First Command Reports: TRICARE Reform Proposals Fueling Anxiety in Military Families

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

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

Results of a First Command Financial Behaviors Index® survey reveal that
three out of four middle-class military families (commissioned officers
and senior NCOs in pay grades E-6 and above with household incomes of at
least $50,000) are anxious about recently proposed changes to TRICARE.
Anxiety levels were similar for President Obama’s recent reform proposal
and last year’s recommendations from the Military Compensation and
Retirement Modernization Commission (76 percent and 73 percent,
respectively).

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

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

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

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

Response rates were similar for the Commission’s recommendations.

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

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

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

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

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

About the First Command Financial Behaviors Index®

Compiled by Sentient Decision Science, Inc., the First Command Financial
Behaviors Index® assesses trends among the American public’s
financial behaviors, attitudes and intentions through a monthly survey
of approximately 530 U.S. consumers aged 25 to 70 with annual household
incomes of at least $50,000. Results are reported quarterly. The margin
of error is +/- 4.3 percent with a 95 percent level of confidence. http://www.firstcommand.com/fbi/

About Sentient Decision Science, Inc.

Sentient Decision Science was commissioned by First Command to compile
the Financial Behaviors Index®. SDS is a behavioral science and
consumer psychology consulting firm with special vertical expertise
within the financial services industry. SDS specializes in advanced
research methods and statistical analysis of behavioral and attitudinal
data.

About First Command

First Command Financial Services and its subsidiaries, including First
Command Advisory Services, First Command Bank and First Command
Financial Planning, assist American families in their efforts to build
wealth, reduce debt and pursue their lifetime financial goals and
dreams—focusing on consumer behavior as the first and most powerful
determinant of results. Through knowledgeable advice and coaching of the
financial behaviors conducive to success, First Command Financial
Advisors have built trustworthy, lasting relationships with hundreds of
thousands of client families since 1958.

First Command Financial Services, Inc., is the parent of First
Command Financial Planning, Inc. (Member SIPC,
FINRA),
First Command Advisory Services, Inc., First Command Insurance Services,
Inc. and First Command Bank. Financial planning services and investment
products, including securities, are offered by First Command Financial
Planning, Inc. , a broker-dealer. Financial planning and investment
advisory services are offered by First Command Advisory Services, Inc.,
an investment adviser. Insurance products and services are offered
by First Command Insurance Services, Inc., in all states except Montana,
where as required by law, insurance products and services are offered by
First Command Financial Services, Inc. (a separate Montana domestic
corporation). Banking products and services are offered by First Command
Bank. In certain states, as required by law, First Command Insurance
Services, Inc. does business as a separate domestic corporation.
Securities products are not FDIC insured, have no bank guarantee and may
lose value. A financial plan, by itself, cannot assure that retirement
or other financial goals will be met. First Command Financial Services,
Inc. and its related entities are not affiliated with, authorized to
sell or represent on behalf of or otherwise endorsed by any federal
employee benefits programs referenced, by the U.S. government, or the
U.S. armed forces.

Contacts

First Command Financial Services
Mark Leach, 817-569-2419
Media
Relations
msleach@firstcommand.com