240
monthly annuity payable to the beneficiary shall be
the amount equal to a percentage of the retired pay
of the person who elected to provide the annuity after
the reduction in such pay in accordance with section
1452(c) of this title that—
‘‘(A) is less than 55 percent; and
‘‘(B) is determined under subsection (f).
‘‘(3) COMPUTATION OF RESERVE-COMPONENT AN-
NUITY WHEN PARTICIPANT DIES BEFORE AGE 60.—
For the purposes of paragraph (2), a person—
‘‘(A) who provides an annuity that is deter-
mined in accordance with that paragraph;
‘‘(B) who dies before becoming 60 years of
age; and
‘‘(C) who at the time of death is otherwise
entitled to retired pay,
shall be considered to have been entitled to retired pay
at the time of death. The retired pay of such person
for the purposes of such paragraph shall be computed
on the basis of the rates of basic pay in effect on the
date on which the annuity provided by such person
is to become effective in accordance with the designa-
tion of such person under section 1448(e) of this title.
241
‘‘(c) ANNUITIES FOR SURVIVORS OF CERTAIN PER-
SONS DYING DURING A PERIOD OF SPECIAL ELIGIBILITY
FOR SBP.—
‘‘(1) IN GENERAL.—In the case of an annuity
provided under section 1448(d) or 1448(f) of this title,
the amount of the annuity shall be determined as fol-
lows:
‘‘(A) BENEFICIARY
UNDER
YEARS
OF
AGE.—If the person receiving the annuity is
under 62 years of age or is a dependent child
when the member or former member dies, the
monthly annuity shall be the amount equal to 55
percent of the retired pay to which the member
or former member would have been entitled if the
member or former member had been entitled to
that pay based upon his years of active service
when he died.
‘‘(B) BENEFICIARY 62 YEARS OF AGE OR
OLDER.—
‘‘(i) GENERAL RULE.—If the person re-
ceiving the annuity (other than a dependent
child) is 62 years of age or older when the
member or former member dies, the monthly
annuity shall be the amount equal to 35
percent of the retired pay to which the
242
member or former member would have been
entitled if the member or former member
had been entitled to that pay based upon
his years of active service when he died.
‘‘(ii) RULE IF BENEFICIARY ELIGIBLE
FOR
SOCIAL
SECURITY
OFFSET
COMPUTA-
TION.—If the beneficiary is eligible to have
the annuity computed under subsection (e)
and if, at the time the beneficiary becomes
entitled to the annuity, computation of the
annuity under that subsection is more fa-
vorable to the beneficiary than computation
under clause (i), the annuity shall be com-
puted under that subsection rather than
under clause (i).
‘‘(2) DIC OFFSET.—An annuity computed under
paragraph (1) that is paid to a surviving spouse shall
be reduced by the amount of dependency and indem-
nity compensation to which the surviving spouse is
entitled under section 1311(a) of title 38. Any such
reduction shall be effective on the date of the com-
mencement of the period of payment of such com-
pensation under title 38.
‘‘(3) OFFICER WITH ENLISTED SERVICE WHO IS
NOT YET ELIGIBLE TO RETIRE AS AN OFFICER.—In
243
the case of an annuity provided by reason of the serv-
ice of a member described in section 1448(d)(1)(B) or
1448(d)(1)(C) of this title who first became a member
of a uniformed service before September 8, 1980, the
retired pay to which the member would have been en-
titled when he died shall be determined for purposes
of paragraph (1) based upon the rate of basic pay in
effect at the time of death for the grade in which the
member was serving at the time of death, unless (as
determined by the Secretary concerned) the member
would have been entitled to be retired in a higher
grade.
‘‘(4) RATE OF PAY TO BE USED IN COMPUTING
ANNUITY.—In the case of an annuity paid under sec-
tion 1448(f) of this title by reason of the service of a
person who first became a member of a uniformed
service before September 8, 1980, the retired pay of
the person providing the annuity shall for the pur-
poses of paragraph (1) be computed on the basis of the
rates of basic pay in effect on the effective date of the
annuity.
‘‘(d) REDUCTION OF ANNUITIES AT AGE 62.—
‘‘(1) REDUCTION REQUIRED.—The annuity of a
person whose annuity is computed under subpara-
graph (A) of subsection (a)(1), (a)(2), or (c)(1) shall
244
be reduced on the first day of the month after the
month in which the person becomes 62 years of age.
‘‘(2) AMOUNT OF ANNUITY AS REDUCED.—
‘‘(A) 35 PERCENT ANNUITY.—Except as pro-
vided in subparagraph (B), the reduced amount
of the annuity shall be the amount of the annu-
ity that the person would be receiving on that
date if the annuity had initially been computed
under subparagraph (B) of that subsection.
‘‘(B) 
SAVINGS
PROVISION
FOR
BENE-
FICIARIES ELIGIBLE FOR SOCIAL SECURITY OFF-
SET COMPUTATION.—In the case of a person eli-
gible to have an annuity computed under sub-
section (e) and for whom, at the time the person
becomes 62 years of age, the annuity computed
with a reduction under subsection (e)(3) is more
favorable than the annuity with a reduction de-
scribed in subparagraph (A), the reduction in
the annuity shall be computed in the same man-
ner as a reduction under subsection (e)(3).
‘‘(e) SAVINGS
PROVISION
FOR
CERTAIN
BENE-
FICIARIES.—
‘‘(1) PERSONS
COVERED.—The following bene-
ficiaries under the Plan are eligible to have an annu-
ity under the Plan computed under this subsection:
245
‘‘(A) A beneficiary receiving an annuity
under the Plan on October 1, 1985, as the sur-
viving spouse or former spouse of the person pro-
viding the annuity.
