February 26, 2014, 

http://shop.aafes.com/shop/Product.aspx?dept_id=5054&PFID=1_MOTORCYCLE&gid=&AskReturn=search. 1365 Armed Services Exchange Regulations, DoDI 1330.21, ¶ E3.3.8 (2005). 1366 Armed Services Exchange Policy, DoDI 1330.09, 7 (2005). 1367 “About Us,” Exchange New Car Sales (ENCS), accessed February 19, 2014, http://www.encs.com/aboutus.aspx?id=145. 1368 Army Air Force Exchange Service, AAFES 2012 Annual Report, 12, accessed May 8, 2014, 

http://www.shopmyexchange.com/AboutExchange/PublicAffairs/.

1369 Army Air Force Exchange Service, AAFES 2013 Annual Report, 12, provided by AAFES to MCRMC, June 10, 2014. 1370 See generally the following websites: Army Air Force Exchange Service, http://www.shopmyexchange.com; Navy 

Exchange, https://www.mynavyexchange.com; Coast Guard Exchange Service, http://www.cg-exchange.com. 1371 See generally Marine Corps Exchange Website, http://mymcx.com/index.cfm/myshopping/. 1372 “Understanding and Using Your Military Exchange,” Military OneSource, accessed June 1, 2014, 

http://www.militaryonesource.mil/phases-new-to-the-military?content_id=268514. 
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In addition to shore-based facilities, NEXCOM also operates small exchanges, known 

as “Ships Stores,” primarily onboard seagoing vessels.1373 These can include vending, 

laundry, and barber shop services.1374 There are approximately 160 Ships Stores 

operated under NEXCOM’s technical guidance, including three small shore 

installations.1375 All Ships Store profits support crew quality of life. Most profits 

(between 94.5 percent and 99.5 percent depending on number of authorized billets) 

are retained onboard for the ship’s own MWR Program, with the remainder being 

distributed to centralized MWR funds.1376

AAFES offers multiple levels of field support available for military operations, 

humanitarian or contingency operations, and training exercises worldwide: Army and 

Air Force Exchange Service Imprest Fund Activities (AIFA or EIFA), Direct Operational 

Exchanges-Tactical (DOX-T), and Tactical Field Exchanges (TFE).1377 These are small, 

mobile alternatives that extend the reach of the military exchanges. The appropriate 

alternative depends upon the distance to an exchange, as well as the duration and size 

of the operation to be supported.1378 Both the AIFA and TFE are operated by Service 

members from the unit being supported.1379 AAFES supplies the merchandise, 

operating procedures, pricing, and other support.1380 For the TFE and DOX-T 

alternatives, merchandise is pushed from AAFES distribution centers to the theater of 

operation using appropriated fund support, as required.1381 The MCX also supports 

deployed Marines using the DOX-T and TFE models, in cooperation with AAFES.1382 In 

addition, the MCX supports mobile Warfighter Express Services (WES) teams providing 

exchange and other services in the field.1383 Other forms of remote support include 

mobile service or vending machines, group representation (sending a representative of 

multiple exchange patrons to the nearest exchange outlet), and mail-order or ecommerce arrangements.1384

Similarly, with the approval of the Commandant of the Coast Guard, satellite and 

independent exchanges may be operated on select afloat and shore units.1385 Satellite 

exchanges have been established on approximately 47 afloat units and some remote 

shore facilities.1386 The CGES supplies the merchandise and the working capital for the 

inventory associated with these operations.1387 In addition, a Deployable Support 

 

1373 “Who We Are,” Navy Exchange, accessed February 19, 2014, 

https://www.mynavyexchange.com/work4us/who_we_are.html. 1374 Ibid. 1375 Ibid. 1376 Ibid. See also “Ships Store Afloat,” NAVSUP Publication 487, Volume 1, Revision of February 2003 (2003). 1377 Morale, Welfare, and Recreation, Army and Air Force Exchange Service Operations, AR 215–8/AFI 34–211(I), 5, 16-

17 (2012). See also “Military Exercises & Contingencies,” Army Air Force Exchange Service, accessed February 19, 

2014, http://www.shopmyexchange.com/aboutexchange/installations.htm/. See also “Our Story,” Marine Corps 

Exchange, accessed May 18, 2014, http://www.mymcx.com/index.cfm/about/history1/. 1378 “Military Exercises and Contingencies,” Army Air Force Exchange Service, accessed June 12, 2014, 

http://www.shopmyexchange.com/aboutexchange/installations.htm.

1379 Ibid. 1380 Ibid. 1381 Ibid. 1382 “Our Story,” Marine Corps Exchange, accessed May 18, 2014, 

http://www.mymcx.com/index.cfm/about/history1/. See also Marine Corps Exchange, Marine Corps Exchanges – 

Timeline of Significant Events, accessed May 19, 2014, 

http://www.ebmpubs.com/ECN_pdfs/ecn0812_MCX_Timeline.pdf. 1383 Ibid. 1384 Ibid. 1385 Nonappropriated Fund Instrumentalities (NAFI) Manual, COMDTINST M7010.5B, 2-2 (2008). Additional data 

provided by Coast Guard Exchange Service (CGES), e-mail to MCRMC, May 19, 2014. 1386 Ibid. 1387 Ibid.
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Exchanges (DSE) was created to support basic needs of Coast Guard personnel and 

their families during natural disasters.1388 In FY 2012, the DSE was instrumental in 

providing basic exchange support for Coast Guard families impacted by hurricane 

Sandy in New Jersey.1389

Beneficiaries 

The following groups have unlimited exchange privileges: 

 active-duty or Reserve uniformed and retired uniformed personnel

 recipients of the Congressional Medal of Honor

 honorably discharged veterans when hospitalized or certified 100 percent 

disabled

 military members of foreign nations when on duty with U.S. Military Service

 National Guard not in Federal Service

 Red Cross personnel who are U.S. citizens, assigned outside the United States

with the Military Service

 U.S. civilian DoD employees when stationed outside the United States

 U.S. citizen employees of firms under contract to the DoD when employed 

outside the United States

 Military Transition personnel

 Retired ship’s officers and crew members of National Oceanic and Atmospheric 

Administration (NOAA) 

 Ship’s officers and crew members of NOAA

 dependent family members of personnel listed above

 contract surgeons

 non-DoD Federal Departments/Agencies as determined by local commanding 

officer 

 dependents of members of the Armed Forces, commissioned officers of the 

Public Health Service or commissioned officers of the National Oceanic and 

Atmospheric Administration who have been separated for dependent abuse1390

The following groups have limited exchange privileges, which generally exclude 

tobacco products, alcoholic beverages, and military uniforms: 

 U.S. Government civilian employees and full-time paid staff of the Red Cross 

who reside on military installations within the United States or Puerto Rico

 Armed Forces Exchange employees

 DoD civilian employees on evacuation orders

 family members of the personnel mentioned above

 DoD civilians on temporary-duty status when occupying Government quarters 

in the United States

 civilian employees of the U.S. Government working on, but residing off, military 

installations are authorized to purchase all food and beverages sold at exchange 

locations, if consumed on the installation

 Uniformed and nonuniformed personnel working in recognized welfare service 

organization offices within an Activity of the Military Service are authorized to 

 

1388 Ibid. 1389 Ibid. 1390 Armed Services Exchange Regulations, DoDI 1330.21, Enclosure E6 (2005).
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purchase all food and beverages sold at exchange locations, if consumed on the 

installation

 visitors to military installations are authorized to purchase all food and 

beverages sold at exchange locations, if consumed on the installation

 contract technical services personnel in travel status

 Service (Army, Navy, Air Force) Academy applicants when occupying 

Government quarters in the United States

 foreign national active-duty officer and enlisted members, when visiting a 

U.S. military installation for unofficial business (merchandise is restricted to 

quantities required for personal use) 

 Service members in Civil Air Patrol in travel status and occupying Government 

quarters on a DoD installation may purchase uniform items when Civil Air 

Patrol membership card is shown

 Civil Air Patrol Cadets may purchase uniform items when Civil Air Patrol 

membership card is shown and all food and beverages sold at exchange 

locations, if consumed on the installation

 members of the Reserve Officer Training Corps and Junior Reserve Officer 

Training Corps when visiting installations under orders as part of a Service 

orientation program

 members of the Naval Sea Cadets attending two-week training course, if 

occupying Government quarters on a military installation

 Coast Guard Auxiliary members

 civilian students and faculty members at Service schools may purchase books, 

supplies and materials related to the educational process, only at exchange 

facilities that support the school

 hardship – persons who are “stranded on an installation” may purchase small 

quantities of gasoline, oil, other automotive items, or items necessary for an 

individual’s health

 DoD civilian employees using Government-authorized vehicles for official 

business may purchase gasoline for those vehicles1391

Exchange privileges in overseas areas may be impacted by agreements and treaties 

with the host country.1392 Additional details on authorized patrons can be found in 

DoD Instruction 1330.21, Armed Services Exchange Regulations.1393

Historical Context 

During the American Revolutionary War, the American Articles of War of 1775 

provided for “sutlers” whose mission was to provide for the individual personal needs 

of Service personnel.1394 As described on the Military OneSource website:1395

By 1821, the sutlers were returning part of their profit to the units they served. 

The Post Fund was created to account for this money and to collect fines 

levied on Soldiers and the sutlers for various violations of regulations. The 

Fund was soon being used for varied welfare projects such as relief for 

widows and orphans, financial assistance for the post school, purchase of 

 

1391 Ibid. 1392 Armed Services Exchange Regulations, DoDI 1330.21, ¶ 6.5 (2005). 1393 Ibid, Enclosure E6. 1394 “History,” Military OneSource, accessed May 19, 2014, 

http://www.militaryonesource.mil/search?content_id=267444. 1395 Ibid. 
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library books, and maintenance of the post band. Councils administered the 

Fund and the commanding officer eventually took over the custodians’ duties. 

Congress, in adopting the Regulations of the Army in 1821, provided its first 

recognition of welfare programs and this new type of fund.

The sutlers eventually brought about their own downfall by charging 

exorbitant prices, engaging in usurious credit practices, and providing 

inadequate service. In 1867, Congress authorized the establishment of Post 

Traders to replace the sutlers. This new cast of merchants represented some 

improvement, but Traders were not always available at forts or camps in 

remote locations....The Post Exchange was established with the publication of 

War Department General Order No. 46, 1895. The Order directed Post 

Commanders to establish an exchange (general store) at every post where 

practicable.

In 1932, due to complaints from local civilian businesses about unfair 

competition, a Special Committee of the House of Representatives conducted 

the first in-depth congressional examination of post exchange operations. The 

War Department justified post exchanges by explaining that they were the 

only means for providing troops with recreational funds. Since Congress did 

not provide appropriations for recreation, NAF represented a direct savings to 

the taxpayer and a subsidy to low paid Soldiers, Sailors, and Marines. To 

mitigate the post exchange competitive advantage, the 1933 War Department 

Appropriations Act prohibited the use of any appropriations to pay any 

expense connected with the conduct, operation, or management of any post 

exchange.

The Army Exchange Service was established in 1941, standardizing post exchange 

organizations.1396

In 1942, the Supreme Court ruled (in Standard Oil Company of California 

versus Johnson) that “[the fact that] the establishment of post exchanges has 

been in accordance with regulations rather than specific statutory directions 

does not alter their status, for authorized War Department regulations have 

the force of law. “Exchanges” are arms of the government...They are integral 

parts of the War Department, and partake of whatever immunities it may have 

under the constitution and federal statutes.” This ruling established the 

precedent that NAF activities are an integral part of the federal government 

with certain legal status and led to the name “nonappropriated fund 

instrumentality” to describe the legal fiscal entity. This legal status continues 

to be affirmed in case law and in rulings and opinions of the Comptroller 

General of the United States.

