Financial, Health and Life Insurance Considerations During the Transition
Whether you are returning to school, transitioning to a new job or retiring, your financial situation will undergo a great deal of change. Your salary and benefits may not measure up to your current earnings and benefits. You will soon discover that shopping and paying medical costs can create serious sticker shock. Getting into debt is not the best way to start a new life.
Careful planning is the only way to avoid problems. It may take you a while to find a new job. Start by identifying your income and expenses. Check with friends and family to find out what you may have to pay for your rent or mortgage, groceries and daily expenses. Create a budget and be conservative. Research your earning potential and make sure you can afford to pay your bills and live. Your Army Community Service office is equipped to help you take control of your finances.
Prior to final separation, the finance office will audit your pay account and research your entitlements as well as your liabilities. You will then draw final pay and you may cash in any unused leave.
If your financial situation is shaky, you need to stabilize your finances before you leave federal service. Your Army Community Service office has trained debt counselors who can help you take control of your money and debts. Be leery of commercials for debt consolidation. Consolidation may help, but only if it’s part of a total financial management plan. If you’re married, make sure you and your spouse work together as partners.
Thrift Savings Plan
The Thrift Savings Plan (TSP) is a defined-contribution retirement and investment plan that offers savings and tax benefits. Since your contributions and earnings are yours to keep even if you separate from the military, you need to be sure you understand the requirements and penalties you can incur if your TSP is not managed correctly.
If you are planning to retire, schedule your appointment with the installation Retirement Services Officer (RSO) as soon as possible. The RSO is a valuable resource for all retirement issues who can provide a wealth of information and help ease your retirement concerns. Retirement is a major transition in your and your family’s life, so be sure to include your spouse in any appointments you schedule with the RSO.
As part of your pre-retirement counseling, you and your spouse must be counseled on the Survivor Benefit Plan (SBP). You and your spouse must agree, in writing, if you want SBP and on the level of coverage you want.
If you entered active duty after July 31, 1986, you will be required to select the method for calculating your retirement pay. You can learn more about your options at the Military Pay and Benefits website at http://www.defenselink.mil/militarypay/. Once there, select Retirement.
You may be eligible for separation pay. The type of separation and conditions under which you are being separated will determine if you qualify for separation pay. The Finance Office at your installation can compute the actual amount. Separation pay entitlement must be specified on your separation order to be payable. Separation pay is authorized only:
* If you have finished your first term of enlistment or period of obligated service, AND
* have at least six years of service, AND
* are separating involuntarily, AND
* are not yet eligible for retirement, AND
* are separating with a fully honorable discharge.
If you think you qualify, discuss this with your commander and local personnel and finance offices. This benefit is computed on the basis of 10 percent of your yearly base pay when you separate, multiplied by the number of years of active service you have. Separation pay is taxable.
Unemployment Compensation for Ex-Service Members (UCX)
Service members separating from active duty may qualify for unemployment compensation if they are unable to find a new job. Under 5 USC 8521, a former service member is eligible to receive unemployment compensation only if the discharge or release is, at a minimum, Under Honorable Conditions. Receiving separation pay may also influence your receipt of unemployment compensation. (Retirees will almost certainly receive a lesser amount, or no amount, since the weekly amount of retirement pay is usually “offset” against the amount of unemployment compensation.)
Your state employment office handles unemployment compensation. Benefits vary from state to state. Because of this, only the office where you apply will be able to tell you the amount and duration of your entitlement. Your nearest state employment office is listed in your local telephone directory. To receive unemployment compensation, you must apply. The best time to do that is when you visit the Local Veterans Employment Representative (LVER) at your state employment services office for assistance in finding a new job. To apply for unemployment compensation, you must bring your Certificate of Release or Discharge from Active Duty (DD Form 214), your Social Security card and your civilian and military job history or resume.
Eligible veterans may obtain loans guaranteed by the VA to purchase or refinance homes, condominiums and manufactured homes. VA home loans feature a competitive interest rate and a lower down payment or, if the lender agrees, no down payment at all. More information is available from the VA homepage at http://www.homeloans.va.gov/.
FHA Mortgage Insurance
The Federal Housing Administration (FHA) of the Department of Housing and Urban Development (HUD) insures mortgage loans for the construction, purchase and improvement of homes. FHA-insured mortgages allow veterans to borrow with a minimum down and payments over longer periods of time. More information is available by visiting the FHA homepage at http://www.hud.gov/faqs/faqbuying.cfm.
Business loans are available to veterans through programs of the Small Business Administration (SBA). In addition, SBA offers loans specifically to Vietnam-era and disabled veterans. More information is available by visiting the SBA homepage http://www.sba.gov/.