‘‘(B) A spouse or former spouse beneficiary
of a person who on October 1, 1985—
‘‘(i) was a participant in the Plan;
‘‘(ii) was entitled to retired pay or was
qualified for that pay except that he had
not applied for and been granted that pay;
or
‘‘(iii) would have been eligible for re-
serve-component retired pay but for the fact
that he was under 60 years of age.
‘‘(2) AMOUNT
OF
ANNUITY.—Subject to para-
graph (3), an annuity computed under this subsection
is determined as follows:
‘‘(A) STANDARD ANNUITY.—In the case of
the beneficiary of a standard annuity, the annu-
ity shall be the amount equal to 55 percent of the
base amount.
‘‘(B) RESERVE
COMPONENT
ANNUITY.—In
the case of the beneficiary of a reserve-component
annuity, the annuity shall be the percentage of
the base amount that—
246
‘‘(i) is less than 55 percent; and
‘‘(ii) is determined under subsection
(f).
‘‘(C) BENEFICIARIES
OF
PERSONS
DYING
DURING A PERIOD OF SPECIAL ELIGIBILITY FOR
SBP.—In the case of the beneficiary of an annu-
ity under section 1448(d) or 1448(f) of this title,
the annuity shall be the amount equal to 55 per-
cent of the retired pay of the person providing
the annuity (as that pay is determined under
subsection (c)).
‘‘(3) SOCIAL
SECURITY
OFFSET.—An annuity
computed under this subsection shall be reduced by
the lesser of the following:
‘‘(A) SOCIAL SECURITY COMPUTATION.—The
amount of the survivor benefit, if any, to which
the surviving spouse (or the former spouse, in the
case of a former spouse beneficiary who became
a former spouse under a divorce that became
final after November 29, 1989) would be entitled
under title II of the Social Security Act (42
U.S.C. 401 et seq.) based solely upon service by
the person concerned as described in section
210(l)(1) of such Act (42 U.S.C. 410(l)(1)) and
247
calculated assuming that the person concerned
lives to age 65.
‘‘(B) MAXIMUM AMOUNT OF REDUCTION.—
40 percent of the amount of the monthly annuity
as determined under paragraph (2).
‘‘(4) SPECIAL RULES FOR SOCIAL SECURITY OFF-
SET COMPUTATION.—
‘‘(A) TREATMENT OF DEDUCTIONS MADE ON
ACCOUNT OF WORK.—For the purpose of para-
graph (3), a surviving spouse (or a former
spouse, in the case of a person who becomes a
former spouse under a divorce that becomes final
after November 29, 1989) shall not be considered
as entitled to a benefit under title II of the So-
cial Security Act (42 U.S.C. 401 et seq.) to the
extent that such benefit has been offset by deduc-
tions under section 203 of such Act (42 U.S.C.
403) on account of work.
‘‘(B) TREATMENT OF CERTAIN PERIODS FOR
WHICH SOCIAL SECURITY REFUNDS ARE MADE.—
In the computation of any reduction made under
paragraph (3), there shall be excluded any pe-
riod of service described in section 210(l)(1) of
the Social Security Act (42 U.S.C. 410(l)(1))—
248
‘‘(i) which was performed after Decem-
ber 1, 1980; and
‘‘(ii) which involved periods of service
of less than 30 continuous days for which
the person concerned is entitled to receive a
refund under section 6413(c) of the Internal
Revenue Code of 1986 of the social security
tax which the person had paid.
‘‘(f) DETERMINATION OF PERCENTAGES APPLICABLE
TO COMPUTATION OF RESERVE-COMPONENT ANNUITIES.—
The percentage to be applied in determining the amount
of an annuity computed under subsection (a)(2), (b)(2), or
(e)(2)(B) shall be determined under regulations prescribed
by the Secretary of Defense. Such regulations shall be pre-
scribed taking into consideration the following:
‘‘(1) The age of the person electing to provide the
annuity at the time of such election.
‘‘(2) The difference in age between such person
and the beneficiary of the annuity.
‘‘(3) Whether such person provided for the annu-
ity to become effective (in the event he died before be-
coming 60 years of age) on the day after his death
or on the 60th anniversary of his birth.
‘‘(4) Appropriate group annuity tables.
249
‘‘(5) Such other factors as the Secretary consid-
ers relevant.
‘‘(g) ADJUSTMENTS TO ANNUITIES.—
‘‘(1) PERIODIC ADJUSTMENTS FOR COST-OF-LIV-
ING.—
‘‘(A) INCREASES IN ANNUITIES WHEN RE-
TIRED PAY INCREASED.—Whenever retired pay is
increased under section 1401a of this title (or
any other provision of law), each annuity that
is payable under the Plan shall be increased at
the same time.
‘‘(B) PERCENTAGE OF INCREASE.—The in-
crease shall, in the case of any annuity, be by
the same percent as the percent by which the re-
tired pay of the person providing the annuity
would have been increased at such time if the
person were alive (and otherwise entitled to such
pay).
‘‘(C) CERTAIN
REDUCTIONS
TO
BE
DIS-
REGARDED.—The amount of the increase shall be
based on the monthly annuity payable before
any reduction under section 1450(c) of this title
or under subsection (c)(2).
‘‘(2) ROUNDING DOWN.—The monthly amount of
an annuity payable under this subchapter, if not a
250
multiple of $1, shall be rounded to the next lower
multiple of $1.