In 1948, the Army Exchange Service was expanded to become the Army and Air Force 

Exchange Service.1397 Regulations evolved to allow the use of APF to fund a limited 

number of Exchange cost elements.1398

 

1396 Ibid. 1397 Ibid. 1398 “History,” Military OneSource, accessed May 19, 2014, 

http://www.militaryonesource.mil/search?content_id=267444. See also Armed Services Exchange Regulations, 

DoDI 1330.21 (2005).
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Onboard ships, retail operations were once called “canteens,” a term thought to have 

been derived from “Via Quintana,” the Roman street where shops specially catering to 

soldiers were located.1399 In the early days of the Navy, common necessities were 

purchased by the paymaster for resale to the crew at the ship’s canteen. In the early 

1800s, the functions of the canteen had gradually been usurped by “bumboaters,” 

private merchants who rowed out into the harbor to peddle their wares to men on 

board Navy ships.1400 Sailors would place their money in a pail, lower it over the side 

and haul back their purchases, but frequently the merchandise was poor, overpriced, 

and of questionable origin.1401

To address concerns with the bumboaters, the Congress established Ships Stores in 

1909.1402 In 1923, Ships Service Stores were established by Navy regulations to 

provide services not offered by Ship Stores, such as laundry, shoe repair, tailors, 

barbers, and soda fountains.1403 These operations were supported by unofficial funds 

obtained by subscriptions among enlisted men and officers, or borrowed from other 

sources.1404 On April 1, 1946, the U. S. Navy Ship’s Store Office (NSSO) was created to 

provide efficient control over these services and to put the stores on a self-supporting 

basis. In 1950, Ships Service Stores became known as Navy Exchanges.1405

The first Marine Corps exchange was established at Marine Barracks, Boston, 

Massachusetts, in 1897 by Theodore Roosevelt, then the Acting Secretary of the 

Navy.1406 The Marines opened their first overseas exchange in 1900 in the Philippines 

and were operating 52 exchanges by 1950.1407 Exchange Marines have been routinely 

deployed to support combat units since the Vietnam war.1408

Financial Summary 

In FY 2012, total exchange revenue (including merchandise sales and other revenues) 

across the Armed Forces was $13.4 billion, of which $13 billion paid operating costs

and $320 million was provided to Morale Welfare and Recreation (MWR) programs.1409

Table 20 provides a summary the generation and use of these nonappropriated funds 

(NAF).

 

1399 “Who We Are,” Navy Exchange, accessed February 19, 2014, 

https://www.mynavyexchange.com/work4us/who_we_are.htmlhttps://www.mynavyexchange.com/work4us/who_we_

are.html.

1400 Ibid. 1401 Ibid. 1402 Ibid. 1403 Ibid. 1404 Ibid. 1405 Ibid. 1406 “Our Story,” Marine Corps Exchange, accessed May 18, 2014, 

http://www.mymcx.com/index.cfm/about/history1/. 1407 Ibid. 1408 Ibid. 1409 Army and Air Force Exchange Service, 2012 Annual Report, 1, accessed June 8, 

2014, http://aafes.imirus.com/Mpowered/book/vaar12/i1/1. Navy Exchange Command, Navy Exchange Program of 

the Navy Exchange Service Command, Financial Statements, February 2, 2013 and January 28, 2012, accessed June 8, 

2014, https://www.mynavyexchange.com/command/about_us/Annual%20Report12.pdf. Coast Guard Exchange data 

provided by Coast Guard Exchange Service via Office of Budget and Programs (CG-821), May 5, 2014. U.S. Marine 

Corps Exchange data provided by Deputy Director, Plans, Policy and Analysis NAF Business and Support Services 

Division (MR) HQMC, M&RA, May 5, 2014. 
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Table 20. NAF Summary of Exchanges (FY 2012)1410

(dollars in millions)

AAFES NEX MCX CGES Total

Revenue $9,163 $2,957 $1,093 $166 $13,379

Costs and Expenses $8,957 $2,892 $1,018 $162 $13,029

Net Earnings $206 $65 $75 $4 $350

MWR contribution $224 $43 $50 $4 $320

*Note: A portion of the MWR contributions made by each exchange system may be contributed to the MWR system associated 

with another Military Service. This typically occurs when one exchange system operates exchanges that support an installation

managed by a different Military Service.

Exchanges are Non-Appropriated Fund Instrumentalities (NAFIs), covering most costs 

with the revenues collected from the sale of merchandise (94 percent of revenue), 

concession fees (2 percent of revenue), credit cards (2 percent of revenue), and other 

sources (1 percent of revenue).1411 Merchandise prices are set at levels that recover the 

cost of goods, cover operating expenses, and generate earnings.1412 Earnings are either 

invested back into the exchange system (e.g., modernization of facilities, improvements 

to patron services) or are paid as dividends to the MWR programs of the military 

Services.1413

When setting prices, the exchanges must find an appropriate balance between 

providing patron savings, covering expenses, and contributing to MWR programs.1414

Per the Armed Services Exchange Policy (DoD Instruction 1330.09), “Merchandise and 

services sold through the Armed Services exchanges, whether by direct or concession 

sale, should be priced in a substantially uniform manner at the lowest practicable 

level consistent with the mission to provide authorized patrons with articles and 

services necessary for their health, comfort, and convenience. The creation of a 

supplemental source of funding for the military MWR program is to be considered a 

secondary mission when establishing prices.”

1415 Although each Military Department 

establishes their own policies and procedures for setting prices, they are directed to, 

“achieve maximum pricing commonality among the Armed Services exchanges.”

1416

For merchandise such as tobacco and distilled spirits, the Armed Services Exchange 

policy constrains the range of prices that may be set. 

Prices of tobacco products sold in military resale outlets in the United States, 

its territories and possessions, shall be no higher than the most competitive 

commercial price in the local community and no lower than 5 percent below 

the most competitive commercial price in the local community. Tobacco shall 

 

1410 Ibid. 1411 Ibid. 1412 Armed Services Exchange Regulations, DoDI 1330.21 (2005). 1413 Armed Services Exchange Policy, DoDI 1330.09, 3-4 (2005). See also Army and Air Force Exchange Service, 2012 

Annual Report, 1, accessed June 8, 2014, http://aafes.imirus.com/Mpowered/book/vaar12/i1/1. Navy Exchange 

Command, Navy Exchange Program of the Navy Exchange Service Command, Financial Statements, February 2, 2013 

and January 28, 2012, accessed June 8, 

2014, https://www.mynavyexchange.com/command/about_us/Annual%20Report12.pdf. Coast Guard Exchange data 

provided by Coast Guard Exchange Service via Office of Budget and Programs (CG-821), May 5, 2014. U.S. Marine 

Corps Exchange data provided by Deputy Director, Plans, Policy and Analysis NAF Business and Support Services 

Division (MR) HQMC, M&RA, e-mail to MCRMC, May 5, 2014. 1414 Armed Services Exchange Policy, DoDI 1330.09, 5-6 (2005). 1415 Ibid. 1416 Ibid. 
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not be priced below the cost to the exchange. Prices of tobacco products sold in 

overseas military retail outlets shall be within the range of prices established 

for military retail system stores located in the United States....Prices of 

distilled spirits sold in the United States and the District of Columbia may be 

discounted no more than 10 percent less than the best local shelf price in 

Alcohol Beverage Control (ABC) States and 5 percent less than the best local 

shelf price in non-ABC States....Distilled spirits sold outside the United States 

and the District of Columbia shall be priced within the range of prices 

established for Armed Services exchange stores located in the United States 

unless the same alcoholic beverages are sold locally for less. Those alcoholic 

beverages may be sold for 10 percent less than the best local shelf price.1417

As a NAFI, the exchange systems and their sales are typically exempt from taxes paid 

by private-sector retailers. Most sales by exchanges are free of State and local sales 

taxes or value added tax (VAT).1418 Significant exceptions include gasoline sales in the 

United States1419 and sales by concessionaires licensed by the exchanges.1420 Since 

most military exchanges are located on U.S. military reservations and operated as 

NAFIs, they do not pay rent, property taxes, or Federal income taxes.1421

Exchanges also receive appropriated funds, which can only be used to fund a limited 

number of cost elements. In FY 2012, the exchanges of the Armed Forces expended 

approximately $512.5 million in APF, as summarized in Table 21.

Table 21. APF Summary of Armed Forces Exchanges (FY 2012)1422

(dollars in millions)

Cost Category APF Cost

Second Destination Transportation $188.2

In Theater Support $224.5 

Other APF costs $99.8

Total $512.5

The largest category of APF spending in FY 2012 was second destination

transportation (SDT). The $188.2 million paid for transportation of U.S. merchandise 

to overseas exchanges, supporting consistent pricing for domestic and overseas 

patrons.1423 Another $224.5 million in APF was used to provide exchange services to 

Service members deployed to the Middle East, including Operation ENDURING 

 

1417 Ibid, 5-6. 1418 Armed Services Exchange Regulations, DoDI 1330.21, Section E5.8.2 (2005). 1419 The Flag, 4 U.S.C. § 104. 1420 Establishment, Management, and Control of Nonappropriated Fund Instrumentalities and Financial Management 

of Supporting Resources, DoDI 1015.15, Section 6.16.8, 19 (2007) See also “Retail & General FAQs,” Army Air Force 

Exchange Service, accessed May 9, 2014, http://www.shopmyexchange.com/exchangestores/faq.htm#13. 1421 Establishment, Management, and Control of Nonappropriated Fund Instrumentalities and Financial Management 

of Supporting Resources, DoDI 1015.15, Section 6.16.3, 18 (2007). 1422 Army and Air Force Exchange Service, 2012 Annual Report, 1, accessed June 8, 

2014, http://aafes.imirus.com/Mpowered/book/vaar12/i1/1. Navy Exchange Command, Navy Exchange Program of 

the Navy Exchange Service Command, Financial Statements, February 2, 2013 and January 28, 2012, accessed June 

8, 2014, https://www.mynavyexchange.com/command/about_us/Annual%20Report12.pdf. Coast Guard Exchange 

data provided by Coast Guard Exchange Service via Office of Budget and Programs (CG-821), May 5, 2014. U.S. Marine 

Corps Exchange data provided by Deputy Director, Plans, Policy and Analysis NAF Business and Support Services 

Division (MR) HQMC, M&RA, May 5, 2014.

1423 Ibid.
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FREEDOM and U.S. Mission Iraq.1424 Finally, $99.8 million in APF1425 paid for other 

support services specifically authorized by DoD Instruction 1330.21, such as the costs 

associated with a limited number of active-duty personnel, human resources office 

assistance or administration, personnel travel, utilities, communications, equipment, 

equipment maintenance, supplies, utilities overseas, and other services.1426

5.8.3. FAMILY SUBSISTENCE SUPPLEMENTAL ALLOWANCE

Family Subsistence Supplemental Allowance (FSSA) is a voluntary benefits program 

that is “designed to remove the member’s household from eligibility for benefits under 

the supplemental nutrition assistance program [SNAP].”

1427 SNAP is formerly known as 

the Food Stamp Program.1428 FSSA payments reflect “the amount that is required to 

bring the household income of that Armed Forces Service member to 130 percent of 

the Federal poverty line,”1429 but they are currently capped at $1,100 per month.1430 As 

a voluntary program, Service members must apply to receive the allowance.1431 The 

determination of eligibility involves an evaluation of household income level and 

household size.1432 In addition, at least one person in the household must be a military 

dependent.1433

Beneficiaries 

Members of the Military Services may participate in the FSSA program if they are 

serving on active duty, including Reserve Component members on active-duty

orders,

1434 and receiving full or partial basic allowance for subsistence (BAS).1435

“Eligibility is based on the household size and income of a Service member.”1436 In 

addition, “At least one person in the household of a Service member must be a military 

dependent for that Service member to be eligible for the FSSA Program.”

1437 Even if 

otherwise eligible, “When a Service member is in a non-pay status for any reason, the 

Service member is not eligible for the FSSA during that non-pay period.”

