Military Personnel: Active Duty Benefits Reflect Changing Demographics, but Opportunities Exist to Improve
Published: 2002-09-18T00:00:00

Fast Facts:

Highlights:
section_title: What GAO Found
paragraphs: The Department of Defense (DOD) uses employee benefits--that is, indirect compensation above and beyond a service member's basic pay--as a tool to recruit and retain personnel. DOD has instituted a number of benefits that reflect demographic changes in the active duty force since the draft ended and the military became an all-volunteer force in 1973. Many of these benefits address one of the most significant demographic changes--an increase in service members with family obligations. A second major demographic change in the active military has been a growing proportion of female service members. DOD has responded positively to most demographic changes by incorporating a number of family-friendly benefits; however, opportunities exist to improve current benefits in this area. In comparing the types of benefits offered by the military with those offered in the private sector, GAO did not identify significant gaps in the benefits available to military personnel. GAO did not make direct comparisons between individual military and private-sector benefits but did determine that all the core benefits offered by most private-sector firms--retirement pay, health care, life insurance, and paid time off--are offered by the military.

section_title: Letter
paragraphs: The Department of Defense (DOD) uses employee benefits—that is,  indirect compensation above and beyond a service member’s basic pay—as  one tool to recruit and retain personnel. Employee benefits are part of  DOD’s overall military compensation system that also includes basic  military pay, special pays, and allowances. (See app. I for a list of specific  elements of the military compensation system.) DOD provides employee  benefits to more than 1.3 million active duty service members and their  nearly 2 million spouses and dependents.
The Subcommittee expressed concerns about whether the current  employee benefit package available to active duty service members has  kept pace with changes in the demographic composition of the force and  whether the benefit package positions DOD to compete with private-sector  companies for high-quality personnel. Because of these concerns, the  Subcommittee asked us to review the active duty benefit structure.  Specifically, our objectives were to determine (1) how DOD has changed  benefits in response to demographic changes in the active duty military  since the advent of the all-volunteer force in 1973 and (2) how the military’s  overall benefit package compares with the array of benefits offered by  private-sector firms.
This report expands on the issues we covered in our April 2002 testimony  on active duty benefits.
subsections: section_title: Background
paragraphs: The basic goals of the military’s compensation system are to attract, retain,  and motivate the number and quality of people needed to maintain national  security. In fiscal year 2002, Congress appropriated more than $100 billion  in compensation for military personnel. DOD is the single largest employer  and trainer of youth and recruited about 196,000 individuals into active  duty in 2001. Although a unique institution, the military nevertheless  competes with academia and other organizations for qualified people. The  military may face increased competition for qualified people over the next  few years because of continued increases in the number of high school  graduates going on to college and labor shortages projected through at  least 2010. The U.S. Department of Education projects that the number of  high school graduates will increase by 11 percent by 2010-2011, and  enrollment in degree-granting institutions is predicted to increase  20 percent by 2011. The Bureau of Labor Statistics projects that the civilian  labor force will increase by 12 percent by 2010, while total employment will  increase by 15 percent.
In May 2002, DOD issued a strategic human capital plan addressing quality- of-life issues and benefits. The plan, entitled A New Social Compact: A  Reciprocal Partnership Between the Department of Defense, Service  Members and Families, emerged in response to a presidential directive  requiring the Secretary of Defense to review measures for improving the  quality of life for military personnel and to provide recommendations for  their implementation. According to DOD officials, the Social Compact is  needed to ameliorate the demands of the military lifestyle, which includes  frequent separations and relocations, and to provide better support to  service members and their families. The Social Compact focuses on the  efforts DOD has or plans to make to improve housing, education, health  care, work-life issues, and family and community support for service  members and their families. It emphasizes the need to maintain programs  and services viewed as benefits by service members.
The Under Secretary of Defense for Personnel and Readiness has oversight  of career development, recruitment, and pays and benefits for active duty  personnel. Within this office, the Assistant Secretary of Defense for Force  Management Policy develops policies, plans, and programs for military  personnel management, including quality-of-life issues for service members  and their dependents. The Deputy Assistant Secretary of Defense for  Military Community and Family Policy is responsible for policies and  programs that establish and support programs such as child care, spousal  employment assistance, and other family support programs.
section_title: DOD’s Benefits Reflect Demographic Changes in the Active Force
paragraphs: The active duty force has undergone several demographic changes since  the end of the draft and the advent of an all-volunteer force in 1973. It  has become older and better educated, it has experienced increases in  the representation of minority and female service members, and a greater  proportion of its service members are married and have children.  Recognizing that a family’s satisfaction with military life can influence  retention, Congress and DOD have responded by establishing and  increasing support services for military families. However, opportunities  exist to further improve benefits in this area.
subsections: section_title: Composition of the Force Has Changed
paragraphs: The percentage of personnel over age 25 increased from about  40 percent of the active duty force in 1974 to nearly 55 percent in 2000.  The proportion of enlisted personnel with at least a high school diploma  increased from about 80 percent of the enlisted force in 1974 to about  95 percent in 2000. During that time period, the percentage of officers  attaining a degree beyond a bachelor’s degree increased from 25 percent to  43 percent of all officers. The proportion of minority service members  increased from 20 percent to 35 percent of the active duty force between  1974 and 2000, and the proportion of female service members increased  from 4 percent to 15 percent.
Although reliable data on married personnel is not available for 1973-77,  various DOD studies cite statistics showing that the percentage of married  enlisted personnel increased from approximately 40 percent of the force in  1973 to approximately 50 percent in 1977. After dropping slightly from 1977  to 1980, the marriage rate rose again through the mid-1990s. For each year  between 1980 and 2000, married service members, including both enlisted  personnel and officers, made up at least half of the active duty force. DOD  attributes the rate increases to the gradual aging of the active duty force.
Other DOD data also indicates growth in the proportion of service  members who have family obligations. The percentage of service  members with children increased from 43 percent to 45 percent  between 1990 and 2000, while the proportion of single service members  with children increased from 4 percent to 6 percent. Figure 1 shows  the composition of the active duty force, by family status, in 2000.  (See app. II for additional information on demographic changes in  the active duty military.)
section_title: Congress and DOD Have Responded Positively to Demographic Changes
paragraphs: Congress and DOD have responded positively to the growth in the  proportion of service members with family obligations by authorizing and  implementing a number of family-friendly benefits. Research has shown  that family satisfaction with military life can influence a service member’s  decision whether to remain in the military. Consequently, Congress has  authorized, and DOD instituted, a number of services to support military  families. The Military Family Act of 1985 established a spousal employment  assistance program. In 1989, Congress directed DOD to establish a  relocation assistance program. In 1992, DOD established guidance for  implementing, overseeing, staffing, and funding family support centers at  installations to deliver programs such as personal financial management  training, employment assistance, relocation assistance, deployment  assistance, and child and spouse abuse prevention programs.
Health care benefits for military families have also been enhanced. For  example, Congress recently eliminated most copayments for active duty  families enrolled in DOD’s managed health care program and extended  benefits for dependents living with a member of the uniformed services in  remote areas. In the area of education, Congress authorized DOD in the  National Defense Authorization Act for Fiscal Year 2002 to grant reenlisting  service members who possess critical skills the option to transfer a portion  of their educational assistance benefits to their spouse and dependents.  With respect to child care, DOD has made progress improving the quality,  availability, and affordability of military child care. DOD is working to  expand capacity to meet a range of child care needs, including initiatives to  extend care hours, subsidize the cost of obtaining child care at commercial  centers, offer cash incentives to increase the number of family child care  providers, and construct additional child development centers on  installations. Lastly, DOD has identified a need to reach out to the  two-thirds of military personnel and their families who reside off of  installations, to make them aware of their benefits, and to deliver services  to them. One approach DOD is taking is to increase its use of the Internet  by adding information and transactional features to Web sites.
section_title: Opportunities Exist to Further Improve Benefits
paragraphs: Although a number of family-friendly benefits are available to active duty  service members, opportunities exist to improve current benefits in this  area that could aid in the retention of military personnel. DOD has planned  initiatives for expanding its spousal employment assistance program but  lacks information on the effectiveness of employment assistance services  offered at installations. DOD authorizes 6 weeks of paid leave for new  mothers but does not offer extended time off for the care of newborn or  adopted children.
Spousal Employment Assistance DOD has begun to pay increased attention to employment assistance  for the military’s 700,000 spouses, who must move frequently (on average  every 2 years) with their spouses to different parts of the country or the  world and face many challenges when trying to find work. Many service  members are in dual-income households, with spouses contributing on  average about 25 percent of the family’s income. In 1999, 48 percent of  officers’ spouses and 55 percent of enlisted members’ spouses were  employed in the civilian labor force, while 7 percent of officers’ spouses  and 8 percent of enlisted members’ spouses were unemployed and  seeking work.
Many working spouses are underemployed. According to a 2002 DOD  study, the spouses of military service members earn an average of 24 to  30 percent less than their civilian counterparts. In part, this wage  differential, which increases for those with higher levels of education, is  due to local labor market conditions. Some installations are located in  remote areas characterized by relatively poor labor market conditions.  Military spouses face several other employment challenges, such as  frequent relocations that make it difficult to sustain a career and accrue  retirement benefits. The families of junior enlisted personnel face  particular financial difficulties as the result of housing and transportation  costs, the high cost of credit, and child care expenses. The income that  spouses earn can help to mitigate some of these problems. DOD believes  spouse employment is necessary for many military families to meet basic  family expenses.