‘‘(h) ADJUSTMENTS TO BASE AMOUNT.—
‘‘(1) PERIODIC ADJUSTMENTS FOR COST-OF-LIV-
ING.—
‘‘(A) INCREASES
IN
BASE
AMOUNT
WHEN
RETIRED
PAY
INCREASED.—Whenever retired
pay is increased under section 1401a of this title
(or any other provision of law), the base amount
applicable to each participant in the Plan shall
be increased at the same time.
‘‘(B) PERCENTAGE OF INCREASE.—The in-
crease shall be by the same percent as the percent
by which the retired pay of the participant is so
increased.
‘‘(2) RECOMPUTATION AT AGE 62.—When the re-
tired pay of a person who first became a member of
a uniformed service on or after August 1, 1986, and
who is a participant in the Plan is recomputed under
section 1410 of this title upon the person’s becoming
62 years of age, the base amount applicable to that
person shall be recomputed (effective on the effective
date of the recomputation of such retired pay under
section 1410 of this title) so as to be the amount equal
to the amount of the base amount that would be in
253
native reduction amounts is more favorable
to that person.
‘‘(iii) NEW ENTRANTS AFTER ENACT-
MENT OF FLAT-RATE REDUCTION.—In the
case of a person who first becomes a member
of a uniformed service on or after March 1,
1990, and who is entitled to retired pay
under a provision of law other than chapter
61 or chapter 1223 of this title, the reduc-
tion shall be in an amount equal to 61⁄2
percent of the base amount.
‘‘(iv) 
ALTERNATIVE
REDUCTION
AMOUNTS.—For purposes of clauses (i) and
(ii), the alternative reduction amounts are
the following:
‘‘(I) FLAT-RATE REDUCTION.—An
amount equal to 61⁄2 percent of the
base amount.
‘‘(II) AMOUNT UNDER PRE-FLAT-
RATE REDUCTION.—An amount equal
to 21⁄2 percent of the first $421 (as ad-
justed under paragraph (4)) of the base
amount plus 10 percent of the remain-
der of the base amount.
254
‘‘(B) RESERVE-COMPONENT
ANNUITY.—If
the annuity coverage being provided is a reserve-
component annuity, the reduction shall be in
whichever of the following amounts is more fa-
vorable to that person:
‘‘(i) 
FLAT-RATE
REDUCTION.—An
amount equal to 61⁄2 percent of the base
amount plus an amount determined in ac-
cordance with regulations prescribed by the
Secretary of Defense as a premium for the
additional coverage provided through re-
serve-component annuity coverage under the
Plan.
‘‘(ii) AMOUNT UNDER PRE-FLAT-RATE
REDUCTION.—An amount equal to 21⁄2 per-
cent of the first $421 (as adjusted under
paragraph (4)) of the base amount plus 10
percent of the remainder of the base amount
plus an amount determined in accordance
with regulations prescribed by the Secretary
of Defense as a premium for the additional
coverage provided through reserve-compo-
nent annuity coverage under the Plan.
‘‘(2) ADDITIONAL REDUCTION FOR CHILD COV-
ERAGE.—If there is a dependent child as well as a
255
spouse or former spouse, the amount prescribed under
paragraph (1) shall be increased by an amount pre-
scribed under regulations of the Secretary of Defense.
‘‘(3) NO REDUCTION WHEN NO BENEFICIARY.—
The reduction in retired pay prescribed by paragraph
(1) shall not be applicable during any month in
which there is no eligible spouse or former spouse ben-
eficiary.
‘‘(4) PERIODIC ADJUSTMENTS.—
‘‘(A) ADJUSTMENTS
FOR
INCREASES
IN
RATES OF BASIC PAY.—Whenever there is an in-
crease in the rates of basic pay of members of the
uniformed services effective after January 1,
1996, the amounts under paragraph (1) with re-
spect to which the percentage factor of 21⁄2 is ap-
plied shall be increased by the overall percentage
of such increase in the rates of basic pay. The in-
crease under the preceding sentence shall apply
only with respect to persons whose retired pay is
computed based on the rates of basic pay in ef-
fect on or after the date of such increase in rates
of basic pay.
‘‘(B) ADJUSTMENTS
FOR
RETIRED
PAY
COLAS.—In addition to the increase under sub-
paragraph (A), the amounts under paragraph
256
(1) with respect to which the percentage factor of
21⁄2 is applied shall be further increased at the
same time and by the same percentage as an in-
crease in retired pay under section 1401a of this
title effective after January 1, 1996. Such in-
crease under the preceding sentence shall apply
only with respect to a person who initially par-
ticipates in the Plan on a date which is after
both the effective date of such increase under sec-
tion 1401a and the effective date of the rates of
basic pay upon which that person’s retired pay
is computed.
‘‘(5) SPOUSE
COVERAGE
DESCRIBED.—For the
purposes of paragraph (1), a participant in the Plan
who is providing spouse coverage is a participant
who—
‘‘(A) has (i) a spouse or former spouse, or
(ii) a spouse or former spouse and a dependent
child; and
‘‘(B) has not elected to provide an annuity
to a person designated by him under section
1448(b)(1) of this title or, having made such an
election, has changed his election in favor of his
spouse under section 1450(f) of this title.
‘‘(b) CHILD-ONLY ANNUITIES.—
257
‘‘(1) REQUIRED REDUCTION IN RETIRED PAY.—
The retired pay of a participant in the Plan who is
providing child-only coverage (as described in para-
graph (4)) shall be reduced by an amount prescribed
under regulations by the Secretary of Defense.