1438

Certain portions of a Service Member’s military income are included as a contribution 

to household income:

1439 basic pay, BAS, basic allowance for housing (or cash 

equivalent for those who are living in Government-provided housing), overseas 

housing allowance (OHA), all bonuses, and some special and incentive pays.1440 The 

excluded special and incentive pays are Hostile Fire/Imminent Danger Pay, 

Continental United States (CONUS) Cost of Living Allowance (COLA), overseas COLA, 

 

1424 Army and Air Force Exchange Service, 2012 Annual Report, 23, accessed June 8, 

2014, http://aafes.imirus.com/Mpowered/book/vaar12/i1/1. 1425 Based on both actual costs and estimated engineering costs as recorded in FY 2012 exchange financial reports. 1426 Armed Services Exchange Regulations, DoDI 1330.21, Enclosure 9, 36-39 (2005). 1427 Pay and Allowances of the Uniformed Services, 37 U.S.C. § 402a(a)(1). 1428 “Supplemental Nutrition Assistance Program (SNAP), A Short History of SNAP,” Department of Agriculture,”

accessed May 1, 2014, http://www.fns.usda.gov/snap/short-history-snap. 1429 Family Subsistence Supplemental Allowance (FSSA) Program, DoDI 1341.11, section 6.2.2, 3 (2008). 1430 Pay and Allowances of the Uniformed Services, 37 U.S.C. § 402a. 1431 Ibid. 1432 Family Subsistence Supplemental Allowance (FSSA) Program, DoDI 1341.11, section 4, 2 (2008). 1433 Ibid, section 6.1.3, 3. 1434 Ibid, section 1, 1. 1435 Ibid, section 6.1.1, 3. 1436 Ibid, section 6.1.2, 3. 1437 Ibid, section 6.1.3, 3. 1438 Ibid, section 6.1.5, 3. 1439 Ibid, section E2.4.1, 11. 1440 Ibid, section E2.3.1, 10.
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Family Separation Allowance, all travel- and transportation-related allowances and 

entitlements, and clothing allowances.1441

“The FSSA income may affect participation of the household in certain programs for 

which eligibility is based on income, such as subsidized school lunch programs, the 

Women, Infant, and Children Program, day care programs, and earned income tax 

credit (EITC).”

1442 “If the Service member participates in the USDA Food Stamp 

Program, the FSSA income shall be reported to the USDA Food Stamp Program 

Office.”

1443 Receipt of an FSSA payment may either render the household of a Service 

member ineligible for food stamps or may reduce the amount of the food stamp 

benefit.”

1444 If a child or spouse is eligible for the benefits listed below, ignoring FSSA, 

he or she maintains eligibility despite an increase in household income attributable to 

FSSA:

 assistance provided under the Richard B. Russell National School Lunch Act 

(42 U.S.C. § 1751 et seq.) (2014)

 assistance provided under the Child Nutrition Act of 1966 (42 U.S.C. § 1771 

et seq.) (2014)

 a service provided under the Head Start Act (42 U.S.C. § 9831 et seq.) (2014)

 assistance under the Child Care and Development Block Grant Act of 1990 

(42 U.S.C. § 9858 et seq.) (2014)1445

FSSA requires an annual re-certification.

1446 In addition, recipients of FSSA are

responsible for reporting to their certifying officials changes which may affect their 

eligibility and/or the amount of FSSA they receive. These changes include salary 

changes of $100 or more,1447 any decrease in the size of the household,1448 transfer of 

the member through a permanent change of station,1449 and promotion.

1450

Historical Context 

In the 1990s and early 2000, there were multiple reports in the press citing the 

number of military families receiving food stamps.1451 The Congress enacted the 

FY 2001 National Defense Authorization Act, creating the FSSA, “to remove the 

 

1441 Ibid, section E.2.4.2, 11. 1442 Ibid, section 6.4.4.2.5. 1443 Ibid, section 6.4.4.3.5. 1444 Ibid. 1445 Pay and Allowances of the Uniformed Services, 37 U.S.C. § 402a(f). 1446 Ibid. Family Subsistence Supplemental Allowance (FSSA) Program, DoDI 1341.11, section 6.5.1.5, 6 (2008). 1447 Ibid. Family Subsistence Supplemental Allowance (FSSA) Program, DoDI 1341.11, section 6.4.4.1.5 (2008). 1448 Ibid. 1449 Pay and Allowances of the Uniformed Services, 37 U.S.C. § 402a(d)(3). Family Subsistence Supplemental Allowance 

(FSSA) Program, DoDI 1341.11, section 6.5.1.4 (2008). 1450 Pay and Allowances of the Uniformed Services, 37 U.S.C. § 402a(d)(2). Family Subsistence Supplemental Allowance 

(FSSA) Program, DoDI 1341.11, section 6.5.1.3 (2008). 1451 Examples include: “Thousands of American soldiers serving in the world’s most powerful armed forces are so poorly 

paid they are having to depend on charity to provide their families with basic household necessities,” 

David Wastell, “U.S. Soldiers Rely on Charity to Support Families,” London Sunday Telegraph, October 31, 1999. Other 

recent articles are Ceci Connoly, “Battle for Veterans’ Vote Heats Up,” The Washington Post, September 9, 1999; Steve 

Vogel, “Feeling the Pinch of a Military Salary,” The Washington Post, July 20, 1999. Older examples include Tom 

Bowman, “Little Appetite for Food Stamps,” Baltimore Sun, September 8, 1998; Rick Maze, “Senator: Get Military 

Families Off Food Stamps,” Army Times, August 24, 1998; Chuck Vinch, “Military Points to Families,” European Stars 

and Stripes, January 17, 1997; Rick Maze, “Senate Orders Study on Food Stamp Use,” Navy Times, August 22, 1994; 

and Soraya Nelson, “Food Stamp Redemption Hits High,” Air Force Times, April 5, 1993.
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member’s household from eligibility for benefits under the food stamp program,” with 

an initial cap of $500 per month.

1452

Financial Summary 

A summary of recipients of FSSA for calendar year (CY) 2012 is provided in 

Table 22.

1453

Table 22. Summary of FSSA Recipients

CY2012 Army Navy Air 

Force

Marine 

Corps USCG Total Recipients

Total 

Payments

Enlisted 403 2 6 0 0 411 $1,462,781

Officers 8 1 1 0 0 10 $21,391

Total 411 3 7 0 0 421 $1,484,172

“If a Service member is eligible for the FSSA for less than 1 month, the payment shall 

be prorated for the number of days eligible during the month at a rate of one-thirtieth

of 1 month of FSSA for each eligible day served.”

1454

5.8.4. TRANSITION ASSISTANCE

There are multiple programs and services available to Service members and their 

families as they transition from military to civilian life. These include the Transition 

Assistance Program (TAP), the Troops to Teachers Program, and the Armed Forces 

Retirement Home.

5.8.4.1. TRANSITION ASSISTANCE PROGRAM

Each Service manages a separate transition assistance program: Army Career and 

Alumni Program (ACAP),1455 Marine Corps Transition Readiness Seminar,1456 Navy 

Transition Assistance Management Program,1457 Air Force Transition Assistance 

Program,1458 and Coast Guard Transition Assistance Program.1459 Although job 

counseling has been provided for years,1460 in 2012, the Transition Goals, Plans, and 

Success (Transition GPS) program was established to expand and improve the 

assistance being provided to separating Service members and their 

families.1461 Transition GPS involves multiple federal agencies and implements a variety 

 

1452 The Floyd D. Spence National Defense Authorization Act for FY 2001, Pub. L. No. 106–398, 114 Stat. 1654 § 604.

(2000). 1453 All data supplied by the Director of Military Compensation, Office of Personnel and Readiness, e-mail to MCRMC, 

December 5, 2013. 

1454 Family Subsistence Supplemental Allowance (FSSA) Program, DoDI 1341.11, 3 (2008). 1455 Army Community Service Center, AR 608-1 (2013). 1456 Update for Implementation of the Marine Corps Transition Readiness Seminar, Date Signed: 12/21/2012 

MARADMINS Active Number: 734/12.

1457 Transition Assistance Management Program (TAMP), OPNAVINST 1900.2B (2007). 1458 Airman and Family Readiness Centers, AFI 36-3009, 14 (2013). 1459 Transition Assistance Program, COMDTINST 1900.2A (2003). 1460 Veterans’ Benefits, 38 U.S.C. Chapter 41 (2003). 1461 Implementation of Mandatory Transition Assistance Program Participation for Eligible Service Members, Directivetype Memorandum (DTM) 12-007 (2014).
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of laws, including the Veterans Opportunity to Work (VOW) to Hire Heroes Act of 

2011.1462

On January 31, 2013, seven executive branch agencies entered into a Memorandum of 

Understanding regarding the parties’ collaboration on the redesigned Transition 

Assistance Program (TAP) for Separating Service Members.1463 DoD, in partnership 

with the Department of Labor (DOL), the Department of Veterans Affairs (VA), and the 

Small Business Administration (SBA), deliver Transition GPS services through a series 

of coordinated workshops and briefings, incorporated into the transition programs 

managed by each Service.1464 This coordinated effort includes pre-separation 

counseling, the Transition GPS Core Curriculum, Transition GPS Tracks, and a 

CAPSTONE event that verifies “a viable plan for transition.”

1465 The guidelines for 

cooperation between these organizations are formally documented in a memorandum 

of understanding (MOU).1466 Pursuant to 10 U.S.C. § 1144, all eligible separating 

Service members are required to participate in TAP.”

1467

Preseparation Counseling

Separating Service members receive individual counseling to discuss their career goals 

and to formally start their transition process.1468 Members are subsequently provided a 

needs and goals assessment coupled with counseling sessions covering benefits, 

resources, and available assistance across a wide scope of military separation topics. 

Service members develop an Individual Transition Plan (ITP) that documents their 

personal transition and the specific accomplishments they must complete to meet 

Career Readiness Standards (CRS).1469 The Career Readiness Standards include the 

Common Readiness Standards and either the Employment Readiness Standards (for 

those initially seeking employment) or Education and Technical Training Standards 

(for those initially seeking additional education or technical training).1470

Transition GPS Core Curriculum

The Transition GPS Core Curriculum is a series of seminars and workshops, currently 

provided over 40 hours, in a classroom setting, in a single week. The portion delivered 

by DoD covers a Transition Overview, Military Occupational Code (MOC) Crosswalk (to 

translate military skills, training, and experience into civilian occupations, credentials, 

and employment), and Personal Financial Planning.1471 The VA provides Benefits 

Briefings that include information on education, health care, compensation, life 

 

1462 VOW to Hire Heroes Act of 2011, L. 112-56, §§201-265, 125 Stat.711 (2011). See also Veterans’ Benefits, 38 U.S.C.

Chapters 41-43. 1463 Transition Assistance Program for Separating Service Members, (V62-8) MOU (2013). Parties to the MOU are: DoD, 

DVA, DoL, ED, DHS (USCG), SBA, and OPM. This MOU supersedes the September 19, 2006 TAP MOU. 

1464 Transition Assistance Program for Separating Service Members, (V62-8) MOU (2013). 1465 Implementation of Mandatory Transition Assistance Program Participation for Eligible Service Members, Directivetype Memorandum (DTM) 12-007, 5, 6, and 11 (2014). 1466 (Transition Assistance Program for Separating Service Members, (V62-8) MOU (2013). See also Implementation of 

Mandatory Transition Assistance Program Participation for Eligible Service Members, Directive-type Memorandum 

(DTM) 12-007, 5-6 (2014). 1467 Armed Forces, 10 U.S.C. §1144. See also Implementation of Mandatory Transition Assistance Program 

Participation for Eligible Service Members Directive-type Memorandum (DTM) 12-007 (2014). 1468 Armed Forces, 10 U.S.C. §§ 1142 1143, 1144. 1469 Implementation of Mandatory Transition Assistance Program Participation for Eligible Service Members, Directivetype Memorandum (DTM) 12-007 (2014). See also Transition Assistance Program for Separating Service Members, 

(V62-8) MOU (2013). Parties to the MOU are: DoD, DVA, DoL, ED, DHS (USCG), SBA, and OPM. 1470 Implementation of Mandatory Transition Assistance Program Participation for Eligible Service Members, Directivetype Memorandum (DTM) 12-007, 8-9 (2014). 1471 Ibid, 9. See also Transition Assistance Program for Separating Service Members, (V62-8) MOU 3, 9-11 (2013).
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insurance, home loans, as well as Vocational Rehabilitation and Employment (VR&E) 

benefits information and counseling.1472 DOL runs the Employment Workshop 

(DOLEW) which includes information on employment and training opportunities, the 

labor market, resume writing, and job-search strategies.1473 Service members can also 

sign up for a DOL Gold Card which provides them access to intensive support services 

at One Stop Career Centers (a.k.a. American Job Centers) for up to six months after 

transition.1474

Transition GPS Tracks

In addition to completing the Transition GPS Core Curriculum, transitioning Service 

members also have the option of participating in a series of two-day tailored tracks. 