In the last few years, DOD has taken a number of steps to enhance its  spousal employment assistance program, which has been in existence  since 1985. DOD held a “spouse employment summit” in 2000 to identify  needed actions. DOD is now focusing on establishing partnerships with  private-sector employers who can offer jobs with “portable tenure,” which  enables spouses to relocate and stay with the same employer. Other efforts  include expanding employment preference for spouses working in Europe  and establishing partnerships with federal agencies to increase private- sector career opportunities. For example, DOD is developing a partnership  with the Department of Labor to resolve issues such as the different state  residency and licensing requirements for jobs in teaching, nursing, and  child care. DOD is seeking Labor’s assistance to help spouses who work in  these fields overcome employment barriers when they relocate. The Navy  and the Marine Corps have also launched a partnership with a civilian  employment services firm at two installations. These initiatives are in the  early stages of development. As a result, it is too early to gauge their  effectiveness in promoting spousal employment.
At installations, DOD offers services to help active duty military spouses  find civilian jobs. Services include job searching and career planning, skills  assessments, training to facilitate entrance into the workforce, resume  writing, interviewing, and networking. Neither DOD nor the services have  systematically tracked demand for employment assistance at installations  or developed outcome oriented performance measures to help evaluate  which of these kinds of services provided by installations contribute most  effectively to spousal employment. DOD’s Social Compact proposed a  number of metrics to measure spousal employment and to assess progress  made in meeting the goals of the spousal employment assistance program.  Some of the proposed measures would track changes in spousal  employment, the percentage of federal and DOD jobs filled by military  spouses, and the extent to which services and policies are standardized.  These proposed measures would enable DOD to collect useful information  on spousal employment issues. However, none of them would track the  extent that spouses use the program or gauge the effectiveness of the  services offered (such as career counseling, interviewing, and training) in  helping spouses find jobs appropriate to their knowledge, skills, and  abilities. As a result, DOD cannot determine which services offered through  its spousal employment assistance program are most effective in achieving  programmatic goals.
subsections: section_title: Extended Time Off for New Parents
paragraphs: DOD’s Social Compact, the department’s strategic human capital plan for  quality-of-life issues, states that retaining personnel is essential to building  and sustaining DOD’s highly skilled workforce. It further states that  lifestyle values of American workers from which the department draws are  changing: People want more time for themselves and their families, and  they want more time at home. Wise employers are selectively adopting new  practices to strengthen their relationship with the workers they want to  keep, the Social Compact states. In this regard, a benefit that offers the  potential for helping the department retain trained, experienced personnel  is extended time off for new parents. Up to 10 percent of active duty female  service members become pregnant each year, and there were about  75,000 military children under age 1 as of March 2001. While new military  mothers and fathers may take time off after the birth of a child, the military  does not offer extended time off to new parents. New mothers may take  6 weeks of paid convalescent leave, which is similar to sick leave in the  private sector. Both new mothers and new fathers may also use annual  leave. The services stated that they do not track information concerning  the number of women who separate from active duty service because of  parental responsibilities. We previously reported that of the 28,353 women  without prior military service who enlisted in fiscal year 1993, 2,074  separated because of pregnancy between the 7th and 48th month of  enlistment. Another 706 separated because of parenthood. These  separations accounted for more than one-third of the attrition for female  enlistees who joined the services in 1993. Replacing trained, experienced  personnel who leave is expensive. DOD estimated for fiscal year 1998 that  it had spent $35,000 per enlistee by the time enlistees had been recruited  and trained for 6 months.
The U.S. Coast Guard—which is part of the Department of Transportation  in peacetime but operates under the Navy during wartime—has offered  extended time off for new parents since the early 1990s. The agency’s  “care of newborn children” program permits eligible officers and enlisted  personnel to separate from active duty for a period of up to 2 years.  During the separation period, members do not receive pay and benefits, but  they may elect to join the Coast Guard Reserve and receive reserve pay and  benefits. Upon completion of their separation period, the members are  guaranteed reappointment to active duty at the same grade or rate they  held when they left. Although the program was originally aimed at retaining  women, other factors such as the emergence of dual-income and single- parent families, as well as other economic and cultural changes, created  the need for enhanced family care opportunities for both men and women.  Of 244 service members separated under the program as of June 1999, 133  were women and 111 were men. The Coast Guard found that 47 percent of  members who had separated under the program had returned to active  duty when their separation period ended.
In comparison, private-sector employers with more than 50 employees are  required by the Family and Medical Leave Act of 1993 to allow their  employees to take 12 weeks of unpaid leave to meet family obligations,  such as maternity or paternity leave, adoptions, and care for a spouse,  child, or parent with serious health conditions. The act, which also covers  federal government civilians but not military personnel, does not require  private-sector employers to provide paid time off. Paid maternity and  paternity leave in the private sector appears to be rare. In 1997, only  2 percent of employees had access to paid family leave programs,  according to the Bureau of Labor Statistics. Of the nine private-sector  companies we contacted, one allowed employees to take up to 3 years of  unpaid leave after the birth of a child and to return to a comparable  position. Another company gave mothers 12 weeks paid leave with the  option to take additional unpaid time off. If she returned within 6 months,  the company guaranteed her position; if she returned after 1 year, the  company guaranteed employment, but not the same position.
section_title: DOD Offers Wide Array of Benefits for Active Duty Service Members
paragraphs: On the basis of our analysis, we found no significant gaps between the  types of benefits offered to active duty service members as part of the  military’s benefit package and those offered by private-sector employers.  Most important, DOD offers all four of the core benefits that are offered by  most private-sector firms. These benefits are retirement, health care, life  insurance, and paid time off. As shown on the following page in figure 2,  DOD also offers a wide array of additional benefits. (See app. III for a  description of selected military benefits.) Many private-sector firms offer  additional employee benefits as well.
On the basis of our prior work on military compensation and  DOD’s compensation studies, we have noted several difficulties in  making direct comparisons between military and private-sector benefits.  Such comparisons must account for (1) the demands of military service,  such as involuntary relocation, frequent and lengthy separations from  family, and liability for combat; (2) certain principles of military  compensation that are absent in the private sector, such as the principle  that military compensation must work equally well during peace or war;  (3) the difficulty in identifying appropriate private-sector industries and  jobs to use as benchmarks for the military; (4) difficulties associated with  measuring the value of employee benefits; and (5) military personnel  practices—such as hiring primarily at the entry level and “up or out”  rules—that are uncommon in the private sector.
For these reasons, we did not make direct analytical comparisons  between individual benefits offered by the military and those offered by the  private sector. For instance, we did not attempt to determine whether the  military retirement system is based on certain criteria, more or less  lucrative than private-sector pension plans. However, we sought to identify  the types of benefits found in the private sector—both traditional and  emerging benefits—and used this information to determine whether there  are potential gaps in the benefit package offered to active duty  service members.
The shaded areas of the figure indicate those benefits that are typically considered core benefits in the  private sector.
This chart is not a comprehensive listing of all benefits offered to active duty military personnel.
Private-sector employers take a great variety of approaches when  designing their benefit package. Even so, three thematic trends have  become evident over the last decade or two. Specifically, private-sector  companies are (1) offering a growing number and array of benefits—such  as long-term care insurance, convenience benefits, and elder care  assistance—while also making changes to their traditional core benefits;  (2) introducing more flexibility in their benefit packages; and (3) adding  benefits to help employees balance work and life responsibilities. (See  app. IV for information on trends in specific benefits offered by private- sector firms.) While private-sector firms use pay and benefits packages to  attract and retain employees, they are also concerned about controlling  costs. Employers increasingly are sharing a growing portion of benefit  costs with employees, particularly health care costs, while requiring them  to assume more responsibility for managing their benefits. Some employers  have reduced certain benefits or ceased to sponsor coverage. We recently  testified that the availability of employer-sponsored retiree health benefits  eroded during the late 1990s and that rising cost pressures on employers  may lead to further erosion of these benefits.
Like the military, the private sector also has reacted to demographic  changes in the workforce. Since the 1970s, the American workforce has  become more educated, more heterogeneous, and older. The numbers of  dual-earner families, working women, and single parents have increased.  Employers have reacted by offering benefits aimed at helping employees  balance work and life demands. Since the 1980s, employers have begun  offering benefits such as dependent care assistance, parental leave, flexible  work schedules, and convenience services such as on-site credit unions  and cafeterias and health promotion programs. Flexible schedules that  allow employees to adjust the beginning and ending of their work day,  work more hours per day but shorter weeks, or share a job with another  part-time employee are some of the ways that employers help employees to  manage their work and family responsibilities. Flexible benefit plans also  help employees by allowing them to select additional benefits that may  help balance work-life priorities.
Our work comparing the military’s overall benefit package with the array of  benefits in the private sector showed that several military benefits have  their analogues or counterparts in the private sector. As we noted earlier,  the military offers benefits in the four core areas; however, the military may  structure its benefits differently. For example, whereas the military  retirement system requires 20 years of service to be vested, private-sector  firms typically have much shorter vesting periods or no vesting period at  all. However, military personnel can begin receiving retirement pay and  benefits as soon as they attain 20 years of service and retire from active  duty, but private-sector employees typically must wait until at least age 55.  The military’s health care benefit (TRICARE) is provided to service  members and their families through a network of more than 500 military  treatment facilities, supplemented by civilian providers. The cost of this  care to service members and their dependents is nil or minimal. Active duty  service members and their families enrolled in TRICARE Prime do not pay  enrollment fees, annual deductibles, or copayments. Family members who  use TRICARE Extra pay no enrollment fees but are responsible for annual  deductibles and cost shares of 15 percent. Family members who use  TRICARE Standard also do not pay enrollment fees. However, they pay a  cost share of 20 percent plus the difference between the TRICARE  allowable charge and the doctor’s charge. Private-sector firms, in contrast,  typically offer individual and family health care through private insurers  and normally require employees to share the cost burden. According to the  Bureau of Labor Statistics, in 1999, medium and large private-sector  employers paid the full cost of health coverage for 25 percent of  participants with individual coverage and 15 percent of those with family  coverage. Of those participants required to contribute to their health  coverage, the average monthly cost was approximately $45 for individual  coverage and $151 for family coverage. In the core benefit area of life  insurance, DOD offers low-cost rates on group life insurance.