In order to prepare yourself to apply for a mortgage, car loan or other type of credit, you may wish to obtain a credit report. You can do this, usually for a small fee, by contacting a credit reporting agency. Ask your bank which credit reporting agency they use, then contact that agency. Once you receive a copy of your report, check it carefully for errors. If you find any, contact the credit reporting agency to correct them. Keep in mind that they may ask you for documentation such as receipts or cancelled checks.
Health and Life Insurance
Health Insurance Planning
Before you leave active duty, you need to arrange for health insurance to protect yourself and your family. Most people leaving government service obtain civilian jobs that provide health insurance. Sometimes, however, there is a gap between when your military coverage ends and your new employer’s coverage begins. For specific health insurance questions, call the Health Benefits Advisor at your military medical treatment facility.
Health “Check-up” Before You Leave
There is no longer a requirement for military personnel to undergo medical exams or sign waivers in conjunction with transition, except for retirees and certain discharges. The Department of Veterans Affairs strongly suggests you request and receive a separation physical with medical documentation. Physicals should be arranged in the four-month window before separation since this will establish a basis for any future disability claims.
Within 90 days of discharge or separation from the service, the VA provides one-time dental care for veterans who were not provided a dental examination or treatment. The time limit does not apply to veterans with dental disabilities resulting from combat wounds or service injuries. If you are unable to obtain a dental examination prior to separation, ask the dental clinic staff to annotate your dental records. Your servicing transition center will then annotate your DD Form 214, and the VA will provide one-time dental care, if you apply within 90 days after your separation date.
Remember, your records and those of your family members belong to the U.S. Government. Before you leave your installation, visit the patient assistance or patient advocate office at the hospital or clinic and ask for your medical and dental records so that you can make copies. We recommend that you make two personal sets of all medical and dental records for yourself and your family members. These records will provide useful background information to the health care professionals who will assist you in your upcoming civilian life.
Transitional Health Care
Your eligibility to continue to receive government-sponsored health care is determined by the nature of your separation.
If you separate voluntarily, you and your family are not eligible to use military treatment facilities or the TRICARE health care plan. However, you may purchase extended transitional health care insurance, for up to 18 months of coverage, through the Continued Health Care Benefit Program (CHCBP). You have 60 days after separation to enroll in CHCBP. Your coverage will start the day after your separation. See your Health Benefits Advisor for more specific information.
Eligible Involuntary Separation:
You and your family are authorized to use military treatment facilities for a period of 60 days (if you served fewer than six years) or 120 days (if you served six years or more). During this period of transitional health care, you will have the same priority as family members of active duty personnel. After this 60-/120-day period, you and your family are no longer eligible to use military treatment facilities or the TRICARE health care plan. However, you may purchase extended transitional health care insurance, through the Continued Health Care Benefit Program (CHCBP), for up to 18 months of coverage. You have 60 days after your initial transitional health care ends to purchase CHCBP. See your Health Benefits Advisor for specific information.
Continued Health Care Benefit Program (CHCBP)
Under the CHCBP program, separating military personnel may purchase temporary, TRICARE-like transitional medical coverage for three months at a time, for up to 18 months total. The CHCBP program covers pre-existing conditions. DoD uses a civilian third-party administrator to provide information, marketing and administrative support. You have 60 days after your initial transitional health care ends to purchase CHCBP.
Veterans Group Life Insurance (VGLI)
Service member’s Group Life Insurance (SGLI) will continue to cover you for the first 120 days after your separation, just as if you were still in uniform. After this coverage ends, you must make your own arrangements for life insurance. One option offered by the Department of Veterans Affairs is Veterans Group Life Insurance (VGLI). Shortly after your discharge from active duty, you will be given the opportunity to convert your SGLI to VGLI. All service members are eligible for the SGLI to VGLI conversion. You can obtain coverage in increments of $10,000, up to the amount of your SGLI but not to exceed $400,000. You can make the conversion up to 120 days after your separation. The insurance becomes effective on the 121st day.
VGLI is five-year, renewable term insurance. That is, you can renew your VGLI policy every five years. At the end of the fifth year, you are guaranteed to convert your policy to a commercial insurer, regardless of your health, or renew your policy for another five-year period. This is important, since many insurers will not cover you if you have a pre-existing condition.
The VA will send the conversion form and information to you within 30 days after your separation. If you do not receive it, call the VA toll free number, 1-800-419-1473. The Office of Servicemember’s Group Life Insurance administers the VGLI program. You can also write for more information
Office of Servicemembers’ Group Life Insurance
290 West Mt. Pleasant Avenue
Livingston, New Jersey 07039
New VGLI Applications and VGLI Reinstatements:
Office of Servicemembers’ Group Life Insurance
P.O. Box 41618
Philadelphia, PA 19176-9913
Readjustment Counseling Services
VA offers Readjustment Counseling Services through local Vet Center offices in your state. Professional services include counseling, outreach to special populations and brokering of services with community agencies. For more information or assistance, visit the RCS website at http://www.va.gov/rcs.