These tracks include an Education track, for those pursuing a higher education 

degree; a Technical and Skills Training track, for those seeking job-ready skills and 

industry-recognized credentials in shorter-term training programs; and an 

Entrepreneurship track administered by SBA called “Boots to Business,” which 

focuses on the feasibility analysis for business planning for those wanting to start a 

business.1475

CAPSTONE Event

Before separation from the military, Service members participate in a CAPSTONE 

event where commanders, or their designees, verify that Service members have met 

the Career Readiness Standards, and have a viable transition plan.1476 Those who 

require additional assistance are referred to supplemental training opportunities.1477

The Military Life Cycle Transition Model is being implemented through Transition 

GPS.1478 This model incorporates career readiness and transition preparation into the 

entire span of a Service member’s career. In the past, transition and preparation for 

the civilian workforce often occurred late in a Service member’s time in the military. 

The Military Life Cycle Transition Model provides counseling, assessments, and access 

 

1472 Transition Assistance Program for Separating Service Members, (V62-8) MOU, 12-14 (2013). 1473 Ibid, 14-16. See also Department of Labor, Workshop, Participant Guide, Transition from Military to Civilian 

Workforce, January 2014 edition, accessed April 6, 2014, http://www.dol.gov/vets/programs/tap/DOLEW-ParticipantGuide-January_2014.pdf. 1474 “New Employment Initiatives for Veterans,” Department of Labor, accessed April 6, 2014, 

http://www.dol.gov/vets/goldcard.html. 1475 Implementation of Mandatory Transition Assistance Program Participation for Eligible Service Members, Directivetype Memorandum (DTM) 12-007, 5-6 (2014). Department of Labor, Transition Assistance Program (TAP) Information, 

April 6, 2014, http://www.dol.gov/vets/programs/tap/. 1476 Transition Assistance Program for Separating Service Members, (V62-8) MOU, 4 (2013). Implementation of 

Mandatory Transition Assistance Program Participation for Eligible Service Members, Directive-type Memorandum 

(DTM) 12-007, 8-9 (2014). Department of Labor, Transition Assistance Program (TAP) Information, April 6, 2014, 

http://www.dol.gov/vets/programs/tap/. 1477 Implementation of Mandatory Transition Assistance Program Participation for Eligible Service Members, Directivetype Memorandum (DTM) 12-007, 10 (2014). Department of Labor, Transition Assistance Program (TAP) Information, 

April 6, 2014, http://www.dol.gov/vets/programs/tap/. 1478 Office of the President, July 23, 2012 Fact Sheet: President Obama’s Work to Honor our Military Families and 

Veterans, accessed June 1, 2014, http://www.whitehouse.gov/the-press-office/2012/07/23/fact-sheet-presidentobama-s-work-honor-our-military-families-and-vetera. See also Statement of Dr. Susan Kelly, Director, Transition to 

Veterans Program Office, Office of the Under Secretary of Defense for Personnel and Readiness, before the House 

Armed Services Committee, Subcommittee on Military Personnel, Hearing on the Transition Assistance Program, 

April 24, 2013. Implementation of Mandatory Transition Assistance Program Participation for Eligible Service Members, 

Directive-type Memorandum (DTM) 12-007, 27 (2014).
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to resources to build skills or credentials at earlier stages of a Service member’s 

military tenure.1479 Implementation of this model is in progress.1480

Beneficiaries 

Transition services are provided to members of the Military Services who are being 

separated from active duty and the spouses of such members.1481 More specifically, 

this includes Service members who have completed their first 180 days of active duty, 

except in the case of a member who is being retired or separated for disability.1482 With 

limited exceptions, all eligible, separating Service members are required to participate 

in TAP, and their spouses are encouraged to participate (on a space available 

basis).1483

Historical Context 

In 1967, in coordination with DoD, VA adopted new outreach measures to disseminate 

information about benefits to transitioning Service members.1484

In 1990, the Congress authorized the Transition Assistance Program (TAP) to assist 

separating Service members and their families in their transition to civilian life.1485

Since 2012, DoD and interagency partners have been implementing the redesigned 

TAP (Transition GPS) based on the mandates and intent of the VOW to Hire Heroes Act 

of 20111486 and the recommendations from the Veterans Employment Initiative 

Taskforce (VEITF).1487

Financial Summary 

In FY 2013, spending on TAP included $123 million by DoD,1488 $230,000 by Coast 

Guard,1489 and $9 million by DOL.1490 The VA costs for TAP redesign and roll out 

between November 2011 and September 2013 were approximately $20 million.

1491 At 

the end of FY 2012, the Congress authorized the reprogramming of $650,000 to 

 

1479 Transition Assistance Program for Separating Service Members, (V62-8) MOU (2013). Parties to the MOU are: DoD, 

DVA, DoL, ED, DHS (USCG), SBA, and OPM. This MOU supersedes the September 19, 2006 TAP MOU. 1480 Statement of Dr. Susan Kelly, Director, Transition to Veterans Program Office, Office of the Under Secretary of 

Defense for Personnel and Readiness, Before the House Armed Services Committee, Subcommittee on Military 

Personnel, Hearing on the Transition Assistance Program, April 24, 2013. 1481 Armed Forces, 10 U.S.C. § 1144. 1482 Implementation of Mandatory Transition Assistance Program Participation for Eligible Service Members, Directivetype Memorandum (DTM) 12-007, 10 (2014). 1483 Ibid, 5-7. 1484 Veterans’ Readjustment Benefits Act of 1966, Pub. L. No. 89-358, 80 Stat. 12 (1966). See also Department of 

Veterans Affairs, VA History in Brief, 19, accessed June 1, 2014, 

http://www.va.gov/opa/publications/archives/docs/history_in_brief.pdf. 1485 Armed Forces, 10 U.S.C. § 1142. 1486 VOW to Hire Heroes Act of 2011, Pub. L. No. 112-56, §§201-265, 125 Stat.711 (2011) codified at Armed Forces, 

10 U.S.C. §1142-1144. See also Statement of Dr. Susan Kelly, Director, Transition to Veterans Program Office, Office of 

the Under Secretary of Defense for Personnel and Readiness, before the House Armed Services Committee, 

Subcommittee on Military Personnel, Hearing on the Transition Assistance Program, April 24, 2013. 1487 Statement of Dr. Susan Kelly, Director, Transition to Veterans Program Office, Office of the Under Secretary of 

Defense for Personnel and Readiness, Before the House Armed Services Committee, Subcommittee on Military 

Personnel, Hearing on the Transition Assistance Program, April 24, 2013. 1488 Data provided by DoD Transition to Veterans Program Office, e-mail to MCRMC, March 14, 2014. 1489 Data provided by U.S. Coast Guard, Office of Budget and Programs, e-mail to MCRMC, May 21, 2014. 1490 Department of Labor, Congressional Budget Justification, Veteran’s Employment and Training Service, FY 2014,

VETS-8, accessed June 1, 2014, http://www.dol.gov/dol/budget/2014/PDF/CBJ-2014-V3-05.pdf. 1491 Data provided by Department of Veterans Affairs, e-mail to MCRMC, March 11, 2014. 
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support the development and piloting of Boots to Business in FY 2013.1492 This allowed 

SBA to begin conducting classes in January 2013 (using limited resources).1493

5.8.4.2. TROOPS TO TEACHERS PROGRAM

The Troops to Teachers (TTT) program provides transitioning Service members with 

counseling services focused on starting new careers as academic or vocationaltechnical public school teachers.1494 The program offers two types of participation, 

funded and unfunded. Financial assistance is available to eligible participants who 

agree to teach in public school in a high-needs school district for at least three 

years.1495 The assistance includes up to $5,000 in stipends to help reimburse the costs 

associated with becoming a certified teacher, including coursework and other 

certification requirements.1496 Financial assistance can also include a $10,000 bonus 

to teach in a high-needs public school that serves a high percentage of underprivileged 

students.1497

TTT counselors are assigned to every state to help participants navigate the transition 

from military service to a career in education.1498 Counseling and assistance services 

include guidance on teacher certification processes, academic or career technical 

information on the different pathways to state certification leads on employment 

opportunities, and information on financial assistance.

1499

Beneficiaries 

Current and former members of the Military Services who received an honorable 

discharge are eligible to participate in Troops to Teachers and will receive counseling 

regarding education and certification requirements, as well as job search

assistance.1500 Eligibility for financial assistance is more complicated, incorporating 

factors such as years of active service and time until retirement or type of nonretirement separation. Additional details can be found in 10 U.S.C. § 1154.

1501

Historical Context 

 “The Troops to Teachers program is a federal program that began operations in 

19941502 with two goals: (1) to help military personnel affected by downsizing become 

teachers and (2) to ease the teacher shortage, especially in math and science and in 

 

1492 Small Business Administration, FY 2015 Congressional Budget Justification and FY 2013 Annual Performance 

Report, 81, accessed June 1, 2014, http://www.sba.gov/content/fiscal-year-2015-congressional-budget-justificationand-fiscal-year-2013-annual-performance-report. 1493 Ibid. 1494 Armed Forces, 10 U.S.C. § 1154. Education, 20 U.S.C. § 6671. National Defense, 34 CFR 230. National Defense,

32 CFR 77. See also Voluntary Education Programs, DoDI 1322.25 (2011). 1495 Armed Forces, 10 U.S.C. § 1154. 1496 Ibid. 1497 Ibid. See also Education, 34 CFR 230. National Defense, 32 CFR 77. See also Voluntary Education Programs, 

DoDI 1322.25 (2011). 1498 “Troops to Teachers,” Defense Activity for Non-Traditional Education Support, accessed April 6, 2014, 

http://www.dantes.doded.mil/service-members/troops-to-teachers-faq/index.html. 1499 “Eligibility,” Defense Activity for Non-Traditional Education Support, April 6, 2014, 

http://www.dantes.doded.mil/Programs/TTT.html#Eligibility. 1500 “The Troops to Teachers Program: ‘Proud to Serve Again,’” Military OneSource, accessed April 6 2014, 

http://www.militaryonesource.mil/transition?content_id=267436. 1501 Armed Forces, 10 U.S.C. § 1154(i). 1502 National Defense Authorization Act for FY 2013, Pub. L. No. 112-239, § 541, 126 Stat. 1632, 1728 (2013).
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areas with concentrations of children from low-income families.”

1503 The National 

Defense Authorization Act for FY 2000 transferred the responsibility for program 

oversight and funding to the U.S. Department of Education but continued operation 

by DoD. The National Defense Authorization Act for FY 2013 transferred responsibility 

back to DoD.1504 More than 20,000 Troops to Teachers participants have attained jobs 

nationally in public schools through this program.1505

Financial Summary 

TTT program funding is limited to $15 million.