Service members pay $20 a month for the maximum $250,000 coverage. In  2001, coverage was extended to members’ spouses and eligible children.  Finally, in the core benefit area of paid time off, all service members  receive 30 days annual leave and may carry over as many as 60 days  accrued leave to the next year. The military offers numerous other forms of  paid leave for specific reasons.
In some areas, the military offers benefits that would not normally be  available to civilians working for private-sector firms. For example, service  members and their dependents may obtain discount prices by shopping at  military commissaries (grocery stores) and exchanges (department stores).  They also have privileges to use an extensive array of community facilities  to include, among others, fitness centers, swimming pools, officer and  enlisted clubs, libraries, community centers, hobby shops, and golf  courses. Some private-sector firms offer amenities such as fitness centers  and company stores to their employees, but few, if any, can match the  breadth of facilities and programs available on a military installation. It also  would be rare to find private-sector firms offering, as the military does, free  housing or housing allowances to all of their employees.
Military benefits, overall, have been enhanced in recent years. During the  1990s, some service members expressed concerns that their pay was falling  behind that in the private sector and that their benefits were eroding,  particularly their health care and retirement benefits. Such perceptions  were cited as one cause of the retention problems the military was  experiencing at that time. Congress subsequently enacted legislation to  increase military pay and enhance benefits. These efforts were aimed at  improving the financial well-being and quality of life of service members  and at addressing recruiting and retention problems. For example,  Congress approved across-the-board pay raises of 4.8 percent for  fiscal year 2000 and 3.7 percent for fiscal year 2001, along with targeted pay  raises to mid-level officers and enlisted personnel. For fiscal year 2002,  Congress approved pay raises ranging between 5 and 10 percent,  depending on pay grade and years of service. Major enhancements to  benefits included the restoration of retirement benefits that had been cut for military service members who entered military service on or  after August 1, 1986, and increases in the basic housing allowance to  reduce out-of-pocket housing expenses for service members not living in  military housing.
section_title: Conclusions
paragraphs: Many military spouses want to work, and many families need dual incomes  to meet basic expenses. However, frequent relocations associated with the  military lifestyle can hinder spousal employment and decrease satisfaction  with military life. The ability to assess the effectiveness of the employment  assistance service offered at military installations is one critical step in  developing this program. Doing so could enable DOD to better target  resources and tailor services to meet the employment assistance needs of  military spouses.
As competition with the private sector for qualified personnel increases,  DOD must continue to explore and evaluate benefits that address  changing workforce demographics, help meet mission needs, and  positively impact recruitment and retention efforts. The majority of female  service members are in their childbearing years, and up to 10 percent of  servicewomen annually become pregnant while on active duty. In addition,  the emergence of dual-income and single-parent families has created a  need for enhanced family care opportunities and flexibility for both men  and women. The lack of extended time off for parents following the birth or  adoption of a child could be negatively impacting retention. Moreover,  replacing trained, experienced personnel who leave is expensive. Because  DOD does not track the number of service members who separate due to  parental responsibilities, the magnitude of this issue is unknown.
section_title: Recommendations for Executive Action
paragraphs: We recommend that the Secretary of Defense direct the Under Secretary of  Defense for Personnel and Readiness to  develop measures for tracking and assessing the effectiveness of  installation-level services offered through DOD’s spousal employment  assistance program and  assess the feasibility, costs, and benefits of offering extended time off to  parents of newborn or adopted children as one way to increase  retention of trained, experienced personnel.
section_title: Agency Comments and Our Evaluation
paragraphs: In written comments on a draft of this report, DOD concurred with our  recommendation on tracking and assessing the effectiveness of  installation-level services offered through DOD’s spousal employment  assistance program. DOD partially concurred with our recommendation  to assess the feasibility, costs, and benefits of offering extended time off  to parents of newborn or adopted children. DOD stated that it has  contracted a study to evaluate the feasibility of implementing an extended  leave program for active duty military members. The study will review  leave programs at private-sector organizations and other government  agencies, including the U.S. Coast Guard. According to DOD, the study will  include an assessment of extended leave for new parents, as well as other  reasons for leaves of absence. The study is scheduled for completion by  September 30, 2002. We obtained and reviewed a project description for the  DOD study as well as a status report dated August 2002. These documents  indicate that DOD plans to address the feasibility, costs, and benefits of  extended maternity leave. The scope of the study, however, is limited to  active duty officers and does not appear to address parental leave for new  fathers. Our recommendation was intended to apply to all active duty  personnel, including enlisted personnel and new fathers. If DOD conducts a  follow-up study that addresses these groups, then we believe it could  satisfy the intent of our recommendation.
DOD also provided technical comments that we incorporated as  appropriate. DOD’s comments are reprinted in appendix V.
section_title: Scope and Methodology
paragraphs: To identify demographic changes in the active duty force after 1973,  we obtained and analyzed relevant sections of two DOD reports,  2000 Population Representation in the Military Services and Profile of  the Military Community: 2000 Demographics Report, as well as  additional data from the Defense Manpower Data Center. We also obtained  and analyzed demographic data on the U.S. civilian labor force from the  Bureau of Labor Statistics. To identify the employee benefits available to  active duty service members, we reviewed DOD financial management  regulations, service budget documents, military compensation background  papers, DOD and service Web sites, and other department documents.
We also reviewed DOD studies on compensation, human capital, and  quality of life; research on military families and benefits, and our prior  studies on military benefits and personnel issues. We interviewed officials  at the Office of the Secretary of Defense, the Army, the Navy, the Air Force,  and the Marine Corps, and other department officials. Based on our  analysis of demographic changes in the military, we focused particular  attention on family-friendly benefits, such as spousal employment  assistance and child care.
To gather information on private-sector benefits, we conducted a  broad literature search of private-sector benefit practices and trends and  used survey results of medium and large employers from the U.S. Bureau of  Labor Statistics and several human resources consulting firms. Sources  included the following publications from the Bureau of Labor Statistics:  Monthly Labor Review, Compensation and Working Conditions, and  Employee Benefits in Medium and Large Establishments. Although the  studies we reviewed covered different time periods, surveyed different  employer populations, and asked different questions—thereby resulting  in conflicting data on the prevalence of benefits—their findings generally  concurred on trends related to specific benefits. We also interviewed  representatives from nine companies that have been recognized as  innovative or effective in strategically managing their human capital.  The nine companies are Federal Express Corp.; IBM Corp.; Marriott  International, Inc.; Merck and Co., Inc.; Motorola, Inc.; Sears, Roebuck and  Company; Southwest Airlines Co.; Weyerhaeuser Co.; and Xerox Corp.,  Documents Solution Group. We previously reported on the key principles  that underlie these companies’ human capital strategies and practices. We  did not make direct analytical comparisons between individual benefits  offered by the military and those offered by the private sector to assess  whether military benefits are more or less lucrative than those offered by  private-sector employers. However, we identified the types of benefits  found in the private sector—including core benefits and emerging  benefits—and used this information to determine whether there were gaps  in the benefit package offered to active duty service members.
We conducted our review from March to July 2002 in accordance  with generally accepted government auditing standards. We obtained  comments on a draft of this report from DOD and incorporated  its comments where appropriate.
We are sending copies of this report to the Secretary of Defense. We  will also make copies available to appropriate congressional committees  and to other interested parties on request. In addition, the report will be  available at no charge at the GAO Web site at http://www.gao.gov.
If you or your staff has any questions regarding this report, please call me  at (202) 512-5140. Key contributors to this report are listed in appendix VI.
section_title: Active Duty Pay, Allowances, and Benefits
paragraphs: This appendix lists active duty pays, allowances, and benefits that we  identified during our review. We compiled this list from Department of  Defense (DOD) financial management regulations, service budget  documents, military compensation background papers, DOD and service  Web sites, directives, and other department documents.
section_title: Demographic Trends in the Active Duty Military
paragraphs: This appendix shows demographic changes that have occurred in the  active duty military since 1973, when the draft ended and the military  became an all-volunteer force. The appendix also shows selected  demographic changes that have occurred in the U.S. civilian labor force.  In cases where data was not available going back to 1974, we went back as  far as possible.
The active duty force has undergone several demographic changes since  the military became an all-volunteer force in 1973. It has become older and  better educated, and it has seen increases in the representation of minority  and female service members (see figs. 3-5).
Some of the demographic changes in the active duty military generally  reflect trends in the U.S. civilian labor force during this time period (see  figs. 6-8).
Although reliable data on married military personnel is not available for  1973-77, various DOD studies cite statistics showing that the percentage of  married enlisted personnel increased from approximately 40 percent of the  force in 1973 to approximately 50 percent in 1977. After dropping slightly  from 1977 to 1980, the enlisted marriage rate rose again through the mid- 1990s. The overall marriage rate—including both enlisted personnel and  officers—has remained at 50 percent or higher since 1980 (see fig. 9).