‘‘(2) NO REDUCTION WHEN NO CHILD.—There
shall be no reduction in retired pay under paragraph
(1) for any month during which the participant has
no eligible dependent child.
‘‘(3) SPECIAL RULE FOR CERTAIN RCSBP PAR-
TICIPANTS.—In the case of a participant in the Plan
who is participating in the Plan under an election
under section 1448(a)(2)(B) of this title and who pro-
vided child-only coverage during a period before the
participant becomes entitled to receive retired pay,
the retired pay of the participant shall be reduced by
an amount prescribed under regulations by the Sec-
retary of Defense to reflect the coverage provided
under the Plan during the period before the partici-
pant became entitled to receive retired pay. A reduc-
tion under this paragraph is in addition to any re-
duction under paragraph (1) and is made without re-
gard to whether there is an eligible dependent child
during a month for which the reduction is made.
258
‘‘(4) CHILD-ONLY COVERAGE DEFINED.—For the
purposes of this subsection, a participant in the Plan
who is providing child-only coverage is a participant
who has a dependent child and who—
‘‘(A) does not have an eligible spouse or
former spouse; or
‘‘(B) has a spouse or former spouse but has
elected to provide an annuity for dependent chil-
dren only.
‘‘(c) REDUCTION
FOR INSURABLE INTEREST COV-
ERAGE.—
‘‘(1) REQUIRED REDUCTION IN RETIRED PAY.—
The retired pay of a person who has elected to provide
an annuity to a person designated by him under sec-
tion 1450(a)(4) of this title shall be reduced as fol-
lows:
‘‘(A) STANDARD ANNUITY.—In the case of a
person providing a standard annuity, the reduc-
tion shall be by 10 percent plus 5 percent for
each full five years the individual designated is
younger than that person.
‘‘(B) RESERVE
COMPONENT
ANNUITY.—In
the case of a person providing a reserve-compo-
nent annuity, the reduction shall be by an
259
amount prescribed under regulations of the Sec-
retary of Defense.
‘‘(2) LIMITATION
ON
TOTAL
REDUCTION.—The
total reduction under paragraph (1) may not exceed
40 percent.
‘‘(3) DURATION OF REDUCTION.—The reduction
in retired pay prescribed by this subsection shall con-
tinue during the lifetime of the person designated
under section 1450(a)(4) of this title or until the per-
son receiving retired pay changes his election under
section 1450(f) of this title.
‘‘(4) RULE FOR COMPUTATION.—Computation of
a member’s retired pay for purposes of this subsection
shall be made without regard to any reduction under
section 1409(b)(2) of this title.
‘‘(d) DEPOSITS TO COVER PERIODS WHEN RETIRED
PAY NOT PAID.—
‘‘(1) REQUIRED DEPOSITS.—If a person who has
elected to participate in the Plan has been awarded
retired pay and is not entitled to that pay for any
period, that person must deposit in the Treasury the
amount that would otherwise have been deducted from
his pay for that period.
‘‘(2) DEPOSITS NOT REQUIRED WHEN PARTICI-
PANT
ON
ACTIVE
DUTY.—Paragraph (1) does not
260
apply to a person with respect to any period when
that person is on active duty under a call or order
to active duty for a period of more than 30 days.
‘‘(e) DEPOSITS NOT REQUIRED FOR CERTAIN PARTICI-
PANTS IN CSRS.—When a person who has elected to par-
ticipate in the Plan waives that person’s retired pay for
the purposes of subchapter III of chapter 83 of title 5, that
person shall not be required to make the deposit otherwise
required by subsection (d) as long as that waiver is in effect
unless, in accordance with section 8339(i) of title 5, that
person has notified the Office of Personnel Management that
he does not desire a spouse surviving him to receive an an-
nuity under section 8331(b) of title 5.
‘‘(f) REFUNDS OF DEDUCTIONS NOT ALLOWED.—
‘‘(1) GENERAL RULE.—A person is not entitled
to refund of any amount deducted from retired pay
under this section.
‘‘(2) EXCEPTIONS.—Paragraph (1) does not
apply—
‘‘(A) in the case of a refund authorized by
section 1450(e) of this title; or
‘‘(B) in case of a deduction made through
administrative error.
261
‘‘(g) DISCONTINUATION OF PARTICIPATION BY PAR-
TICIPANTS WHOSE SURVIVING SPOUSES WILL BE ENTI-
TLED TO DIC.—
‘‘(1) DISCONTINUATION.—
‘‘(A) CONDITIONS.—Notwithstanding any
other provision of this subchapter but subject to
paragraphs (2) and (3), a person who has elected
to participate in the Plan and who is suffering
from a service-connected disability rated by the
Secretary of Veterans Affairs as totally disabling
and has suffered from such disability while so
rated for a continuous period of 10 or more
years (or, if so rated for a lesser period, has suf-
fered from such disability while so rated for a
continuous period of not less than 5 years from
the date of such person’s last discharge or release
from active duty) may discontinue participation
in the Plan by submitting to the Secretary con-
cerned a request to discontinue participation in
the Plan.
‘‘(B) EFFECTIVE
DATE.—Participation in
the Plan of a person who submits a request
under subparagraph (A) shall be discontinued ef-
fective on the first day of the first month follow-
ing the month in which the request under sub-
262
paragraph (A) is received by the Secretary con-
cerned. Effective on such date, the Secretary con-
cerned shall discontinue the reduction being
made in such person’s retired pay on account of
participation in the Plan or, in the case of a
person who has been required to make deposits
in the Treasury on account of participation in
the Plan, such person may discontinue making
such deposits effective on such date.