1506 In FY 2013, DoD spent $14 million

on the TTT program.1507

5.8.4.3. ARMED FORCES RETIREMENT HOME

The Armed Forces Retirement Home (AFRH) provides retired enlisted men and women 

a retirement center with two campuses, one located in Gulfport, Mississippi and the 

other in Washington, D.C.1508 AFRH provides a continuum of care including outpatient 

dental and medical services, hospital and long term nursing care, meals, private 

rooms, and recreational facilities.1509

Beneficiaries 

Eligible beneficiaries include:

 enlisted Service members with a minimum of 20 years of service whose age is 

60 years or older

 veterans incapable of earning a livelihood because of a service-connected 

disability incurred in the line of duty

 veterans who served in a War Zone or Hostile Fire Zone and are later found to 

be incapable of earning a livelihood

 and women veterans who served before July 12, 19481510

More than one thousand men and women, with an average age in the eighties, were 

residing in these homes in 2012.1511

Historical Context 

The Congress established a home for destitute Navy officers, sailors and Marines in 

Philadelphia during the War of 1812.1512 Forty years later, the Congress established an 

“asylum” for old and disabled soldiers in Washington, D.C.1513 The U.S. Naval Home 

eventually moved from Philadelphia to Gulfport, Mississippi and the U.S. Soldiers and 

 

1503 Government Accountability Office, Troops to Teachers: Program Helped Address Teacher Shortages, GAO-01-567

(2001). See also Troops to Teachers Program, Armed Forces, 10 U.S.C. § 1154. 1504 National Defense Authorization Act of Fiscal Year 2013, Pub. L. No. 112-239 (2013). 1505 “Troops to Teachers,” Defense Activity for Non-Traditional Education Support, accessed June 1, 2014, 

http://troopstoteachers.net/AbouttheProgram/Overview.aspx. 1506 Armed Forces, 10 U.S.C. § 1154(g). 1507 Data provided by DoD Transition to Veterans Program Office, e-mail to MCRMC, March 14, 2014. 1508 Hospitals and Asylums, 24 U.S.C. § 411. 1509 Hospitals and Asylums, 24 U.S.C. § 412. 1510 Ibid. 1511 Armed Forces Retirement Home, 2012 Annual Report The Armed Forces Retirement Home (AFRH) Advisory Council, 

accessed June 1, 2014, https://www.afrh.gov/afrh/about/AFRH_FY12Annual_Report_to_DOD_Final_Feb25.pdf. 1512 Armed Forces Retirement Home, AFRH Fact Sheet: Protecting a Promise. Renewing a Trust, accessed April 6, 2014, 

https://www.afrh.gov/afrh/about/master/master_factsheetbackground.pdf. 1513 Ibid. 
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Airmen’s Home remained in Washington, D.C.1514 For many years, they operated 

separately however in 1990, the Congress passed a law combining the operation of the 

two facilities into the Armed Forces Retirement Home.1515

Financial Summary 

AFRH is an independent Federal Agency funded by a permanent trust fund and fees 

from residents.1516 Funding is provided through a 50 cent per month payroll deduction 

of active-duty military personnel, fines and forfeitures imposed through the Uniform 

Code of Military Justice (UCMJ), and investment income. The home is restricted by 

law to investments in low yield Treasury bonds.1517 Other than these funding sources, 

AFRH is self-sustaining through fees from residents, which are capped by income.1518

It does not receive an annual appropriation from the Congress.1519

 

1514 Ibid. 1515 Hospitals and Asylums, 24 U.S.C. § 411 (2014). Armed Forces Retirement Home, AFRH Fact Sheet: Protecting a 

Promise. Renewing a Trust, accessed April 6, 2014, 

https://www.afrh.gov/afrh/about/master/master_factsheetbackground.pdf. 1516 Hospitals and Asylums, 24 U.S.C. §§ 414, 419. See also Armed Forces Retirement Home, AFRH Fact Sheet: 

Protecting a Promise. Renewing a Trust, accessed April 6, 2014, 

https://www.afrh.gov/afrh/about/master/master_factsheetbackground.pdf. 1517 Hospitals and Asylums, 24 U.S.C. § 419. 1518 Hospitals and Asylums, 24 U.S.C. § 419. Pay and Allowances of the Uniformed Services, 37 U.S.C. § 1007(i). Armed 

Forces, 10 U.S.C. § 2772. See also Armed Forces Retirement Home, AFRH Fact Sheet: Protecting a Promise. Renewing a 

Trust, accessed April 6, 2014, https://www.afrh.gov/afrh/about/master/master_factsheetbackground.pdf. 1519 Armed Forces Retirement Home, AFRH Fact Sheet: Protecting a Promise. Renewing a Trust, accessed April 6, 2014, 

https://www.afrh.gov/afrh/about/master/master_factsheetbackground.pdf. See also Hospitals and Asylums, 

24 U.S.C. § 419. Pay and Allowances of the Uniformed Services, 37 U.S.C. § 1007(i). Armed Forces, 10 U.S.C. § 2772.
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6. APPROPRIATED

COMPENSATION FUNDING

6.1. OVERVIEW

In its enabling legislation, the Commission is tasked to “examine all laws, policies, and 

practices of the Federal Government that result in any direct payment of authorized or 

appropriated funds” to Service members, veterans, retirees, and their families.1

Section 6.2 of this report provides an accounting of such appropriated funds between 

1998 and 2014, including all funding for pay and allowances, retirement, health care, 

and quality of life programs.2 As detailed in Sections 6.3 and 6.4, appropriation and 

end-strength data were extracted from official government budget publications and, in 

some cases, were obtained from responsible agencies. Section 6.5 contains current 

basic pay tables.

Figure 23. Uniformed Services’ Compensation Funding, FY 20143

To ensure a comprehensive review of compensation for the uniformed services, the 

Commission gathered data from DoD, the U.S. Coast Guard, and the National Oceanic 

and Atmospheric Administration, as well as the Department of Veterans Affairs, the 

Department of Labor, the Department of Education, and the Department of the 

Treasury. Compensation for members of the Public Health Service (PHS) is funded by 

 

1 National Defense Authorization Act for FY 2013, Pub. L. No. 112-239, §§ 671-680, 126 Stat. 1632, 1787-1795 (2013), 

as amended by National Defense Authorization Act for FY 2014, Pub. L. No. 113-66, § 1095(b) (2013). 2 Funding data prior to 1998 were not available from DoD public sources.

3 Appropriated Budget Data, presented in Section 6.2 of this report.
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the agencies to which PHS members are assigned,4 so this report does not account for 

appropriated funding for PHS members.

Figure 25 does not include the Federal payments toward unfunded liabilities of the 

uniformed services’ retirement and Medicare-eligible retiree health care programs. In 

October 1984, DoD began making accrual payments (i.e., “normal cost contributions”) 

to fund the future retirements of military personnel.5 Similarly, TRICARE coverage for 

Medicare-eligible members or former members of the uniformed services began to be 

accrual funded in October 2002.6

 Retirement and health care costs associated with 

military service prior to these dates are not funded by accrual payments and are 

therefore accounted for as “unfunded liabilities.” In FY 2014, unfunded liability 

payments for retirement and Medicare-eligible retiree health care were $72.9 billion

and $4.4 billion, respectively.7 As of September 30, 2012, the remaining unfunded 

liabilities were $933.5 billion8 and $173.1 billion,

9 respectively.

Appropriated funding for the following programs is not included in Section 6.2 

because authoritative funding data was not available for FY 1998 through FY 2014:

 Military Exchanges (e.g., appropriated funding for second destination travel and 

other programs)

 Transition Assistance Programs

 Casualty Assistance Programs

 Overseas Contingency Operation (OCO) funding for child development, youth, 

and Morale, Recreation and Welfare (MWR) programs

 Department of Labor: Veterans’ Employment and Training Service (VETS)

 Small Business Administration: Office of Veterans Business Development 

(OVBD)

 the portion of Federal Impact Aid directly attributable to military dependents 

(note that the DoD contribution to Federal Impact Aid is included)

 

4 USPHS Official, Division of Commissioned Corps Personnel and Readiness (DCCPR), e-mail to MCRMC, March 7, 

2014.

5 Department of Defense Authorization Act, 1984, Pub. L. No. 98-94, § 925, 97 Stat. 614, 644-648 (1983). 6 Floyd D. Spence National Defense Authorization Act for FY 2001, Pub. L. No. 106-398, § 713, 114 Stat. 1654, 1654A179-1654A-184 (2000). 7 Appropriated Budget Data, presented in Section 6.2 of this report.

8 DoD Office of the Actuary, Valuation of the Military Retirement System, September 30, 2012.

9 DoD Office of the Actuary, Valuation of the Medicare-Eligible Retiree Health Care Fund, September 30, 2012. 
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6.3. DATA SOURCES
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6.4. SOURCES OF END STRENGTH DATA

Air Force Reserve, Fiscal Year (FY) 2015 Budget Estimates, Appropriation 3700, Reserve 

Personnel, Air Force, March 2014, accessed May 13, 2014, 

http://www.saffm.hq.af.mil/shared/media/document/AFD-140310-011.pdf. 

Air National Guard, Fiscal Year (FY) 2015 Budget Estimates, Appropriation 3850, 

National Guard Personnel, Air Force, March 2014, accessed May 13, 2014, 

http://www.saffm.hq.af.mil/shared/media/document/AFD-140310-018.pdf. 

Department of the Air Force, Fiscal Year (FY) 2015 Budget Estimates: Military 

Personnel Appropriation, March 2014, accessed May 13, 2014, 

http://www.saffm.hq.af.mil/shared/media/document/AFD-140310-009.pdf. 

Department of the Army, Fiscal Year (FY) 2015 Budget Estimates: Volume I, National 

Guard Personnel, Army, March 2014, accessed May 13, 2014, 

http://asafm.army.mil/Documents/OfficeDocuments/Budget/budgetmaterials/fy15/

milpers//ngpa-v1.pdf. 

Department of the Army, Fiscal Year (FY) 2015 President’s Budget Submission: Military 

Personnel, Army, Justification Book, March 2014, accessed May 13, 2014, 

http://asafm.army.mil/Documents/OfficeDocuments/Budget/budgetmaterials/fy15/

milpers//mpa.pdf. 

Department of the Army, Fiscal Year (FY) 2015 President’s Budget Submission: Reserve 

Personnel, Army, March 2014, accessed May 13, 2014, 

http://asafm.army.mil/Documents/OfficeDocuments/Budget/budgetmaterials/fy15/

milpers//rpa.pdf. 

Department of the Navy, Fiscal Year (FY) 2015 Budget Estimates: Justification of 

Estimates, March 2014, Military Personnel, Navy, accessed May 13, 2014, 

http://www.finance.hq.navy.mil/FMB/15pres/MPN_BOOK.pdf. 

Department of the Navy, Fiscal Year (FY) 2015 Budget Estimates: Justification of 

Estimates, March 2014, Reserve Personnel, Navy, accessed May 13, 2014, 

http://www.finance.hq.navy.mil/FMB/15pres/RPN_BOOK.pdf. 

Department of the Navy, Fiscal Year (FY) 2015 Budget Estimates: Justification of 

Estimates, March 2014, Military Personnel, Marine Corps, accessed May 13, 2014, 

http://www.finance.hq.navy.mil/FMB/15pres/MPMC_BOOK.pdf. 

Department of the Navy, Fiscal Year (FY) 2015 Budget Estimates: Justification of 

Estimates, March 2014, Reserve Personnel, Marine Corps, accessed May 13, 2014, 

http://www.finance.hq.navy.mil/FMB/15pres/RPMC_BOOK.pdf. 

NOAA staff, National Oceanic and Atmospheric Administration, e-mail to MCRMC 

staff, March 5, 2014.

“Commissioned Corps of the U.S. Public Health Service, Management Information 

System,” United States Department of Health and Human Services, accessed May 9, 

2014, http://dcp.psc.gov/CCMIS/StatusCharts/Public_Pivot.aspx. Using the radio 
SECTION 6

 APPROPRIATED COMPENSATION FUNDING

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buttons on this link provides a view of the current force size of the U.S. Public Health 

Service (USPHS). USPHS does not maintain a historical record of end strength.