In the U.S. civilian labor force, the proportion of married workers  decreased between 1974 and 2000 (see fig. 10).
section_title: Selected Employee Benefits for Active Duty Service Members
paragraphs: This appendix summarizes selected benefits that the federal government  provides to active duty service members and their dependents. DOD lacks  an authoritative listing of its employee benefits. To compile this list, we  drew from several sources, including DOD and service directives,  background papers, studies, and Web sites.
subsections: section_title: Child and Youth Programs
subsections: section_title: Exceptional Family Member Program
paragraphs: The Exceptional Family Member Program is a mandatory enrollment  program for active duty members with family members who have  exceptional medical needs or learning disabilities that require special  medical treatment, education, or counseling. The primary goal of the  program is to assist service members in providing for the special needs of  their exceptional family members before, during, and after relocation  required by the change of duty assignment. Although support varies by  installation, typical programs help families access and use various medical  and social services and educational programs, obtain information and  referrals, coordinate assignments, and confirm the availability of required  services when reassigned. In January 2001, DOD launched an Internet site,  the Special Needs Network, to help members and their families research  assignments and connect with care coordinators and service providers.
section_title: Youth Programs
paragraphs: Youth programs provide service members’ children ages 12 to 18  with social, recreation, and athletic programs at more than 470 youth  facilities at 280 geographic locations worldwide. Military youth may  participate in 4-H, Boys and Girls Clubs activities, and team sports, as well  as activities such as parties, support groups, and community services  offered through teen centers. In addition, a youth sponsorship program,  supplemented by a military teen Web site—Military Teens on the Move— helps military youth acclimate to frequent relocations. DOD recently  expanded its youth program to focus on school-age care, at-risk behaviors,  and prevention programs.
section_title: Death and Burial Benefits
subsections: section_title: Burial Benefits
paragraphs: The Department of Veterans Affairs will provide a casket, a government  headstone or marker, and a burial flag at no cost to a deceased service  member or veteran. In addition, service members and veterans who have  completed service requirements are eligible for burial in a Department of  Veterans Affairs national cemetery. Reserve component members entitled  to retired pay as a result of 20 years of creditable service are also eligible,  as are spouses and minor children of eligible veterans and service  members. The National Defense Authorization Act for Fiscal Year 2002  authorizes a travel allowance for family members to attend burial  ceremonies for deceased members who die while on duty.
section_title: Burial Costs
paragraphs: DOD reimburses up to $4,850 for a member’s burial expenses, depending  on the type of arrangements. DOD also provides travel for next of kin. In  addition, the Department of Veterans Affairs will pay a burial allowance of  up to $2,000 if the veteran’s death is service-connected. In some cases, it  also will pay the cost of transporting the remains of a service-disabled  veteran to the national cemetery with available gravesites that is nearest  the home of the deceased. In certain instances, the Department of Veterans  Affairs will pay a $300 plot allowance when a veteran is buried in a  cemetery that is not under U.S. jurisdiction.
section_title: Continued Health Benefits for Surviving Family Members
paragraphs: Surviving family members of a deceased active duty service member  remain eligible for health care benefits under TRICARE at active duty  dependent rates for a 3-year period following the service member’s death.  According to DOD, they may choose to enroll or remain enrolled in  TRICARE Prime, where available, with no enrollment fees and no cost- shares or deductibles. At the end of the 3-year period, their TRICARE  eligibility continues at the retiree dependent rates.
section_title: Continued Military Privileges for Surviving Family Members
paragraphs: The unmarried surviving spouse and qualified dependents of a deceased  member are eligible for unlimited shopping privileges at military  commissaries and exchanges. Survivors of a service member who dies  while on active duty are provided rent-free government housing for  180 days after the death of the service member or a tax-free housing  allowance for that portion of the 180-day period when they are not in  government housing. The amount of the allowance is based on the  member’s grade at the time of death.
section_title: Death Gratuity Payments
paragraphs: Survivors of a service member who dies while in active service and retirees  who die within 120 days of retirement as a result of a service-connected  injury or illness receive an immediate cash payment of $6,000. This  payment is to assist in meeting financial needs before survivor benefits, if  any, become available.
section_title: Dependency and Indemnity Compensation
paragraphs: The Department of Veterans Affairs provides a monthly nontaxable  payment to the unremarried surviving spouse of a service member who  dies from a service-connected disability. Payment also may be provided to a  member’s unmarried children under age 18, to children between ages 18  and 23 if attending a Veterans Affairs-approved school, to disabled children,  and to the parents of a deceased service member if they meet certain  income requirements. The surviving spouse of a service member who died  after January 1, 1993, receives $935 a month, plus $234 for each dependent  child. The monthly payment for parents of deceased veterans varies with  their income.
section_title: Funeral Honors
paragraphs: DOD provides an honor guard detail for the burial of an eligible veteran,  folding and presentation of the American flag to the next of kin, and playing  of “Taps” during the burial of current and former active duty and Selected  Reserve members.
section_title: Montgomery GI Bill Death Benefit
paragraphs: The Department of Veterans Affairs will pay a designated survivor a  special Montgomery GI Bill cash death benefit in the event of the  service-connected death of an individual while he or she is on active  duty or within 1 year after his or her discharge or release. The deceased  must either have been entitled to educational assistance under the  Montgomery GI Bill program or have been a program participant who  would have been entitled, except for the high school diploma or length-of- service requirement.
section_title: Survivor and Dependent Education
paragraphs: Surviving spouses and children are eligible for up to 45 months of  education benefits to be used for associate, bachelor, or graduate degrees;  courses leading to a certificate or diploma from business, technical, or  vocational schools; and apprenticeships. Payments to a spouse end  10 years from the date the individual is found eligible or from the date of  the death of the veteran. Spouses who have passed the period of eligibility  may be eligible for education loans. During the first 2 years after the end of  their eligibility period, eligible spouses may borrow up to $2,500 per  academic year to continue a full-time course leading to a college degree or  to a professional or vocational objective that requires at least 6 months to  complete. Children are eligible to receive education benefits between their  18th and 26th birthdays. Monthly payments of $670 for full-time attendance  at educational institutions and lesser amounts for part-time attendance are  available. Loans are based on financial need.
section_title: Tax Benefits
paragraphs: When a member of the Armed Forces dies while in a combat zone in active  service, or as a result of wounds, disease, or injury while so serving, special  tax forgiveness rules apply. Additionally, special favorable tax rules apply  when an individual dies as a result of wounds or injury that was incurred  outside the United States in a terroristic or military action. Generally,  benefits received from the Department of Veterans Affairs by a survivor of  a deceased member are exempt from levy by the United States or any  agency thereof with respect to indebtedness the deceased may have had to  the United States.
section_title: Unused Leave
paragraphs: Survivors of a deceased member are entitled to payment for the deceased’s  unused accrued leave, if any. The amount of the payment is based on the  member’s basic pay at the time of death.
section_title: Disability
subsections: section_title: Veterans Disability Compensation
paragraphs: The Department of Veterans Affairs offers tax-free monthly payments  to a member who has a service-connected disability. The amount of the  payment varies based on the extent of disability, the veteran’s marital  status, and the number of dependents. In 2002, monthly payments  ranged from $103 to $2,163 plus allowances for spouse and children  where applicable.
section_title: Veterans Disability Pension
paragraphs: The Department of Veterans Affairs offers monthly payments to eligible  wartime veterans with limited income, a permanent disability, and an  inability to work. Payments vary according to the veteran’s income, number  of family members, and capacity for self-care. If a veteran is receiving any  income, an equivalent offset is subtracted from this payment. The annual  basic pension for a single veteran in 2002 was $9,556. A veteran with one  dependent received $12,516. For each additional dependent, the pension  increased by $1,603.
section_title: DOD Disability Retirement Pay
paragraphs: A service member may qualify for disability retirement pay if the member  has a permanent and stable disability that is not the result of intentional  misconduct or willful neglect and the member has at least 20 years of  service. If the member does not have 20 years of service, the member may  still qualify for disability retirement if the disability is at least 30 percent  and meets certain other criteria.
section_title: DOD Disability Severance Pay
paragraphs: Members with less than 20 years of active service who are separated from  active duty because of service-connected minor disabilities are eligible to  receive a lump-sum payment. This lump-sum payment is directed at  members who are less than 30 percent disabled and physically unable to  perform the military duties of their respective office or grade. Payments are  based on 2 months’ basic pay for each year of active service, not to exceed  12 years’ basic pay.
section_title: Discount Shopping
subsections: section_title: Commissaries
paragraphs: Active duty service members, their dependents, and retirees can purchase  discounted grocery items at more than 280 commissaries worldwide.  Because commissaries sell food and household items free of local sales tax  and at cost, plus a 5-percent surcharge to help defray operational expenses,  customers can save more than 30 percent on their purchases compared to  commercial supermarkets. According to DOD, a family of four can save  about $2,400 annually by shopping at a commissary.
section_title: Military Exchanges
paragraphs: Active duty service members, their dependents, and retirees may purchase  a variety of goods and services at 1,522 military exchanges worldwide.  Exchanges are similar to department stores, selling apparel, footwear,  household appliances, jewelry, cosmetics, food, and other merchandise.
Some exchanges offer gas stations, florist shops, optical shops, fast food  restaurants, and liquor stores.
section_title: Education Assistance
subsections: section_title: Education Savings Plan
paragraphs: The National Defense Authorization Act for Fiscal Year 2002 authorized  service secretaries to establish an education savings plan. Service  members who sign up for at least another 6 years of active duty in a critical  skill area may receive a bonus of $5,000 to $30,000 in U.S. savings bonds.  Generally, service members who have completed fewer than 3 years of  service and who commit to at least 6 years of additional service are eligible  to receive savings bonds worth $5,000; service members who have  completed between 3 and 9 years of service and make the requisite service  commitment are eligible to receive savings bonds worth $15,000; and  service members who have completed 9 years of service are eligible to  receive savings bonds worth $30,000 after committing to the required  additional service.
section_title: Montgomery GI Bill
paragraphs: The Montgomery GI Bill provides educational assistance to active duty  members and veterans who enter active duty after June 30, 1985. Members  may use the assistance for degree and certificate programs, as well as for  on-the-job training and correspondence courses.
Eligible individuals upon first becoming members of the Armed Forces or  first entering on active duty contribute $1,200 through basic pay reductions  of $100 per month during their first 12 months of service unless they make  an election not to receive educational assistance under the program.