‘‘(C) FORM FOR REQUEST FOR DISCONTINU-
ATION.—Any request under this paragraph to
discontinue participation in the Plan shall be in
such form and shall contain such information as
the Secretary concerned may require by regula-
tion.
‘‘(2) CONSENT OF BENEFICIARIES REQUIRED.—A
person described in paragraph (1) may not dis-
continue participation in the Plan under such para-
graph without the written consent of the beneficiary
or beneficiaries of such person under the Plan.
‘‘(3) INFORMATION ON PLAN TO BE PROVIDED BY
SECRETARY CONCERNED.—
‘‘(A) 
INFORMATION
TO
BE
PROVIDED
PROMPTLY TO PARTICIPANT.—The Secretary con-
cerned shall furnish promptly to each person who
263
files a request under paragraph (1) to dis-
continue participation in the Plan a written
statement of the advantages of participating in
the Plan and the possible disadvantages of dis-
continuing participation.
‘‘(B) RIGHT
TO
WITHDRAW
DISCONTINU-
ATION REQUEST.—A person may withdraw a re-
quest made under paragraph (1) if it is with-
drawn within 30 days after having been submit-
ted to the Secretary concerned.
‘‘(4) REFUND OF DEDUCTIONS FROM RETIRED
PAY.—Upon the death of a person described in para-
graph (1) who discontinued participation in the Plan
in accordance with this subsection, any amount de-
ducted from the retired pay of that person under this
section shall be refunded to the person’s surviving
spouse.
‘‘(5) RESUMPTION OF PARTICIPATION IN PLAN.—
‘‘(A) CONDITIONS
FOR
RESUMPTION.—A
person described in paragraph (1) who discon-
tinued participation in the Plan may elect to
participate again in the Plan if—
‘‘(i) after having discontinued partici-
pation in the Plan the Secretary of Veterans
Affairs reduces that person’s service-con-
264
nected disability rating to a rating of less
than total; and
‘‘(ii) that person applies to the Sec-
retary concerned, within such period of time
after the reduction in such person’s service-
connected disability rating has been made
as the Secretary concerned may prescribe, to
again participate in the Plan and includes
in such application such information as the
Secretary concerned may require.
‘‘(B) EFFECTIVE DATE OF RESUMED COV-
ERAGE.—Such person’s participation in the
Plan under this paragraph is effective beginning
on the first day of the month after the month in
which the Secretary concerned receives the appli-
cation for resumption of participation in the
Plan.
‘‘(C) RESUMPTION
OF
CONTRIBUTIONS.—
When a person elects to participate in the Plan
under this paragraph, the Secretary concerned
shall begin making reductions in that person’s
retired pay, or require such person to make de-
posits in the Treasury under subsection (d), as
appropriate, effective on the effective date of such
participation under subparagraph (B).
265
‘‘(h) INCREASES IN REDUCTION WITH INCREASES IN
RETIRED PAY.—Whenever retired pay is increased under
section 1401a of this title (or any other provision of law),
the amount of the reduction to be made under subsection
(a) or (b) in the retired pay of any person shall be increased
at the same time and by the same percentage as such retired
pay is so increased.
‘‘(i) RECOMPUTATION OF REDUCTION UPON RECOM-
PUTATION OF RETIRED PAY.—When the retired pay of a
person who first became a member of a uniformed service
on or after August 1, 1986, and who is a participant in
the Plan is recomputed under section 1410 of this title upon
the person’s becoming 62 years of age, the amount of the
reduction in such retired pay under this section shall be
recomputed (effective on the effective date of the recomputa-
tion of such retired pay under section 1410 of this title)
so as to be the amount equal to the amount of such reduction
that would be in effect on that date if increases in such
retired pay under section 1401a(b) of this title, and in-
creases in reductions in such retired pay under subsection
(h), had been computed as provided in paragraph (2) of
section 1401a(b) of this title (rather than under paragraph
(3) of that section).
266
‘‘§ 1453. Recovery of amounts erroneously paid
‘‘(a) RECOVERY.—In addition to any other method of
recovery provided by law, the Secretary concerned may au-
thorize the recovery of any amount erroneously paid to a
person under this subchapter by deduction from later pay-
ments to that person.
‘‘(b) AUTHORITY TO WAIVE RECOVERY.—Recovery of
an amount erroneously paid to a person under this sub-
chapter is not required if, in the judgment of the Secretary
concerned and the Comptroller General—
‘‘(1) there has been no fault by the person to
whom the amount was erroneously paid; and
‘‘(2) recovery of such amount would be contrary
to the purposes of this subchapter or against equity
and good conscience.
‘‘§ 1454. Correction of administrative errors
‘‘(a) AUTHORITY.—The Secretary concerned may,
under regulations prescribed under section 1455 of this title,
correct or revoke any election under this subchapter when
the Secretary considers it necessary to correct an adminis-
trative error.
‘‘(b) FINALITY.—Except when procured by fraud, a
correction or revocation under this section is final and con-
clusive on all officers of the United States.
267
‘‘§ 1455. Regulations
‘‘(a) IN GENERAL.—The President shall prescribe reg-
ulations to carry out this subchapter. Those regulations
shall, so far as practicable, be uniform for the uniformed
services.
‘‘(b) NOTICE OF ELECTIONS.—Regulations prescribed
under this section shall provide that before the date on
which a member becomes entitled to retired pay—
‘‘(1) if the member is married, the member and
the member’s spouse shall be informed of the elections
available under section 1448(a) of this title and the
effects of such elections; and
‘‘(2) if the notification referred to in section
1448(a)(3)(E) of this title is required, any former
spouse of the member shall be informed of the elections
available and the effects of such elections.