USCG staff, United States Coast Guard, e-mail to MCRMC staff, May 13, 2014.
MILITARY COMPENSATION AND RETIREMENT MODERNIZATION COMMISSION

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6.5. MILITARY BASIC PAY TABLES

B

A

SIC 

P

AY

—

EFF

E

CTIVE

J

ANU

A

R

Y 1, 201

4

Pay Grade 2 or less Over 2 Over 3 Over 4 Over 6 Over 8 Over 10 Over 12 Over 14 Over 16 Over 18

O-101

O-91O-81

9,946.20 10,272.00 10,488.30 10,548.60 10,818.60 11,269.20 11,373.90 11,802.00 11,924.70 12,293.40 12,827.10

O-71

8,264.40 8,648.40 8,826.00 8,967.30 9,222.90 9,475.80 9,767.70 10,059.00 10,351.20 11,269.20 12,043.80

O-62

6,125.40 6,729.60 7,171.20 7,171.20 7,198.50 7,507.20 7,547.70 7,547.70 7,976.70 8,735.10 9,180.30

O-5 5,106.60 5,752.50 6,150.60 6,225.60 6,474.30 6,622.80 6,949.50 7,189.50 7,499.70 7,974.00 8,199.30O-4 4,405.80 5,100.30 5,440.80 5,516.40 5,832.30 6,171.00 6,593.10 6,921.30 7,149.60 7,280.70 7,356.60O-3 3,873.90 4,391.40 4,739.70 5,167.80 5,415.30 5,687.10 5,862.60 6,151.50 6,302.40 6,302.40 6,302.40O-2 3,347.10 3,812.10 4,390.50 4,538.70 4,632.30 4,632.30 4,632.30 4,632.30 4,632.30 4,632.30 4,632.30O-1 2,905.20 3,024.00 3,655.50 3,655.50 3,655.50 3,655.50 3,655.50 3,655.50 3,655.50 3,655.50 3,655.50

O-33

5,167.80 5,415.30 5,687.10 5,862.60 6,151.50 6,395.40 6,535.50 6,726.00

O-23

4,538.70 4,632.30 4,779.90 5,028.60 5,220.90 5,364.30 5,364.30 5,364.30

O-13

3,655.50 3,903.30 4,047.90 4,195.20 4,340.10 4,538.70 4,538.70 4,538.70

W-5W-4 4,003.50 4,306.50 4,429.80 4,551.60 4,761.00 4,968.30 5,178.00 5,493.90 5,770.50 6,033.90 6,249.30W-3 3,655.80 3,808.20 3,964.50 4,015.80 4,179.60 4,501.80 4,837.20 4,995.00 5,177.70 5,366.10 5,704.50W-2 3,234.90 3,540.90 3,635.40 3,699.90 3,909.90 4,236.00 4,397.40 4,556.40 4,751.10 4,902.90 5,040.60W-1 2,839.80 3,145.20 3,227.40 3,401.10 3,606.60 3,909.30 4,050.60 4,247.70 4,442.40 4,595.40 4,735.80

E-94

4,836.90 4,946.40 5,084.70 5,246.70 5,411.10

E-8 3,959.40 4,134.30 4,242.90 4,372.80 4,513.80 4,767.60E-7 2,752.50 3,004.20 3,119.10 3,271.50 3,390.60 3,594.90 3,709.80 3,914.40 4,084.20 4,200.30 4,323.90E-6 2,380.80 2,619.60 2,735.10 2,847.60 2,964.90 3,228.60 3,331.50 3,530.40 3,591.30 3,635.70 3,687.30E-5 2,181.00 2,327.40 2,440.20 2,555.10 2,734.50 2,922.30 3,076.20 3,094.80 3,094.80 3,094.80 3,094.80E-4 1,999.50 2,101.80 2,215.80 2,328.00 2,427.30 2,427.30 2,427.30 2,427.30 2,427.30 2,427.30 2,427.30E-3 1,805.40 1,918.80 2,034.90 2,034.90 2,034.90 2,034.90 2,034.90 2,034.90 2,034.90 2,034.90 2,034.90E-2 1,716.90 1,716.90 1,716.90 1,716.90 1,716.90 1,716.90 1,716.90 1,716.90 1,716.90 1,716.90 1,716.90

E-15

1,531.50

Notes:

1. Basic pay for an O-7 to

O-10 is limited by Level II of the Executive Schedule

which is $15,125.10. Basic pay for O-6 and below is limited by Level V of the Executive Schedule 

which is $12,266.70.

2. While serving as Chairman, Joint Chief of Staff/Vice

Chairman, Joint Chief of Staff, Chief of Navy

Operations, Com

mandant of the Marine Corps, Army/Air Force

Chief of Staff, 

Commander of a unified or specified combatant command, basic pay is $21,147.70. (See note 1 above).

3. Applicable to

O-1 to

O-3 with at least 4 years and 1 day of active duty or more than 1460 points as a warrant and/or enlisted member. See Department of Defense Financial

Management Regulations for more detailed explanation on who is eligible for this special basic pay rate.

4. For the Master Chief Petty Officer of the Navy, Chief Master Sergeant of the AF, Sergeant Major of the Army or Marine Corps or Senior Enlisted Advisor of the JCS, basic pay is

$7,816.20. Combat Zone Tax Exclusion for O-1 and above is based on this basic pay rate plus Hostile Fire Pay/Imminent Danger Pay which is $225.00.

5. Applicable to E-1 with 4 months or more of active duty. Basic pay for an E-1 with less than 4 months of active duty is $1,416.30.

6. Basic pay rate for Acade

my Cadets/Midshipmen and ROTC 

members/applicants is $1,017.00.
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 APPROPRIATED COMPENSATION FUNDING

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B

A

SIC 

P

AY

—

EFF

E

CTIVE

J

ANU

A

R

Y 1, 201

4

Pay Grade Over 20 Over 22 Over 24 Over 26 Over28 Over 30 Over 32 Over 34 Over 36 Over 38 Over 40

O-101 16,072.20 16,150.50 16,486.80 17,071.50 17,071.50 17,925.30 17,925.30 18,821.10 18,821.10 19,762.50 19,762.50

O-91 14,056.80 14,259.90 14,552.10 15,062.40 15,062.40 15,816.00 15,816.00 16,606.80 16,606.80 17,436.90 17,436.90O-81 13,319.10 13,647.30 13,647.30 13,647.30 13,647.30 13,989.00 13,989.00 14,338.50 14,338.50 14,338.50 14,338.50O-71 12,043.80 12,043.80 12,043.80 12,105.60 12,105.60 12,347.70 12,347.70 12,347.70 12,347.70 12,347.70 12,347.70O-62

9,625.20 9,878.40 10,134.60 10,632.00 10,632.00 10,844.10 10,844.10 10,844.10 10,844.10 10,844.10 10,844.10

O-5 8,422.20 8,675.70 8,675.70 8,675.70 8,675.70 8,675.70 8,675.70 8,675.70 8,675.70 8,675.70 8,675.70O-4 7,356.60 7,356.60 7,356.60 7,356.60 7,356.60 7,356.60 7,356.60 7,356.60 7,356.60 7,356.60 7,356.60O-3 6,302.40 6,302.40 6,302.40 6,302.40 6,302.40 6,302.40 6,302.40 6,302.40 6,302.40 6,302.40 6,302.40

O-2 4,632.30 4,632.30 4,632.30 4,632.30 4,632.30 4,632.30 4,632.30 4,632.30 4,632.30 4,632.30 4,632.30O-1 3,655.50 3,655.50 3,655.50 3,655.50 3,655.50 3,655.50 3,655.50 3,655.50 3,655.50 3,655.50 3,655.50

O-33

6,726.00 6,726.00 6,726.00 6,726.00 6,726.00 6,726.00 6,726.00 6,726.00 6,726.00 6,726.00 6,726.00

O-23

5,364.30 5,364.30 5,364.30 5,364.30 5,364.30 5,364.30 5,364.30 5,364.30 5,364.30 5,364.30 5,364.30

O-13

4,538.70 4,538.70 4,538.70 4,538.70 4,538.70 4,538.70 4,538.70 4,538.70 4,538.70 4,538.70 4,538.70

W-5 7,118.40 7,479.60 7,748.40 8,046.30 8,046.30 8,448.90 8,448.90 8,871.00 8,871.00 9,315.00 9,315.00

W-4 6,459.30 6,768.00 7,021.80 7,311.00 7,311.00 7,457.10 7,457.10 7,457.10 7,457.10 7,457.10 7,457.10W-3 5,933.10 6,069.90 6,215.40 6,413.10 6,413.10 6,413.10 6,413.10 6,413.10 6,413.10 6,413.10 6,413.10W-2 5,205.30 5,313.60 5,399.70 5,399.70 5,399.70 5,399.70 5,399.70 5,399.70 5,399.70 5,399.70 5,399.70

W-1 4,906.80 4,906.80 4,906.80 4,906.80 4,906.80 4,906.80 4,906.80 4,906.80 4,906.80 4,906.80 4,906.80

E-94

5,673.60 5,895.60 6,129.30 6,486.90 6,486.90 6,810.90 6,810.90 7,151.70 7,151.70 7,509.60 7,509.60

E-8 4,896.30 5,115.30 5,236.80 5,535.90 5,535.90 5,647.20 5,647.20 5,647.20 5,647.20 5,647.20 5,647.20E-7 4,371.60 4,532.40 4,618.50 4,946.70 4,946.70 4,946.70 4,946.70 4,946.70 4,946.70 4,946.70 4,946.70E-6 3,687.30 3,687.30 3,687.30 3,687.30 3,687.30 3,687.30 3,687.30 3,687.30 3,687.30 3,687.30 3,687.30E-5 3,094.80 3,094.80 3,094.80 3,094.80 3,094.80 3,094.80 3,094.80 3,094.80 3,094.80 3,094.80 3,094.80E-4 2,427.30 2,427.30 2,427.30 2,427.30 2,427.30 2,427.30 2,427.30 2,427.30 2,427.30 2,427.30 2,427.30E-3 2,034.90 2,034.90 2,034.90 2,034.90 2,034.90 2,034.90 2,034.90 2,034.90 2,034.90 2,034.90 2,034.90E-2 1,716.90 1,716.90 1,716.90 1,716.90 1,716.90 1,716.90 1,716.90 1,716.90 1,716.90 1,716.90 1,716.90

Notes:

1. Basic pay for an O-7 to

O-10 is limited by Level II of the Executive Schedule

which is $15,125.10. Basic pay for O-6 and below is limited by Level V of the Executive Schedule 

which is $12,266.70.

2. While serving as Chairman, Joint Chief of Staff/Vice

Chairman, Joint Chief of Staff, Chief of Navy

Operations, Com

mandant of the Marine Corps, Army/Air Force

Chief of Staff, 

Commander of a unified or specified combatant command, basic pay is $21,147.70. (See note 1 above).

3. Applicable to

O-1 to

O-3 with at least 4 years and 1 day of active duty or more than 1460 points as a warrant and/or enlisted member. See Department of Defense Financial

Management Regulations for more detailed explanation on who is eligible for this special basic pay rate.

4. For the Master Chief Petty Officer of the Navy, Chief Master Sergeant of the AF, Sergeant Major of the Army or Marine Corps or Senior Enlisted Advisor of the JCS, basic pay is

$7,816.20. Combat Zone Tax Exclusion for O-1 and above is based on this basic pay rate plus Hostile Fire Pay/Imminent Danger Pay which is $225.00.