Members who choose not to participate in the program must formally  decline enrollment and, with some exceptions, cannot enroll in the  program at a later time. Veterans must receive an honorable discharge to  continue to participate. Educational benefits are available while on active  duty after meeting active duty service requirements and generally for up to  10 years after a veteran’s discharge from active duty. The amount of  payment of educational assistance varies depending on the obligated  period of active duty upon which the entitlement is based.
The National Defense Authorization Act for Fiscal Year 2002 authorizes the  service Secretaries to allow a service member with critical skills or in a  military specialty requiring critical military skills who has served a  minimum of 6 years and who agrees to serve for at least 4 additional years  to transfer up to 18 months of unused basic Montgomery GI Bill  educational benefits to his or her spouse or children. A service member’s  spouse may use transferred benefits after the member completes the  6 years of service in the Armed Forces. A member’s child who is at least  18 years old or has a high school diploma may use transferred benefits after  the parent completes 10 years of service in the Armed Forces.
section_title: Voluntary Education
paragraphs: An active duty member who voluntarily enrolls for education or training  in an educational institution during off-duty time may receive tuition  assistance. While the services can pay all or a portion of tuition costs  or expenses, service members may use a portion of their Montgomery  GI Bill benefits to pay for the remaining tuition. Commissioned officers are  not eligible for this benefit unless they agree to remain on active duty for  a period of 2 years after the completion of the training or education  paid for.
section_title: Family Support Services
subsections: section_title: Deployment and Mobilization Support
paragraphs: Deployment and mobilization support programs help service members and  their families prepare for and cope with the challenges associated with  mobilization, remote assignments, and deployments. Programs address a  range of issues that may arise prior to, during, and upon return from  deployments. Programs may include briefings on available support  services; free telephone, video electronic mail, and teleconferencing calls;  and benefits such as a free oil change for the family’s personal vehicle.  Upon return from deployment, commanders may elect to provide  workshops to help members and their families readjust to life together.
section_title: Family Advocacy Programs
paragraphs: Family Advocacy Programs assist members and their families with  problems resulting from spouse and child abuse, child neglect, and child  sexual molestation. These programs offer prevention, intervention, and  treatment resources at no cost to military family members.
section_title: Parenting Programs
paragraphs: Parenting programs help military families address specific problems, teach  and build skills, enhance family self-sufficiency, and prevent child abuse.  These voluntary programs include parent education classes as well as  parent support groups. Two core parenting classes are the New Parent  Support Program and the Healthy Parenting Initiative. Aimed at first-time  parents, the New Parent Support Program offers home visits by nurses who  can answer parents’ questions about infant care. The Healthy Parenting  Initiative provides resources to deal with stressors such as frequent  deployments, intermittent single parenting, and separation from extended  family support networks.
section_title: Personal Financial Management Program
paragraphs: The Personal Financial Management Program provides financial education,  training, and counseling to members and their families in the areas of  personal finance, budgeting, debt management, and retirement planning.
section_title: Relocation Assistance Program
paragraphs: The Relocation Assistance Program helps active duty service members and  their families prepare for moves and adjust to life at new installations. The  program provides pre-move destination information, relocation counseling,  and settling-in services. Members located overseas may also obtain  intercultural training. Typical programs address information on the  shipment and storage of household goods, financial planning, permanent  change of station entitlements, and child care. A special Web site provides  information about more than 300 military installations. The services may  offer additional seminars and programs tailored to members’ needs. Such  programs include information seminars for spouses and new military  families and the loan of household items for use prior to the arrival of  personal household goods.
section_title: Spouse Employment Assistance Program
paragraphs: The Spouse Employment Assistance Program provides information and  referral services to military spouses to facilitate their employment in the  civilian labor market. These services address various aspects of the job  search and career planning process, the acquisition of skills that will  facilitate entrance into the workforce, and the development of portable  careers. Military spouses also may receive preferential consideration for  competitive service positions in DOD located outside the United States and  preference for hiring in positions in nonappropriated fund activities.  Additionally, spouses of members may receive preference in hiring for any  position in DOD above grade GS-7 if the spouse is among persons  determined to be best qualified for the position and if the position is  located in the same geographical area as the permanent duty station of  the member.
section_title: Transition Assistance Program
paragraphs: The Transition Assistance Program provides services to departing military  members to help them adjust to civilian life and obtain jobs. Services  include employment assistance, leave, and relocation assistance for  personnel overseas. Members and their families are eligible to use these  services for up to 180 days after separation. In 2001, DOD launched a  Web site that offers courses on conducting job searches, writing resumes,  and using the Internet to find jobs.
section_title: Health Care
subsections: section_title: Continued Health Care Benefit Program
paragraphs: Members leaving the military before retirement can purchase health care  benefits to cover medical bills incurred by them and their families while  between jobs. The Continued Health Care Benefit Program mirrors  TRICARE Standard medical coverage. Members who enroll in the program  within 60 days after separation from active duty or loss of eligibility for  military health care can purchase coverage for up to 18 months for  themselves and dependents and up to 36 months for others such as  unmarried former spouses.
section_title: Dental
paragraphs: Active duty service members are entitled to dental care in more than  400 military dental treatment facilities on a space available basis. If care  is unavailable either because the member is remotely located or because  unavailable specialty care is needed, civilian dentists may provide care.  Family members may enroll in the TRICARE Dental Program, which  requires monthly premiums and copayments. For example, basic  restorative services, such as fillings, are covered at 80 percent, and the  family member is responsible for the remaining 20 percent of costs. It  allows up to $1,200 per year for general dentistry and a lifetime orthodontic  maximum of $1,500 for each enrollee. The dental program covers a wide  range of diagnostic, preventive, and restorative services, including  dental x-rays, exams, cleaning, fluoride applications, fillings, root canals,  and crowns.
DOD provides health care to active duty members and their dependents  through TRICARE, a managed care program. Care is provided in more than  500 military treatment facilities worldwide, supplemented by civilian  providers. TRICARE offers beneficiaries three health care options: Prime,  Standard, and Extra. Active duty personnel are required to enroll in  TRICARE Prime. This program offers care in military treatment facilities  and does not require enrollment fees or copayments from active duty  beneficiaries for care or drugs obtained from military treatment facilities.
Dependents may choose to enroll in TRICARE Prime where available or  may elect to receive care under TRICARE Extra, a preferred provider  option, or under TRICARE Standard, a fee-for-service option. Beneficiaries  obtaining care under Extra and Standard are subject to deductibles and a  cost share of 15 or 20 percent, depending on the program enrolled. They  may also be subject to a $3 charge for generic drugs and a $9 charge for  brand name drugs purchased from the national mail order pharmacy or at  retail network pharmacies. The charge for nonnetwork pharmacies is the  greater of $9 or 20 percent of total cost. The National Defense  Authorization Act for Fiscal Year 2002 requires the Secretary of Defense  to establish a program to provide extended benefits to eligible dependents  which may include benefits for dependents who are mentally retarded,  have a serious physical disability, or have an extraordinary physical or  psychological condition. These extended benefits may include  comprehensive health care services and case management services.
section_title: Housing
paragraphs: Military members are eligible to receive one of three types of housing,  depending on their rank, marital status, and whether they reside on- or off- installations. Military personnel who have one or more family members  living with them are eligible to apply for and occupy military family housing  located on installations. Single junior-enlisted members are required to live  in barracks where they may share a room with a communal bathroom and  telephone down the hall. Military members living off of installations are  entitled to a basic housing allowance in order to be able to afford housing  in the local civilian housing market. This allowance is determined by the  member’s pay grade and dependency status as well as the cost of suitable  civilian housing for the member’s income level in the geographic area.  Members stationed overseas who are not furnished government housing  are eligible for an overseas housing allowance based on dependency status.
section_title: Life Insurance
subsections: section_title: Service Members’ Group Life Insurance
paragraphs: Service members’ Group Life Insurance is a government-sponsored  program that provides insurance coverage to members of the Armed  Forces. Under the program, active duty members and others automatically  are insured for $250,000. Members may elect less coverage or no coverage.  The premium rate, as set by the Secretary of Veterans Affairs, is $20 a  month for the maximum $250,000 coverage. Monthly premiums for less  than the maximum coverage are $0.80 per $10,000. Beginning in November  2001, coverage was extended to members’ spouses and children. Service  members may purchase up to $100,000 coverage for spouses, but no more  coverage than is held by the service member. Premiums for spouse  coverage vary based on actuarial principles. Coverage for eligible  dependents is free and automatic.
section_title: Survivor Benefit Plan
paragraphs: The Survivor Benefit Plan provides members who reach retirement  eligibility an opportunity to leave a portion of their retired pay to their  survivors. The plan complements social security survivor benefits with a  monthly annuity payment to eligible spouses and dependents. Payments  equal 55 percent of what the members’ retired pay would have been had  they been retired. When survivors reach the age of 62, payments drop to  35 percent of retired pay. Payments are offset by Dependency and  Indemnity Compensation and are adjusted annually for cost-of-living  increases. Under the National Defense Authorization Act for Fiscal Year  2002, surviving spouses of some active duty service members are also  authorized to receive Survivor Benefit Plan benefits.
section_title: Veterans’ Group Life Insurance
paragraphs: Veterans’ Group Life Insurance provides a maximum of $250,000 renewable  5-year coverage for members released from active duty. Service members’  Group Life Insurance may be converted to this plan. Conversion is  available to members who have full-time Service members’ Group Life  Insurance coverage as well as those with part-time coverage under certain  conditions that render them uninsurable at standard premium rates.  Members of the Individual Ready Reserve and Inactive National Guard may  also enroll. Coverage is limited to the maximum amount of Service  members’ Group Life Insurance held while the service member was on  active duty or in the Reserves. Veterans’ Group Life Insurance premiums  range from $11 to $84 per month per $100,000 in coverage, varying with the  service member’s age.