‘‘(c) PROCEDURE
FOR DEPOSITING CERTAIN RE-
CEIPTS.—Regulations prescribed under this section shall es-
tablish procedures for depositing the amounts referred to in
sections 1448(g), 1450(k)(2), and 1452(d) of this title.
‘‘(d) PAYMENTS TO GUARDIANS AND FIDUCIARIES.—
‘‘(1) IN GENERAL.—Regulations prescribed under
this section shall provide procedures for the payment
of an annuity under this subchapter in the case of—
‘‘(A) a person for whom a guardian or other
fiduciary has been appointed; and
268
‘‘(B) a minor, mentally incompetent, or
otherwise legally disabled person for whom a
guardian or other fiduciary has not been ap-
pointed.
‘‘(2) AUTHORIZED
PROCEDURES.—The regula-
tions under paragraph (1) may include provisions for
the following:
‘‘(A) In the case of an annuitant referred to
in paragraph (1)(A), payment of the annuity to
the appointed guardian or other fiduciary.
‘‘(B) In the case of an annuitant referred to
in paragraph (1)(B), payment of the annuity to
any person who, in the judgment of the Sec-
retary concerned, is responsible for the care of
the annuitant.
‘‘(C) Subject to subparagraphs (D) and (E),
a requirement for the payee of an annuity to
spend or invest the amounts paid on behalf of the
annuitant solely for benefit of the annuitant.
‘‘(D) Authority for the Secretary concerned
to permit the payee to withhold from the annuity
payment such amount, not in excess of 4 percent
of the annuity, as the Secretary concerned con-
siders a reasonable fee for the fiduciary services
of the payee when a court appointment order
269
provides for payment of such a fee to the payee
for such services or the Secretary concerned de-
termines that payment of a fee to such payee is
necessary in order to obtain the fiduciary serv-
ices of the payee.
‘‘(E) Authority for the Secretary concerned
to require the payee to provide a surety bond in
an amount sufficient to protect the interests of
the annuitant and to pay for such bond out of
the annuity.
‘‘(F) A requirement for the payee of an an-
nuity to maintain and, upon request, to provide
to the Secretary concerned an accounting of ex-
penditures and investments of amounts paid to
the payee.
‘‘(G) In the case of an annuitant referred to
in paragraph (1)(B)—
‘‘(i) procedures for determining incom-
petency and for selecting a payee to rep-
resent the annuitant for the purposes of this
section, including provisions for notifying
the annuitant of the actions being taken to
make such a determination and to select a
representative payee, an opportunity for the
annuitant to review the evidence being con-
270
sidered, and an opportunity for the annu-
itant to submit additional evidence before
the determination is made; and
‘‘(ii) standards for determining incom-
petency, including standards for determin-
ing the sufficiency of medical evidence and
other evidence.
‘‘(H) Provisions for any other matter that
the President considers appropriate in connec-
tion with the payment of an annuity in the case
of a person referred to in paragraph (1).
‘‘(3) LEGAL EFFECT OF PAYMENT TO GUARDIAN
OR FIDUCIARY.—An annuity paid to a person on be-
half of an annuitant in accordance with the regula-
tions prescribed pursuant to paragraph (1) discharges
the obligation of the United States for payment to the
annuitant of the amount of the annuity so paid.’’.
Subtitle E—Other Matters
SEC. 651. TECHNICAL CORRECTION CLARIFYING ABILITY
OF CERTAIN MEMBERS TO ELECT NOT TO OC-
CUPY GOVERNMENT QUARTERS.
Effective July 1, 1996, section 403(b)(3) of title 37,
United States Code, is amended by striking out ‘‘A mem-
ber’’ and inserting in lieu thereof ‘‘Subject to the provisions
of subsection (j), a member’’.
271
SEC. 652. TECHNICAL CORRECTION CLARIFYING LIMITA-
TION ON FURNISHING CLOTHING OR ALLOW-
ANCES FOR ENLISTED NATIONAL GUARD
TECHNICIANS.
Section 418(c) of title 37, United States Code, is
amended by striking out ‘‘for which a uniform allowance
is paid under section 415 or 416 of this title’’, and inserting
in lieu thereof ‘‘for which clothing is furnished or a uniform
allowance is paid under this section’’.
TITLE VII—HEALTH CARE
PROVISIONS
Subtitle A—Health Care Services
SEC. 701. MEDICAL AND DENTAL CARE FOR RESERVE COM-
PONENT MEMBERS IN A DUTY STATUS.
(a) AVAILABILITY OF MEDICAL AND DENTAL CARE.—
(1) Section 1074a of title 10, United States Code, is amend-
ed to read as follows:
‘‘§ 1074a. Medical and dental care: reserve component
members in a duty status
‘‘(a) HEALTH CARE DESCRIBED.—A person described
in subsection (b) is entitled to the medical and dental care
appropriate for the treatment of the injury, illness, or dis-
ease of the person until the person completes treatment and
is physically able to resume the military duties of the per-
son or has completed processing in accordance with chapter
61 of this title.
272
‘‘(b) MEMBERS ENTITLED TO CARE.—Under joint reg-
ulations prescribed by the administering Secretaries, the
following persons are entitled to the benefits described in
this section:
‘‘(1) Each member of a reserve component who
incurs or aggravates an injury, illness, or disease in
the line of duty while performing—
‘‘(A) active duty, including active duty for
training and annual training duty, or full-time
National Guard duty; or
‘‘(B) inactive-duty training, regardless of
whether the member is in a pay or nonpay sta-
tus.