5. Applicable to E-1 with 4 months or more of active duty. Basic pay for an E-1 with less than 4 months of active duty is $1,416.30.6. Basic pay rate for Acade

my Cadets/Midshipmen and ROTC 

members/applicants is $1,017.00.
MILITARY COMPENSATION AND RETIREMENT MODERNIZATION COMMISSION

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PAGE 327

APPENDIX A: ACRONYM LIST

ACRONYM DEFINITION

A&A Aid and Attendance

AAFES Army and Air Force Exchange Service

ABC Alcohol Beverage Control

ACAP Army Career and Alumni Program

ACE American Council on Education

ADA Average Daily Attendance

ADFM Active-Duty Family Member

AFI Air Force Instruction

AFQT Armed Forces Qualifications Test

AFRC Armed Forces Recreation Center

AFRH Armed Forces Retirement Home

AFSVA Air Force Services Agency

AGR Active Guard and Reserve

AIFA Army and Air Force Exchange Service Imprest Fund Activity

AIP Assignment Incentive Pay

AOR Area of Responsibility

APF Appropriated Funds

AR Army Regulation

ARC American Red Cross

ASD Autism Spectrum Disorder

ASVAB Armed Services Vocational Aptitude Battery

ASYMCA Armed Services Young Men’s Christian Association

B&GCA Boys & Girls Clubs of America

BAH Basic Allowance for Housing

BAH II (RC/T) Basic Allowance for Housing II (Reserve Component/Transit)

BAH-DIFF Basic Allowance for Housing-Differential

BAQ Basic Allowance for Quarters (merged with VHA in 1998 to become 

BAH)

BAS Basic Allowance for Subsistence

BCA Budget Control Act of 2011

BEQ Bachelor Enlisted Quarters
MILITARY COMPENSATION AND RETIREMENT MODERNIZATION COMMISSION

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ACRONYM DEFINITION

BOQ Bachelor Officer Quarters

BRAC Base Realignment and Closure (now known as Large-Scale 

Rebasing) 

BX Base Exchange

CBO Congressional Budget Office

CCAF Community College of the Air Force

CDC Child Development Center

CDH Child Development Home

CDP Child Development Program

CDS Child Development Services

CEB Cooperative Efforts Board

CEU Continuing Education Unit

CFS Command Financial Specialist

CGDF Coast Guard Dining Facility

CGES Coast Guard Exchange Service

CGFAP Coast Guard Family Advocacy Program

CGMA Coast Guard Mutual Assistance

CGX Coast Guard Exchange

CHAMPUS Civilian Health and Medical Program of the Uniformed Services

CHAMPVA Civilian Health and Medical Program of the Department of Veterans 

Affairs

CHCB Continued Health Care Benefit

CNIC Commander, Navy Installations Command

COBRA Consolidated Omnibus Budget Reconciliation Act

COLA Cost of Living Adjustment

COLA Cost of Living Allowance

COMDTINST Commandant Instruction (U.S. Coast Guard)

CONUS Continental United States

CPI Consumer Price Index

CPI-W Consumer Price Index for Urban Wage Earners and Clerical 

Workers

CRDP Concurrent Retirement and Disability Pay

CRI CHAMPUS Reform Initiative

CRS Career Readiness Standards
APPENDIX A

ACRONYM LIST

PAGE 329

ACRONYM DEFINITION

CRSC Combat-Related Special Compensation

CSB Career Status Bonus

CSC Community Services Command (U.S. Coast Guard)

CSS Consolidated School Support

CTUS Customs Territories of the United States

CWSD Children with Severe Disabilities

CWVV Children of Women Vietnam Veterans

CYSS Child, Youth, and School Services

DANTES Defense Activities for Non-Traditional Education Support

DDESS Domestic Dependents Elementary and Secondary Schools

DEA Dependents Educational Assistance

DeCA Defense Commissary Agency

DEERS Defense Enrollment Eligibility Reporting System

DFAS Defense Finance and Accounting Service

DHA Defense Health Agency

DHP Defense Health Program

DHS U.S. Department of Homeland Security

DIC Dependency and Indemnity Compensation

DoD Department of Defense

DoDD DoD Directive

DoDDS DoD Dependents Schools

DoDDS-E DoD Dependents Schools – Europe

DoDDS-P DoD Dependents Schools – Pacific

DoDEA DoD Education Activity

DoDI DoD Instruction

DOJ U.S. Department of Justice

DOL U.S. Department of Labor

DOLEW Department of Labor Employment Workshop

DOX-T Direct Operation Exchange-Tactical

DSE Deployable Support Exchange

DTF Dental Treatment Facility

DTM Directive-Type Memorandum

DTS Defense Transportation System
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ACRONYM DEFINITION

DVOP Disabled Veterans’ Outreach Program

DVQ Distinguished Visitor Quarters

DWCF DeCA Working Capital Fund

EAFE Europe, Australasia, Far East

EBV Entrepreneurial Boot Camp for Veterans with Disabilities

ECHO Extended Care Health Option

ECI Employment Cost Index

ED U.S. Department of Education

EFA Emergency Family Assistance

EFAC Emergency Family Assistance Center

EFC Expected Family Contribution

EFMP Exceptional Family Member Program

EIFA Exchange Imprest Fund Activity

EIP Employment Initiative Program

EITC earned income tax credit

EMIC Emergency Maternal and Infant Care Program 

EML Environment and Morale Leave

ENL BAS Enlisted Basic Allowance for Subsistence

EPP Educational Partnership Program

ESEA Elementary and Secondary Education Act (of 1965)

ESGR Employer Support of the Guard and Reserve

FAC Family Assistance Center (National Guard)

FAP Family Advocacy Program

FCC Family Child Care

FCCH Family Child Care Home

FDA Food and Drug Administration

FEHBP Federal Employees Health Benefits Plan

FHIF Family Housing Improvement Fund

FICA Federal Insurance Contributions Act

FMP Foreign Medical Program

FMR Financial Management Regulation

FNR Fleet Naval Reserve

FRS Family Readiness System
APPENDIX A

ACRONYM LIST

PAGE 331

ACRONYM DEFINITION

FRTIB Federal Retirement Thrift Investment Board

FSGLI Family Servicemembers’ Group Life Insurance

FSSA Family Subsistence Supplemental Allowance

FTI Food Transformation Initiative

FY Fiscal Year

GAO Government Accountability Office

GDP Gross Domestic Product

H2H Hero 2 Hired

HAP Homeowner Assistance Program

HDP Hardship Duty Pay

HFVVWF Homeless Female Veterans and Homeless Veterans with Families

HI Health Insurance

High-36 also known as High-3

HMO Health Maintenance Organization

HOH Hiring our Heroes

HQ Headquarters

HQDA Headquarters, Department of the Army

HRMA Housing Requirements and Market Analysis

HSWL Health, Safety, and Work-Life

HUD U.S. Department of Housing and Urban Development

HVRP Homeless Veterans’ Reintegration Project

I&R Information and Referral

IDEA Individuals with Disabilities Act

IDT Inactive-Duty Training

IMCOM Installation Management Command

IR Information and Referral

IRC Internal Revenue Code

IRR Individual Ready Reserve

ITP Individual Transition Plan

ITT Information, Tickets, and Tours

IU Individual Unemployability

JFSAP Joint Family Support Assistance Program

JFTR Joint Federal Travel Regulation
MILITARY COMPENSATION AND RETIREMENT MODERNIZATION COMMISSION

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ACRONYM DEFINITION

JSF Joint Service Facility

JST Joint Services Transcript

JTR Joint Travel Regulation

JVSG Jobs for Veterans State Grants

LEA Local Educational Agency

LOT Learning Opportunity Threshold

LRP Loan Repayment Program

LVER Local Veterans’ Employment Representative

MAB Medical Affairs Branch (USPHS)

MCCA Military Child Care Act

MCCS Marine Corps Community Services

MCO Marine Corps Order

MCRMC Military Compensation and Retirement Modernization Commission

MCSS Military Clothing Sales Store

MCX Marine Corps Exchange

MF Marine and Family Programs Division (USMC)

MFE Mobile Field Exchange

MFLC Military and Family Life Consultant (Program)

MFR Military Retirement Fund

MFS Marine and Family Services Program Division

MGIB Montgomery GI Bill

MHA Military Housing Area

MHS Military Health System

MHO Military Housing Office

MHPI Military Housing Privatization Initiative

MHS Military Health System

MIA Missing in Action

MILCON Military Construction

MOC Military Operational Code

MOS Military OneSource

MOU Memorandum of Understanding

MR Semper Fit and Exchange Services Division (USMC)

MRF Military Retirement Fund
APPENDIX A

ACRONYM LIST

PAGE 333

ACRONYM DEFINITION

MSEP Military Spouse Employment Partnership

MSRC Military Service Recreation Center

MTF Military Treatment Facility

MWR Morale, Welfare, and Recreation

MWR Morale, Well-Being, and Recreation (U.S. Coast Guard)

NAF Non-Appropriated Funds

NAFI Non-Appropriated Fund Instrumentalities

NCA National Cemetery Administration

NCESGR National Committee for Employer Support of the Guard and Reserve

NCP Normal Cost Percentage

NCTRF Navy Clothing and Textile Research Facility

NDAA National Defense Authorization Act

NDRI National Defense Research Institute

NDSL National Direct Student Loan

NDSP Non-DoD Schools Program

NEO Noncombatant Evacuation Operations

NEX Navy Exchange

NEXCOM Navy Exchange Service Command

NOAA National Oceanic and Atmospheric Administration

NPSP New Parent Support Program

NSLI National Service Life Insurance

NSSO Navy Ship’s Store Office

NVTI National Veterans’ Training Institute

O&M Operation and Maintenance

OASDI Old-Age, Survivor and Disability Insurance

OASVET Office of the Assistant Secretary for Veterans’ Employment and 

Training

OCO Overseas Contingency Operations

OCONUS Outside the Continental United States

OCS Officer Candidate School

OFF BAS Officer Basic Allowance for Subsistence

OHA Overseas Housing Allowance

OMB Office of Management and Budget

OPM Office of Personnel Management
MILITARY COMPENSATION AND RETIREMENT MODERNIZATION COMMISSION

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ACRONYM DEFINITION

OPNAVINST Office of the Chief of Naval Operations Instruction

OSC Office of Special Counsel

OSHA Occupational Safety and Health Administration

OUSD(P&R) Office of the Under Secretary of Defense for Personnel and 

Readiness

OVBD Office of Veterans Business Development (Small Business 

Administration)

P&R Personnel and Readiness

P&T Pharmacy and Therapeutics

PADD Person Authorized to Direct Disposition

PAL Privatized Army Lodging

PB15 President’s Budget for FY 2015

PBS Program Baseline Standards

PCM Primary Care Manager

PCS Permanent Change of Station

PDP Prescription Drug Plans

PDUSD(P&R) Principal Deputy Under Secretary of Defense for Personnel and 

Readiness

PFM Personal Financial Management

PFMP Personal Financial Management Program

PHS Public Health Service

PLUS Parent Loans for Undergraduate Students

PNOK Primary Next of Kin

POS Point-of-Service

POW Prisoner of War

PPO Preferred Provider Organization

PX Post Exchange

QoL Quality of Life

RC Reserve Component

RCSBP Reserve Component Survivor Benefit Program

REAP Reserve Education Assistance Program

REDUX REDUX Retirement System

RMC Regular Military Compensation

ROTC Reserve Officer Training Corps
APPENDIX A

ACRONYM LIST

PAGE 335

ACRONYM DEFINITION

RPP Rental Partnership Program

RSFPP Retired Servicemen’s Family Protection Plan

S&P 500 Standard and Poor’s 500 (stock market index)

SAC School-Age Care

SAC Special Arrangement Contracts

SAH Specially Adapted Housing

SB Spina Bifida

SBA Small Business Administration

SBP Survivor Benefit Plan

SBP-DIC Survivor Benefit Plan-Dependency and Indemnity Compensation

SCAADL Special Compensation for Assistance with Activities of Daily Living

SCRA Servicemembers Civil Relief Act

SDT Second Destination Transportation

S-DVI Service-Disabled Veteran’s Life Insurance

SECO Spouse Education and Career Opportunities

SELRES Selected Reserve

SES Senior Executive Service

SGLI Servicemembers’ Group Life Insurance

SHAD Shipboard Hazard and Defense

SIK Subsistence–in-Kind

SNAP Supplemental Nutrition Assistance Program

SOC Servicemembers Opportunity Colleges

SOFA Status of Forces Agreement

Space-A Space Available Travel

SSIA Special Survivor Indemnity Allowance

SY School Year

TA Tuition Assistance

TAD Temporary Additional Duty

TAMP Transition Assistance Management Program

TAP Transition Assistance Program

TC Transitional Compensation

TDP TRICARE Dental Plan

TDY Temporary Duty
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ACRONYM DEFINITION