section_title: Miscellaneous
subsections: section_title: DOD Dependent Schools
paragraphs: Children of active duty service members can obtain free elementary  through high school education at schools located on installations in the  United States and overseas. DOD Dependent Schools educate more  than 76,000 military children in 154 schools in 13 countries. Seventy  Domestic Dependent Elementary and Secondary Schools at 17 installations  located in seven states, Guam, and Puerto Rico educate more than 34,000  military children.
section_title: Legal Assistance
paragraphs: Service members and their families can receive free legal advice and  assistance from judge advocates or civilian attorneys for many personal,  noncriminal matters. These matters include personal tax questions;  adoption assistance; child and spouse support; wills, estates, and trusts;  debts and bankruptcy; notary public services; leases; and advice on Soldier  and Sailors’ Civil Relief Act protection.
section_title: Department of Veterans Affairs Guaranteed Home Loan Program
paragraphs: Members may obtain guaranteed home loans from the Department of  Veterans Affairs in order to purchase homes, make home improvements,  and refinance home loans. These loans require no down payments, limit  closing costs, provide for assumable mortgages, and allow prepayment  without penalty. The Department of Veterans Affairs guarantees 25 percent  of home loans up to $50,750; 40 percent of home loans up to $36,000; and  50 percent of home loans up to $45,000, subject to the amount of the  entitlement that the veteran has available. An active duty veteran who buys  a home pays a funding fee ranging from 1.25 to 3 percent of the loan  amount depending on the amount of the down payment and whether the  member has other Veterans Affairs loans.
section_title: Privileges at Military Facilities (Morale, Welfare, and Recreation)
paragraphs: Service members and their families have access at installations to morale,  welfare, and recreation programs that are aimed at meeting their physical,  social, and cultural needs. These programs include fitness centers, golf  courses, movie theaters or free movies, automotive skills development,  crafts and hobby programs, guest quarters, swimming pools, enlisted clubs,  game rooms and arcades, coffeehouses, intramural sports, bowling centers,  libraries, chapels, rifle and pistol ranges, outdoor recreation, and  exchanges, commissaries, and discounts on special events and off- installation recreation areas.
section_title: Transportation Incentive Program
paragraphs: Active duty service members may be eligible to receive reimbursements of  up to $100 per month for transportation expenses associated with using  public transportation and van pools when commuting to and from work.
section_title: Space Available Travel
paragraphs: Space Available Travel permits military members and their families to  travel free or for a small fee on military transportation, space permitting.  Family members may use this benefit to accompany an active duty service  member on immediate family emergencies and on house-hunting trips  related to a pending permanent change of station move.
section_title: Paid Time Off
subsections: section_title: Annual leave
paragraphs: Members accrue leave at the rate of 2-1/2 days per month of active service.  Members may not accumulate more than 60 days of leave as of the end of  the fiscal year except when they enter a duty type or situation during which  it is unlikely that leave may be used.
section_title: Convalescent Leave
paragraphs: Service members who are determined unfit for duty by their commanding  officer or hospital command receive leave for a period of up to 30 days per  hospitalization. Following pregnancy, service members normally receive  42 days (6 weeks) leave per a doctor’s instructions.
section_title: Educational Leave of Absence
paragraphs: Eligible members may use up to 2 years of leave to pursue an educational  program. Although members continue to receive basic pay for their  applicable pay grades and to accrue leave, they do not receive housing or  other allowances.
section_title: Graduation Leave
paragraphs: Graduates of the military academies may be granted leave of not more  than 60 days to be used within 3 months of graduation and before  reporting for permanent duty. This leave does not count against the  officer’s annual leave.
section_title: Public Holidays
paragraphs: Except when prevented by military operations, members observe U.S.  public holidays as established by federal statutes.
section_title: Sick-in Quarters
paragraphs: Members may be excused from duty for treatment or medically directed  self-treatment in homes, barracks, or other nonhospital facilities. This  leave does not count against annual leave.
section_title: Retirement and Savings
subsections: section_title: Retirement
paragraphs: Military members presently are covered by one of three separate  retirement systems, depending on when they joined the military. All  three systems require no contribution from the service member, allow  retirement after 20 years of service, and have no vesting before 20 years.  Benefits received are based on years of service and salary. Service  members who joined the military before September 8, 1980, are covered  under the Final Pay plan. This plan bases retired pay on final basic pay  multiplied by 2.5 percent per year of service less any excess over 75 percent of pay upon which the computation is based. Service members  who joined the military after September 7, 1980, and before August 1, 1986,  receive retirement benefits under the High-3 plan. High-3 gives members  (1) 50 percent of their average basic pay for the highest 3 earning years  before retiring at 20 years of service and (2) an additional 2.5 percent for  each year beyond 20 years of service, to a maximum of 75 percent for  30 years of service. Members who joined the Armed Forces after  July 31, 1986, may choose between the High-3 Plan and a revised retirement  plan enacted under the Military Retirement Reform Act of 1986  (sometimes referred to as Redux) upon reaching their 15th year of service.  Under Redux, a member who elects to receive a bonus and signs a written  agreement to remain on active duty until the member has completed  20 years of active duty service will receive a $30,000 lump-sum bonus, and  must remain in the Redux plan.
section_title: Thrift Savings Plan (Uniformed Services Plan)
paragraphs: Service members may contribute up to 7 percent of their basic pay in the  Thrift Savings Plan, a retirement savings and investment program that  offers participants the same type of savings and tax benefits that many  private corporations offer their employees under “401(k)” plans. The  retirement income that service members receive from their accounts  depends on the amount contributed during working years and the earnings  on these contributions. Service members may contribute a portion of their  monthly base pay up to the 2002 Internal Revenue Service limit of $11,000  to any or all of five funds. Service members enrolled in the plan may also  contribute any amount of incentive pay or special pay, including bonuses.  Service members serving in critical military specialties, as designated by  service Secretaries, and who agree to serve on active duty for 6 years are  eligible to receive matching contributions of up to 4 percent of basic pay.  The government matches each of the first 3 percent and half of the next  2 percent.
section_title: Trends in Selected Private-Sector Employee Benefits
paragraphs: This appendix summarizes trends in selected employee benefits offered by  medium and large U.S. employers to their full-time employees. To compile  this list, we drew from several sources, including the U.S. Bureau of Labor  Statistics’ Monthly Labor Review (1989-1991 and 1999-2001),  Compensation and Working Conditions (1996-1998 and 2000), and  Employee Benefits in Medium and Large Private Establishments  (1995 and 1997); surveys conducted by human resources consulting firms;  and our interviews with representatives from nine companies that have  been recognized as innovative or effective in strategically managing their  human capital. Although the studies we reviewed covered different time  periods, surveyed different employer populations, and asked different  questions—thereby resulting in conflicting data on the prevalence of  benefits—their findings generally concur on trends related to specific  employee benefits.
subsections: section_title: Accidental Death and Dismemberment
paragraphs: Accidental death and dismemberment coverage provides benefits in  addition to existing group life insurance if a covered worker dies or is  injured as a result of an accident. Coverage is almost always a component  of group life insurance. However, employees who have the option to  choose their benefits through a flexible benefits program may be able to  receive accidental death and dismemberment coverage without life  insurance. Accidental death and dismemberment benefit payments usually  equal 100 percent of a worker’s basic life insurance. Plans also may pay  partial benefits for the accidental loss of an eye, a leg, or an arm. In 1999,  57 percent of employees in medium and large U.S. companies had  accidental death and dismemberment coverage compared with 69 percent  in 1993.
section_title: Child Care Assistance
paragraphs: Employers sponsor a variety of programs to assist employees with child  care responsibilities. The range of corporate-sponsored child care has  continued to grow since the 1980s and now includes on- and off-site child  care, emergency, sick, and backup child care services when regular child  care is unavailable; care for mildly ill children or when schools are closed  due to holidays; referral services; and dependent care flexible spending  accounts, among other programs. A survey conducted by a human  resources consulting company found that, in 2000, dependent care flexible- spending accounts were the most prevalent form of child care assistance,  followed by employer-sponsored child care resource and referral services.  Five of the nine companies we contacted offered employees flexible  spending accounts for dependent care. In 1999, 10 percent of employees at  medium and large companies had access to employer-sponsored or -funded  child care either on-site or off-site. Few companies—mainly very large  corporations—offer before and after school care, care during holidays and  vacations, or care for mildly ill children.
section_title: Convenience Benefits
paragraphs: Convenience benefits are services and products provided at the workplace  in order to allow employees to perform errands conveniently and  efficiently, thus helping them better balance their work and home  responsibilities. Some convenience benefits have existed for some time,  while others have been implemented only recently. Examples include  health promotion programs, on-site credit unions, dry cleaning services,  cafeterias, take-home meals, minor automotive servicing, and commuting  assistance. The prevalence of these services varies by type. For example,  in 2000, 25 percent of employers subsidized employees’ parking and mass  transit costs through commuter assistance programs, according to a human  resources consulting firm. In comparison, 66 percent of employers  provided on-site credit unions, and 76 percent provided health promotion  programs in 2000.
section_title: Elder Care Assistance
paragraphs: An emerging benefit, elder care assistance, consists of time off—paid or  unpaid leave—to care for an elderly dependent, employer-paid or  sponsored adult day care, and resource and referral information. The  percentage of employers offering elder care assistance has increased since  the 1990s in part due to the aging workforce and the passage of the Family  and Medical Leave Act of 1993, which requires employers to provide up to  12 weeks of unpaid, job-protected leave to eligible employees so they may  care for a parent who is seriously ill. In 1993, 31 percent of employees were  eligible for some form of elder care benefits, compared with 3 percent in  1989. A human resources consulting firm found that 43 percent of surveyed  companies offered elder care resource and referral programs in 2000, up  from 27 percent in 1998. The Family and Medical Leave Act of 1993 applied  to all nine companies we contacted; however, none offered paid time off to  care for family members.