‘‘(2) Each member of a reserve component who
incurs or aggravates an injury, illness, or disease
while traveling directly to or from the place at which
that member is to perform or has performed—
‘‘(A) active duty, including active duty for
training and annual training duty, or full-time
National Guard duty, or
‘‘(B) inactive-duty training, regardless of
whether the member is in a pay or nonpay sta-
tus.
‘‘(3) Each member of a reserve component who
incurs or aggravates an injury, illness, or disease in
273
the line of duty while remaining overnight, between
successive periods of inactive-duty training, at or in
the vicinity of the site of the inactive-duty training,
if the site of inactive-duty training is outside reason-
able commuting distance from the member’s residence.
‘‘(c) ADDITIONAL BENEFITS.—(1) At the request of a
person described in paragraph (1)(A) or (2)(A) of sub-
section (b), the person may continue on active duty or full-
time National Guard duty during any period of hos-
pitalization resulting from the injury, illness, or disease.
‘‘(2) A person described in subsection (b) is entitled
to the pay and allowances authorized in accordance with
subsections (g) and (h) of section 204 of title 37.
‘‘(d) LIMITATION.—A person described in subsection
(b) is not entitled to benefits under this section if the injury,
illness, or disease, or aggravation of the injury, illness, or
disease, is the result of the gross negligence or misconduct
of the person.’’.
(2) The item relating to such section in the table of
sections at the beginning of chapter 55 of title 10, United
States Code, is amended to read as follows:
‘‘1074a. Medical and dental care: reserve component members in a duty status.’’.
(b) ANNUAL MEDICAL AND DENTAL SCREENINGS AND
CARE FOR CERTAIN SELECTED RESERVE MEMBERS.—Sec-
tion 10206 of title 10, United States Code, is amended by
adding at the end the following new subsection:
274
‘‘(c)(1) The Secretary of the Army shall provide to
members of the Selected Reserve of the Army who are as-
signed to units scheduled for deployment within 75 days
after mobilization the following medical and dental services:
‘‘(A) An annual medical screening.
‘‘(B) For members who are over 40 years of age,
a full physical examination not less often than once
every two years.
‘‘(C) An annual dental screening.
‘‘(D) The dental care identified in an annual
dental screening as required to ensure that a member
meets the dental standards required for deployment in
the event of mobilization.
‘‘(2) The services provided under this subsection shall
be provided at no cost to the member.’’.
Subtitle B—TRICARE Program
SEC. 711. DEFINITION OF TRICARE PROGRAM.
For purposes of this subtitle, the term ‘‘TRICARE pro-
gram’’ means the managed health care program that is es-
tablished by the Secretary of Defense under the authority
of chapter 55 of title 10, United States Code, principally
section 1097 of such title, and includes the competitive selec-
tion of contractors to financially underwrite the delivery
of health care services under the Civilian Health and Medi-
cal Program of the Uniformed Services.
275
SEC. 712. CHAMPUS PAYMENT LIMITS FOR TRICARE PRIME
ENROLLEES.
Section 1079(h)(4) of title 10, United States Code, is
amended in the second sentence by striking ‘‘emergency’’.
SEC. 713. IMPROVED INFORMATION EXCHANGE BETWEEN
MILITARY 
TREATMENT 
FACILITIES 
AND
TRICARE PROGRAM CONTRACTORS.
(a) UNIFORM INTERFACES.—With respect to the auto-
mated medical information system being developed by the
Department of Defense and known as the Composite Health
Care System, the Secretary of Defense shall ensure that the
Composite Health Care System provides for uniform inter-
faces between information systems of military treatment fa-
cilities and private contractors under managed care pro-
grams of the TRICARE program. The uniform interface
shall provide for a full electronic two-way exchange of
health care information between the military treatment fa-
cilities and contractor information systems, including en-
rollment information, information regarding eligibility de-
terminations, provider network information, appointment
information, and information regarding the existence of
third-party payers.
(b) AMENDMENT OF EXISTING CONTRACTS.—To assure
a single consistent source of information throughout the
health care delivery system of the uniformed services, the
Secretary of Defense shall amend each TRICARE program
278
known as the TRICARE PRIME option under the
TRICARE program.
(8) The term ‘‘Secretary’’ means the Secretary of
Defense.
(9) The term ‘‘TRICARE program’’ means the
managed health care program that is established by
the Secretary of Defense under the authority of chap-
ter 55 of title 10, United States Code, principally sec-
tion 1097 of such title, and includes the competitive
selection of contractors to financially underwrite the
delivery of health care services under the Civilian
Health and Medical Program of the Uniformed Serv-
ices.
SEC. 722. INCLUSION OF DESIGNATED PROVIDERS IN UNI-
FORMED SERVICES HEALTH CARE DELIVERY
SYSTEM.
(a) INCLUSION IN SYSTEM.—The health care delivery
system of the uniformed services shall include the designated
providers.
(b) AGREEMENTS
TO PROVIDE MANAGED HEALTH
CARE SERVICES.—(1) After consultation with the other ad-
ministering Secretaries, the Secretary of Defense shall nego-
tiate and enter into an agreement with each designated pro-
vider, under which the designated provider will provide
279
managed health care services to covered beneficiaries who
enroll with the designated provider.
(2) The agreement shall be entered into on a sole source
basis. The Federal Acquisition Regulation, except for those
requirements regarding competition, issued pursuant to sec-
tion 25(c) of the Office of Federal Procurement Policy Act
(41 U.S.C. 421(c)) shall apply to the agreements as acquisi-
tions of commercial items.