TFE Tactical Field Exchanges

TFF Total Force Fitness

TFI Total Family Income

TFL TRICARE For Life

TLF Temporary Lodging Facility

TPO TRICARE Prime Overseas

TPR TRICARE Prime Remote

TPRO TRICARE Prime Remote Overseas

Transition GPS Transition Goals, Plans, and Success 

TRR TRICARE Retired Reserve

TRS TRICARE Reserve Select

TSGLI Servicemembers’ Group Life Insurance Traumatic Injury Protection

TSP Thrift Savings Plan

TSP L Thrift Savings Plan Lifecycle Funds

TTT Troops to Teachers

TUHP Transient Unaccompanied Personnel Housing

TYA TRICARE Young Adult

U.S.C. United States Code

UCMJ Uniform Code of Military Justice

UCX Unemployment Compensation for Ex-Servicemembers

UH Unaccompanied Housing

UPH Unaccompanied Personnel Housing

USAF U.S. Air Force

USCG U.S. Coast Guard

USD(P&R) Under Secretary of Defense for Personnel and Readiness

USDA U.S. Department of Agriculture

USERRA Uniformed Services Employment and Reemployment Rights Act of 

1994

USFHP US Family Health Plan (formerly Uniformed Services Family Health 

Plan)

USGLI United States Government Life Insurance

USO United Service Organizations

USPHS U.S. Public Health Service

USTF Uniformed Services Treatment Facility
APPENDIX A

ACRONYM LIST

PAGE 337

ACRONYM DEFINITION

VA U.S. Department of Veterans Affairs

VADIP Veteran Affairs Dental Insurance Program

VANF Veterans Affairs National Formulary

VASRD Veterans Affairs Schedule of Rating Disabilities

VAT Value Added Tax

VBA Veterans Benefits Administration

VCS Veteran Canteen Service

VEAP Veterans Educational Assistance Program

VEITF Veterans Employment Initiative Task Force

VETS Veterans’ Employment and Training Service

VGLI Veterans’ Group Life Insurance

VHA Variable Housing Allowance (merged with BAQ in 1998 to become 

BAH)

VHA Veterans Health Administration

VI&I Veterans Insurance and Indemnities

VISN Veterans Integrated Service Network

VMLI Veterans’ Mortgage Life Insurance

VOQ Visiting Officer Quarters

VOW Veterans Opportunity to Work

VR&E Vocational Rehabilitation and Employment

VRI Veterans’ Reopened Insurance

VSLI Veterans’ Special Life Insurance

VWIP Veterans Workforce Investments Program

V-WISE Women Veterans Igniting the Spirit of Entrepreneurship

WES Warfighter Express Services

WFS Warfighter Family Services

WIA Workforce Investment Act

WIC Women, Infants, and Children

WPA Wagner-Peyser Act

YMCA Young Men’s Christian Association

TOS Years of Service

YP Youth Program

YRRP Yellow Ribbon Reintegration Program 
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PAGE 339

APPENDIX B:

COMMISSION OUTREACH

The Commission has conducted extensive outreach efforts with diverse stakeholders to 

gain their input and a better understanding of perceptions, concerns, and priorities 

regarding military pay and compensation programs. In particular, the Commission has 

met with numerous groups of Service members, veterans, retirees, and their family 

members to discuss the pays and benefits that support the All-Volunteer Force. In 

addition, the Commission has conducted outreach efforts through public hearings, 

town hall meetings, and conversations with representatives from Government 

Agencies, uniformed services, Military and Veterans Service Organizations, research 

institutions, and other commercial and not-for-profit organizations, as listed below. 

These interactions have helped create a foundation of information from which the 

Commission will develop recommendations to modernize military pay and 

compensation programs to

 ensure the long-term viability of the All-Volunteer Force by sustaining the 

required human resources of that force during all levels of conflict and 

economic conditions; 

 enable the quality of life for members of the Armed Forces and the other 

uniformed services and their families in a manner that fosters successful 

recruitment, retention, and careers for members of the Armed Forces and 

the other uniformed services; and

 modernize and achieve fiscal sustainability for the compensation and 

retirement systems for the Armed Forces and the other uniformed services 

for the 21st century.1

PUBLIC HEARINGS AND TOWN HALL MEETINGS 

Date Location

November 4, 2013 Public Hearing - Fort Belvoir, VA

November 5, 2013 Public Hearing - Arlington, VA

November 13, 2013 Public Hearing - Arlington, VA

December 2, 2013 Town Hall Meeting - Norfolk, VA

December 2-3, 2013 Public Hearing - Norfolk, VA

December 11, 2013 Town Hall Meeting - Seattle, WA

December 11-12, 2013 Public Hearing - Seattle, WA

January 6, 2014 Town Hall Meeting - San Antonio, TX

January 6-7, 2014 Public Hearing - San Antonio, TX

March 25, 2014 Town Hall Meeting - Carlsbad, CA

March 26, 2014 Public Hearings - San Diego, CA

May 22, 2014 Town Hall - Tampa, FL

 

1 National Defense Authorization Act for FY 2013, Pub. L. No. 112-239, 126 Stat. 1632, 1787 (2013) (as amended by 

National Defense Authorization Act for FY 2014, Pub. L. No. 113-66, Sec. 1095(b), 127 Stat. 672, 879 (2013)).
MILITARY COMPENSATION AND RETIREMENT MODERNIZATION COMMISSION

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MILITARY INSTALLATIONS VISITED

 Fort Belvoir, VA

 Fort Indiantown Gap National Guard Training Center, PA

 Joint Base Lewis-McChord, Seattle, WA

 Joint Base San Antonio-Fort Sam Houston, TX

 Landstuhl Regional Medical Center, Germany

 Marine Corps Base Camp Pendleton, CA

 Marine Corps Base Quantico, VA

 MacDill Air Force Base, Tampa, FL

 Military Entrance Processing Station, Brooklyn, NY

 Naval Air Station, Pensacola, FL

 Naval Base Point Loma, San Diego, CA

 Naval Recruiting Station

- Chesapeake, VA

- Hampton Roads, VA

- San Diego, CA

- Seattle, WA

 Naval Station Norfolk, VA 

 Naval Support Activity Mid-South, Millington, TN

 U.S. Army Garrison Stuttgart (Patch Barracks), Germany

 United States Military Academy, West Point, NY

 United States Naval Academy, Annapolis, MD 

UNITED STATES GOVERNMENT ENGAGEMENT

Executive Agencies and Offices

 Executive Office of the President

- Office of Management and Budget

 Department of Defense

- Office of the Secretary of Defense

- Office of the Joint Chiefs of Staff

- U.S. Army

- U.S. Marine Corps

- U.S. Navy

- U.S. Air Force

- National Guard Bureau 

 Department of Labor

 Department of Health and Human Services

- Public Health Service

 Department of Veterans Affairs

- National Cemetery Administration

- Veterans Benefits Administration

- Veterans Health Administration

 U.S. Coast Guard

 National Oceanic and Atmospheric Administration

 Office of Personnel Management

 Federal Retirement Thrift Investment Board

 Quadrennial Defense Review Independent Panel
APPENDIX B

COMMISSION OUTREACH

PAGE 341

Legislative Bodies and Offices

 U.S. Senate

 U.S. House of Representatives

 Congressional Budget Office

 U.S. Government Accountability Office

FOREIGN MILITARIES

 Australian Defence Force

 Bundeswehr Zentraler Sanitätsdienst (Joint Medical Service), 

Federal Republic of Germany

 Joint Medical Command, United Kingdom

 United Kingdom Ministry of Defence 

ORGANIZATIONAL ENGAGEMENT

 Air Force Aid Society (AFAS)

 Air Force Association (AFA)

 Air Force Sergeants Association (AFSA) 

 American Academy of Actuaries

 American Enterprise Institute (AEI)

 The American Legion

 American Logistics Association (ALA)

 Armed Forces Marketing Council (AFMC)

 Army Emergency Relief (AER)

 Association of the United States Army (AUSA) 

 Association of the United States Navy (AUSN)

 Blinded Veterans Association (BVA)

 Blue Cross and Blue Shield of Texas

 Blue Star Families

 Business Executives for National Security (BENS)

 Center for a New American Security (CNAS)

 Center for Naval Analysis (CNA)

 Center for Strategic and Budgetary Assessments (CSBA)

 Center for Strategic and International Studies (CSIS)

 Chief Warrant and Warrant Officers Association, United States Coast Guard 

(CWOAUSCG)

 Cigna-HealthSpring

 ClearPoint Credit Counseling Solutions (CCCS)

 The Coalition to Save our Military Shopping Benefits

 Commissioned Officers Association (COA) of the United States Public Health 

Service

 Consumer Financial Protection Bureau (CFPB)

 Disabled American Veterans (DAV)

 Doorways to Dreams (D2D)

 Employee Benefits Research Institute (EBRI)

 Enlisted Association of the National Guard of the United States (EANGUS) 

 EverFi

 Fairfax County Retirement Administration Office

 FINRA Investor Education Foundation

 Fisher House Foundation
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 Fleet Reserve Association (FRA) 

 George Mason University (GMU)

 George Washington University (GWU)

 Gold Star Wives of America (GSW)

 Humana Government Business

 Huron Healthcare

 Institute for Defense Analyses (IDA)

 Iraq and Afghanistan Veterans of America 

 KeepYourPromise Alliance 

 Lowe Campbell Ewald

 Macho Spouse

 Marine Corps League (MCL) 

 Marine Corps Reserve Association (MCRA)

 Military Chaplains Association-United States of America (MCA-USA)

 Military Child Education Coalition (MCEC)

 Military Family Advisory Network (MFAN) 

 Military Officers Association of America (MOAA) 

 Military Order of the Purple Heart

 The Military Produce Group/The Vectre Corporation

 Military Saves 

 Military Spouse Magazine

 Military.com

 MITRE

 National Academy of Public Administration

 National Association for Uniformed Services (NAUS)

 National Association of Counties (NACo)

 National Association of Federally Impacted Schools (NAFIS)

 National Guard Association of the United States (NGAUS)

 National Military Family Association (NMFA)

 National Veterans Transition Services, Inc.

 Naval Enlisted Reserve Association (NERA)

 Navy-Marine Corps Relief Society (NMCRS)

 Non-Commissioned Officers Association (NCOA) 

 Pension Benefit Guaranty Corporation (PBGC)

 Prudential Insurance

 Procter & Gamble (P&G)

 RAND

 Red Sox Foundation and Massachusetts General Hospital Home Base Program 

 Reserve Officers Association (ROA)

 The Retired Enlisted Association (TREA)

 Scott & White Health Plan (SWHP)

 Sentara Healthcare

 Society for Human Resources Management (SHRM)

 Stimson Center

 Student Veterans of America (SVA)

 TRICARE for Kids Initiative

 Troops to Engineers, San Diego State University

 United Services Automobile Association (USAA)

 United States Army Warrant Officers Association (USAWOA)

 United States Coast Guard Chief Petty Officers Association (USCG CPOA)

 University of San Diego 
APPENDIX B

COMMISSION OUTREACH

PAGE 343

 US Family Health Plan Alliance

 USMC Life 

 Veterans of Foreign Wars (VFW)

 Wounded Warrior Project (WWP)
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Military Compensation And Retirement Modernization Commission

www.mcrmc.gov

P.O. Box 13170

Arlington, Virginia 22209

response@mcrmc.gov
Military Compensation And Retirement Modernization Commission

www.mcrmc.gov