section_title: Employee Assistance Programs
paragraphs: Employee assistance programs provide information and referrals to help  employees cope with alcohol and substance abuse, family problems, stress,  and psychiatric problems. An increasing number of programs also provide  information and counseling services related to financial planning, legal  assistance, pre-marriage and marriage counseling, college planning, and  spouse job placement assistance for relocation. Four of the nine companies  we contacted offered employee assistance programs that included  counseling and referral services. According to the Bureau of Labor  Statistics, 54 percent of employees had access to employee assistance  programs in 1999.
section_title: Flexible Benefits
paragraphs: Flexible benefits, also called cafeteria plans, allow employees to tailor their  benefit packages to their specific needs. Companies use flexible benefits as  one approach to meet the needs of their increasingly diverse workforces,  while containing costs. Flexible benefits allow employees to choose among  plans within a given benefit area or to design individual benefit packages by  selecting specific benefits from among several types. Employees may  choose from a variety of health care and life insurance options, various  levels of sickness and accident insurance, long-term disability insurance,  additional vacation and sick leave days, dependent care, adoption  assistance, and legal assistance benefits. According to the Bureau of Labor  Statistics, the percentage of employees in medium and large companies  with access to flexible benefits increased from 5 percent in 1988 to  13 percent in 1999.
section_title: Flexible Spending Accounts
paragraphs: Some companies permit employees to allocate funds for dependent care  expenses, health care deductibles, coinsurance, and other costs not  covered by health care plans through flexible spending accounts. These  accounts provide employees with a pretax savings account into which  employees deposit a defined amount of money each pay period. According  to the Bureau of Labor Statistics, the percentage of employees in medium  and large companies eligible for flexible spending accounts increased from  12 percent in 1988 to 21 percent in 1999. Eight of the nine companies we  contacted offered flexible spending accounts to offset child or health  care expenses.
section_title: Flexible Work Arrangements
paragraphs: Flexible work arrangements give employees greater flexibility in choosing  the times that they begin and end their workdays and weekly schedules.  Common types of flexible schedules include job sharing, telecommuting,  flexible work hours, compensatory time arrangements, and gliding  schedules that require a specific number of hours of work each day but  permit employees to vary their arrival and departure times. According to  the Bureau of Labor Statistics, in 1997 approximately 28 percent of full- time employees had flexible work schedules—almost double the  percentage in 1985. A survey by a human resources consulting firm showed  increases in the prevalence of various flexible work options between 1998  and 2000. The survey showed, for instance, that the percentage of  employers offering compressed work weeks increased from 42 to  50 percent, telecommuting on a regular basis increased from 30 to  44 percent, and flextime increased from 36 to 45 percent.
section_title: Life Insurance
paragraphs: Life insurance provides designated beneficiaries with cash payments on the  death of a family member or other individual. Group life insurance  coverage for employees is a standard part of most employee benefit  packages. Plan coverage is most commonly one to two times base salary,  up to certain dollar limits. The percentage of full-time employees in  medium and large companies that participated in employee-sponsored life  insurance plans decreased from 94 percent in 1989 to 70 percent in 1999. A  2001 survey by a human resources consulting firm found that 94 percent of  the organizations surveyed offered employer-paid life insurance for their  employees. All nine of the companies we surveyed offered life insurance to  their employees. At some companies, employees have the option of  purchasing supplemental life insurance that provides additional  coverage. Employees usually pay the entire cost of the supplemental  insurance premiums.
Although few employers pay for life insurance for spouses or dependents,  some employers offer voluntary life insurance for these groups. Generally,  employees pay the full cost of this benefit, purchasing a minimum of  $10,000 for spouse coverage and between $5,000 and $10,000 for each  dependent child. In 2000, 72 percent of employers surveyed by a major  human resources consulting firm offered this benefit, compared with  64 percent in 1996. Eight of the nine companies we contacted extend life  insurance coverage to their employees’ spouses and dependents.
Living benefits are increasingly popular. They provide a portion of life  insurance benefits to employees who have terminal or long-term illnesses.  When offered, this benefit is commonly a standard component of group life  insurance policies rather than an optional benefit rider. According to a  major human resources consulting firm, the prevalence of this benefit  increased from 40 percent in 1998 to 46 percent in 2000.
section_title: Long-Term Care Insurance
paragraphs: Employer-sponsored long-term care insurance is an emerging but still  relatively rare benefit that provides coverage for employees, their spouses,  and less frequently for parents and grandparents. Long-term care insurance  policies pay for all or part of long-term custodial and maintenance care  provided for a period generally longer than 30 days to individuals with  functional impairments that inhibit total independent living. Services are  provided by nursing homes and assisted living facilities, as well as through  home health care, hospice, and respite care. Although less common, some  policies may cover physical, speech, occupational, and respiratory  therapies. Employers may offer this coverage to employees on a voluntary  basis, requiring employees to pay the entire premium, but at group rates.  Premiums vary by age, with older employees paying more than younger  employees. Policy costs can increase if employees select optional inflation  protection that automatically increases future benefits based on a  schedule. According to an insurance association, the number of employers  offering long-term care insurance as an employee benefit increased from  135 in 1990 to about 3,200 in 1999. However, a 1999 study estimated that  only 6 to 9 percent of eligible employees took advantage of employer- provided group long-term care insurance where it was available. In 2002,  federal employees, active duty service members, selected Reserve  members, retirees, and qualified family members became eligible to obtain  long-term care insurance through the federal government.
section_title: Health Insurance
paragraphs: Employers typically offer several types of health care insurance plans. The  three most common types of plans are health maintenance organizations,  fee-for-service, and preferred provider organizations. According to the  Bureau of Labor Statistics, 76 percent of full-time employees in medium  and large firms were covered by their employer’s medical care plan in 1997.  Of these employees, 33 percent were enrolled in health maintenance  organizations, up from 17 percent in 1991; 40 percent were enrolled in  preferred provider organizations, compared with 16 percent in 1991; and  27 percent were enrolled in fee-for-service plans in 1997, compared with  67 percent in 1991.
Traditionally, employers have subsidized health insurance heavily.  However, employees increasingly are paying a greater portion of premiums  or copayments and deductibles. According to the Bureau of Labor  Statistics, 75 percent of all full-time employees participating in medical  plans in 1999 were required to contribute toward the cost of individual  coverage, compared with 51 percent in 1991. Eighty-one percent of all  employees were required to contribute to the cost of family coverage in  1999, compared with 69 percent in 1991. The average monthly employee  contribution for single coverage in 1999 was $48, compared with about $27  in 1991; the average monthly employee contribution for family coverage  was about $170 in 1999, compared with $97 in 1991.
Almost all health plans provide coverage for outpatient prescription drugs  and require the insured to pay copayments. Today, most plans allow  employees to obtain long-term supplies of maintenance prescription drugs  at reduced cost. Two common delivery methods for prescription drugs are  mail order services for long-term supplies of maintenance drugs and a  prescription drug card for use at retail pharmacies. Because the cost of  prescription drugs has increased annually by 10 to 15 percent for several  years, employers are moving toward multiple-tier copay structures where  participants pay more for brand name drugs than generics, and more for  drugs not on the plan’s formulary.
Some employers offer limited dental and vision coverage in connection  with their health insurance plans, the cost of which employees may or may  not share. Most dental plans cover preventative and restorative services  such as routine exams, x-rays, fillings, root canal therapy, and periodontics  within a calendar-year maximum benefit. Some employers offer voluntary  dental coverage plans. Although these plans provide coverage at less costly  group rates, employees pay the entire premium. According to the Bureau of  Labor Statistics, in 1999, 43 percent of employees participated in dental  care plans, compared with 57 percent in 1995 and 62 percent in 1993. Fee- for-service plans were the most likely to offer dental care, with 85 percent  doing so in 1995. In contrast, only 8 percent of health maintenance  organizations offered dental coverage in 1995. Vision care benefits provide  a variety of services to plan participants that may not be covered by regular  health insurance plans. These services include eye examinations,  eyeglasses, and contact lenses. Since the late 1980s, the provision of vision  care benefits has been declining gradually. According to the Bureau of  Labor Statistics, 25 percent of employees at medium and large companies  participated in vision benefits in 1999, compared with 35 percent in 1988.
section_title: Paid Time Off
paragraphs: Employers offer paid time off benefits consisting of vacation days, sick  leave, personal leave, funeral leave, and leave to meet court and military  obligations as part of a standard benefits package. While most companies  continue to maintain separate leave categories, an increasing number are  combining sick days and vacation days into a single plan called a paid time  off bank. A human resources consulting firm found that 18 percent of  companies responding to a survey had paid time off banks in 2000,  compared with 6 percent in 1997.
Among employers who maintain separate leave plans, the amount of paid  time off has remained relatively stable since the 1980s. Employers offer an  average of 9 paid holidays annually. The number of paid vacation days  varies with employee tenure, ranging from about 10 days for employees  with 1 year of service up to 22 days for employees with 30 years of service.  According to the Bureau of Labor Statistics, in 1997, 23 percent of all  employees may carry over a specified amount of unused vacation leave  annually; 49 percent must use their leave within the year earned; 13 percent  may cash in unused vacation time; and 10 percent may carry over and cash  in unused leave.
Sick leave policies vary greatly. Some employers provide a fixed number of  sick days annually, while others do not limit the number of allowed days.  Some of the nine companies we contacted provided a fixed number of sick  days annually, ranging from 5 to 12 days, and others incorporated sick days  into paid time off banks. According to the Bureau of Labor Statistics,  53 percent of all employees were covered by sick leave plans in 1999.