(3) The implementation of an agreement is subject to
availability of funds for such purpose.
(c) EFFECTIVE DATE OF AGREEMENTS.—(1) Unless
an earlier effective date is agreed upon by the Secretary
and the designated provider, the agreement shall take effect
upon the later of the following:
(A) The date on which a managed care support
contract under the TRICARE program is imple-
mented in the service area of the designated provider.
(B) October 1, 1997.
(2) Notwithstanding paragraph (1), the designated
provider whose service area includes Seattle, Washington,
shall implement its agreement as soon as the agreement per-
mits.
(d) TEMPORARY CONTINUATION OF EXISTING PARTICI-
PATION AGREEMENTS.—The Secretary shall extend the par-
ticipation agreement of a designated provider in effect im-
280
mediately before the date of the enactment of this Act under
section 718(c) of the National Defense Authorization Act for
Fiscal Year 1991 (Public Law 101–510; 104 Stat. 1587)
until the agreement required by this section takes effect
under subsection (c).
(e) SERVICE AREA.—The Secretary may not reduce the
size of the service area of a designated provider below the
size of the service area in effect as of September 30, 1996.
(f) COMPLIANCE WITH ADMINISTRATIVE REQUIRE-
MENTS.—(1) Unless otherwise agreed upon by the Secretary
and a designated provider, the designated provider shall
comply with necessary and appropriate administrative re-
quirements established by the Secretary for other providers
of health care services and requirements established by the
Secretary of Health and Human Services for risk-sharing
contractors under section 1876 of the Social Security Act
(42 U.S.C. 1395mm). The Secretary and the designated
provider shall determine and apply only such administra-
tive requirements as are minimally necessary and appro-
priate. A designated provider shall not be required to com-
ply with a law or regulation of a State government requir-
ing licensure as a health insurer or health maintenance or-
ganization.
(2) A designated provider may not contract out more
than five percent of its primary care enrollment without
281
the approval of the Secretary, except in the case of primary
care contracts between a designated provider and a primary
care contractor in force on the date of the enactment of this
Act.
SEC. 723. PROVISION OF UNIFORM BENEFIT BY DES-
IGNATED PROVIDERS.
(a) UNIFORM BENEFIT REQUIRED.—A designated pro-
vider shall offer to enrollees the health benefit option pre-
scribed and implemented by the Secretary under section 731
of the National Defense Authorization Act for Fiscal Year
1994 (Public Law 103–160; 10 U.S.C. 1073 note), includ-
ing accompanying cost-sharing requirements.
(b) TIME FOR IMPLEMENTATION OF BENEFIT.—A des-
ignated provider shall offer the health benefit option de-
scribed in subsection (a) to enrollees upon the later of the
following:
(1) The date on which health care services within
the health care delivery system of the uniformed serv-
ices are rendered through the TRICARE program in
the region in which the designated provider operates.
(2) October 1, 1996.
(c) ADJUSTMENTS.—The Secretary may establish a
later date under subsection (b)(2) or prescribe reduced cost-
sharing requirements for enrollees.
282
SEC. 724. ENROLLMENT OF COVERED BENEFICIARIES.
(a) FISCAL YEAR 1997 LIMITATION.—(1) During fis-
cal year 1997, the number of covered beneficiaries who are
enrolled in managed care plans offered by designated pro-
viders may not exceed the number of such enrollees as of
October 1, 1995.
(2) The Secretary may waive the limitation under
paragraph (1) if the Secretary determines that additional
enrollment authority for a designated provider is required
to accommodate covered beneficiaries who are dependents
of members of the uniformed services entitled to health care
under section 1074(a) of title 10, United States Code.
(b) PERMANENT LIMITATION.—For each fiscal year
after fiscal year 1997, the number of enrollees in managed
care plans offered by designated providers may not exceed
110 percent of the number of such enrollees as of the first
day of the immediately preceding fiscal year. The Secretary
may waive this limitation as provided in subsection (a)(2).
(c) RETENTION OF CURRENT ENROLLEES.—An en-
rollee in the managed care program of a designated pro-
vider as of September 30, 1997, or such earlier date as the
designated provider and the Secretary may agree upon,
shall continue receiving services from the designated pro-
vider pursuant to the agreement entered into under section
722 unless the enrollee disenrolls from the designated pro-
vider. Except as provided in subsection (e), the administer-
283
ing Secretaries may not disenroll such an enrollee unless
the disenrollment is agreed to by the Secretary and the des-
ignated provider.
(d) ADDITIONAL ENROLLMENT AUTHORITY.—Other
covered beneficiaries may also receive health care services
from a designated provider, except that the designated pro-
vider may market such services to, and enroll, only those
covered beneficiaries who—
(1) do not have other primary health insurance
coverage (other than medicare coverage) covering
basic primary care and inpatient and outpatient
services; or
(2) are enrolled in the direct care system under
the TRICARE program, regardless of whether the cov-
ered beneficiaries were users of the health care deliv-
ery system of the uniformed services in prior years.
(e) SPECIAL RULE FOR MEDICARE-ELIGIBLE BENE-
FICIARIES.—If a covered beneficiary who desires to enroll
in the managed care program of a designated provider is
also entitled to hospital insurance benefits under part A
of title XVIII of the Social Security Act (42 U.S.C. 1395c
et seq.), the covered beneficiary shall elect whether to receive
health care services as an enrollee or under part A of title
XVIII of the Social Security Act. The Secretary may
disenroll an enrollee who subsequently violates the election