Few employers offer paid family leave to new biological or adoptive  parents. Rather, most permit employees to take 12 weeks of unpaid  maternity or paternity leave and adoptive and foster care leave in  accordance with the Family and Medical Leave Act of 1993. According to  the Bureau of Labor Statistics, unpaid family leave covered 93 percent of  full-time employees at medium and large companies in 1997, compared  with 84 percent in 1995. Paid maternity and paternity leave in the private  sector appears to be rare. In 1997, only 2 percent of companies offered paid  leave, according to the Bureau of Labor Statistics. Of the nine companies  we contacted, one allowed employees to take up to 3 years unpaid leave  after the birth of a child and to return to a comparable position. Another  company gave mothers 12 weeks paid leave with the option to take  additional unpaid time off. If she returns within 6 months, the company  guarantees her position; if she returns after 1 year, the company guarantees  employment, but not the same position.
section_title: Personal Financial Employee Education
paragraphs: Personal financial employee education initially was a benefit reserved for  executive-level employees, but at some companies it has gradually been  made available to all employees. Employers offer personal financial  employee education as a way to increase participation in 401(k) plans,  increase employee contribution levels, comply with Employee Retirement  Income Security Act of 1974 regulations, and decrease potential liability  for losses. According to a March 2001 human resources consulting firm  report, 76 percent of surveyed employees received some type of financial  planning services at work. The top financial planning services offered  included retirement planning, insurance advice, and investment and  tax planning.
section_title: Relocation Assistance
paragraphs: Some employers reimburse employee expenses associated with relocation  and increasingly are offering relocation assistance to entry-level  employees. As a result, employers are developing tiered relocation  programs for new and current hires that offer a specific range of benefits  based on salary, grade level, or category, such as renter versus homeowner  and long- versus short-term assignments. Most of the companies we  contacted offered some form of relocation assistance to employees.  Three of these companies limited assistance by job or operational and  specific career development requirements for the company. For example,  one of these has a robust relocation assistance program for employees who  relocate frequently. One company covers all relocation expenses under a  standard and graduated package. Other companies provide relocation  assistance in limited circumstances based on an employee’s job level. For  instance, front-line employees may receive a flat lump sum reimbursement,  while more senior managers receive additional money or services.
Standard features of relocation assistance packages include shipment or  storage of household goods, temporary living expenses, and house-hunting  trips. Some employers are providing predecision orientation trips in  addition to house-hunting trips, and also may offer housing differential  assistance programs to renters and homeowners to assist with extreme  discrepancies in housing costs in certain high-cost areas. A 2001 survey by  a relocation consulting firm found that 94 percent of companies with  relocation programs reimbursed closing costs on new home purchases.  Some employers also offer mortgage assistance through national lenders  that provide competitive interest rates. According to the survey, 53 percent  of polled companies identified spouse employment issues as a reason  employees were reluctant to relocate. As a result, some corporations  include spousal assistance in their relocation program.
Retiree Health Benefits Since World War II, many employers who voluntarily sponsor health  insurance as an employee benefit have offered health benefits to their  retirees as well. We reported in May 2001 that employer-sponsored retiree  health benefits have been declining gradually since at least 1997.  According to a human resources consulting firm, fewer than one-third of  large employers offered health benefits to most retirees in 2000—a drop of  8 percentage points since 1997. Many employers that continue to offer  coverage have reduced the terms of coverage by tightening eligibility  requirements, increasing the share of premiums retirees pay for health  benefits, or increasing copayments and deductibles, thereby contributing  to a gradual erosion of benefits.
section_title: Retirement Plans
paragraphs: Employers typically offer a defined benefit plan, a defined contribution  plan, or a combination of these plans. Defined benefit plans provide a fixed  pension benefit at retirement. In contrast, defined contribution plans  specify employer and employee contributions but do not guarantee future  benefits. Although the basic provisions of employer-sponsored defined  benefit plans have been relatively stable for the past two decades, defined  contribution plans have supplemented or supplanted defined benefit plans.  According to the Bureau of Labor Statistics, 50 percent of full-time  employees were enrolled in defined benefit plans in 1997, compared with  59 percent in 1991, and 57 percent were enrolled in defined contribution  plans in 1997, compared with 48 percent in 1991. All nine of the companies  that we contacted offered some form of retirement plan. All the companies  offered a 401(k) plan, and three offered a company stock purchase plan.
Recent trends in 401(k) plans include higher matching contributions, faster  vesting and eligibility, and more investment options. Eligibility ranges from  immediate to 1 year and is growing shorter as the workforce becomes more  mobile. According to the Profit Sharing/401(k) Council of America,  37 percent of employees in surveyed companies were immediately eligible  to participate in 401(k) plans in 2000, and they could select from an average  of 12 investment funds. Many companies offer to match employee  contributions. However, employer matches vary considerably, ranging from  25 percent to 100 percent of employee pay contributions in 2000. According  to the Profit Sharing/401(k) Council of America, the most popular type of  fixed match is $0.50 per $1.00 up to the first 6 percent of pay contributed.  Some employers weight the match more heavily toward the first 2 percent  or 3 percent of pay contributed by employees. A survey conducted by a  human resources consulting firm found that almost one-third of polled  companies offer immediate vesting of employer matching contributions.  Others offer vesting for matching contributions over a period of 3 to  5 years. At the nine companies we contacted, allowable contributions to  401(k) plans ranged from 1 percent to 50 percent of pretax base pay. Nearly  all of these companies provided matching contributions ranging from $0.50  to $1.00 for every dollar contributed by employees. In most cases, the plans  offered immediate vesting.
Employers are beginning to offer a “hybrid” plan that combines elements of  defined benefit and defined contribution plans. We reported in 2000 that  about 19 percent of 1999 Fortune 1000 firms had begun sponsoring cash  balance plans, an emerging type of defined benefit plan that resembles a  defined contribution plan. Cash balance plans allow workers to accrue  higher pension benefits earlier in their careers than they would under most  traditional defined benefit plans. Cash balance plans also allow more  mobile workers to secure and retain higher benefits, even when they  change jobs, than they would under most defined benefit plans.
section_title: Short- and Long-Term Disability
paragraphs: Short-term disability benefits protect employees against lost income  resulting from nonwork-related illnesses or accidents. These benefits  include paid sick leave plans that replace earnings for a fixed number of  days per year, as well as sickness and accident plans that replace a portion  of earnings for a fixed period of time, generally 6 to 12 months. The  majority of participants have their benefits paid by their employer through  funded plans, usually self-insured or insured by carriers. The two most  common ways to provide benefit payments are either as a percentage of  employee earnings or as a flat dollar amount. According to the Bureau of  Labor Statistics, 49 percent of employees at medium and large companies  participated in short-term disability plans in 1999, compared with  55 percent in 1997. According to one consulting firm, short-term disability  plans pay covered employees their full salaries for the first month of  disability and then a short-term disability benefit ranging from 60 to  70 percent of their salaries for up to 3 months of disability.
Long-term disability benefits, which begin after short-term disability  benefits expire, provide a percentage of pay for disabilities that prevent an  employee from performing any occupation that the person is reasonably  suited to do by training, education, or experience. According to the Bureau  of Labor Statistics, 36 percent of employees at medium and large firms  participated in long-term disability plans in 1999, compared with 43 percent  in 1997. Over the past few years there has been little change in cost-sharing  for long-term disability insurance or the level of coverage. Most benefit  plans continue to provide 60 percent of pay. According to a study by a  human resources consulting firm, in 2000, the average monthly premium  was $0.47 per $100 coverage.
section_title: Survivor Income Insurance
paragraphs: Survivor income insurance plans provide monthly benefits to a deceased  employee’s survivors. While life insurance usually provides a lump-sum  benefit, a survivor income plan generally pays a monthly benefit. Benefits  may be a fixed monthly amount or a percentage of the deceased employee’s  salary. Benefits are usually paid for a limited period, such as 24 months.  Some plans continue payment until a surviving spouse marries or reaches  age 65 or until dependent children reach a certain age. According to the  Bureau of Labor Statistics, 5 percent of employees participated in survivor  income insurance plans in 1999; this percentage remained unchanged  from 1994.
section_title: Tuition Assistance
paragraphs: Tuition assistance benefits reimburse employees for job-related courses,  courses related to future jobs within the company, degree-related courses,  and—less commonly—for nonjob-related courses. Employers may  reimburse eligible employees for both degree programs and on a course-by- course basis. Many employers limit eligibility to full-time salaried  employees and require employees to fulfill a minimum service period of  6 months to 1 year prior to becoming eligible for this benefit. Although  most employers who offer this benefit pay a portion of educational  expenses, such as tuition and book costs, most impose limits on  reimbursement amounts through maximum reimbursement levels or limits  on the number of courses per term or per year. Reimbursement varies by  company and may be based on obtaining certain grades, completion of  courses, and the employee’s agreement to remain with the company for a  specified period of time. Eight of the nine companies we contacted offered  some form of tuition assistance. They limited assistance to tuition costs  and books with total reimbursement ranging from $1,000 to $5,250, or three  courses per semester. One company required employees to maintain a  grade of “C” or better. Three of the nine companies required employees to  remain with the company for a certain time period, generally up to 3 years.  According to the Bureau of Labor Statistics, 55 percent of employees had  access to this benefit for work-related courses and 17 percent were eligible  for nonwork-related educational assistance in 1999, compared with  65 percent and 18 percent, respectively, in 1995. However, few employers  provide educational assistance for employees’ dependents. Only one of the  nine companies we contacted offered merit-based scholarships for  employees’ dependents, but even these were extremely limited in number.
section_title: Comments from the Department of Defense
section_title: GAO Contact and Staff Acknowledgments
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paragraphs: Thomas W. Gosling, Stacey E. Keisling, Krislin M. Nalwalk, Stefano  Petrucci, and Lois L. Shoemaker also made significant contributions to  the report.
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