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entitled 'Military Personnel: Preliminary Observations Related to 
Income, Benefits, and Employer Support for Reservists During 
Mobilizations' which was released on March 19, 2003.



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Testimony:



Before the Subcommittee on Total Force, Committee on Armed Services, 

House of Representatives:



United States General Accounting Office:



GAO:



For Release on Delivery Expected at 2 p.m. EST:



Wednesday, March 19, 2003:



Military Personnel:



Preliminary Observations Related to Income, Benefits, and Employer 

Support for Reservists During Mobilizations:



Statement of Derek B. Stewart, Director, Defense Capabilities and 

Management:



GAO-03-549T:



GAO Highlights:



Highlights of GAO-03-549T, a testimony before the Subcommittee on Total 

Force, Committee on Armed Services, House of Representatives	



Why GAO Did This Study:



Since the end of the Cold War, there has been a shift in the way 
reserve 

forces have been used.  Previously, reservists were viewed primarily as 

an expansion force that would supplement active forces during a major 

war.  Today, reservists not only supplement but also replace active 

forces in military operations worldwide. 



Citing the increased use of the reserves to support military 
operations, 

House Report 107-436 accompanying the Fiscal Year 2003 National Defense 

Authorization Act directed GAO to review compensation and benefits for 

reservists.  In response, GAO is reviewing (1) income protection for 

reservists called to active duty, (2) family support programs, and (3) 

health care access.  For this testimony, GAO was asked to discuss its 

preliminary observations.  GAO also was asked to discuss the results 

of its recently completed review concerning employer support for 

reservists.    



What GAO Found:



The preliminary results of our review indicate that reservists 

experience widely varying degrees of income loss or gain when they 

are called up for a contingency operation.  While income loss data 

for current operations Noble Eagle and Enduring Freedom were not 

available, data for past military operations show that 41 percent of 

drilling unit members reported income loss, while 30 percent reported 

no change and 29 percent reported an increase in income.  This 

information is based on self-reported survey data for mobilizations or 

deployments of varying lengths of time.  As would be expected, the 

data indicate that certain groups, such as medical professionals in 

private practice, tend to report much greater income loss than the 

average estimated for all reservists.



Although reservists called up to support a contingency operation are 

generally eligible for the same family support and health care 

benefits as active component personnel, reservists and their families 

face challenges in understanding and accessing their benefits.  Among 

the challenges, reservists typically live farther from military 

installations than their active duty counterparts, are not part of 

the day-to-day military culture, and may change benefit eligibility 

status many times throughout their career.  Some of these challenges 

are unique to reservists; others are also experienced by active 

component members but may be magnified for reservists.  Outreach to 

reservists and their families is likely to remain a continuing 

challenge for DOD in the areas of family support and health care, and 

we expect to look at DODís outreach efforts in more detail as we 

continue our study.



Outreach is also a critical component of maintaining and enhancing 

employersí support for reservists.  Although DOD has numerous outreach 

efforts, we found that a sizeable number of reservists and employers 

were unsure about their rights and responsibilities.  For example, a 

1999 DOD survey found that 31 percent of employers were not aware of 

laws protecting reservists.  Several factors have hampered DODís 

outreach efforts to both employers and reservists.  However, DOD is 

taking positive actions in this area, such as moving ahead with plans 

to collect employer data from all reserve personnel. 



What GAO Recommends:



GAO is not making new recommendations at this time, but past reports 

have contained GAOís views on actions that should be taken to 

improve reservistsí access to military health care benefits and to 

improve the effectiveness of outreach programs and other aspects of 

reservist-employer relations.  DOD generally concurred with these 

recommendations and has taken some actions.



www.gao.gov/cgi-bin/getrpt?GAO-03-549T.

To view the full report, including the scope

and methodology, click on the link above.

For more information, contact Derek B. Stewart at (202) 512-5140 or 

stewartd@gao.gov.



Mr. Chairman and Members of the Subcommittee:



We are pleased to be here today to discuss reserve personnel income, 

benefits, and employer support. My remarks focus on the more than 

870,000 ďselectedĒ reservists[Footnote 1] who generally drill and train 

part-time with their military units (referred to in this testimony as 

drilling unit members). These reservists may be involuntarily called to 

federal active duty under various provisions of law. They may also be 

placed voluntarily on active duty for training and other purposes. 

Since the 1991 Persian Gulf War, reservists have been mobilized or 

deployed to a number of contingency operations, including operations 

Noble Eagle and Enduring Freedom and operations in Kosovo, Bosnia, 

Southwest Asia, and Haiti. As of early 

March 2003, 193,270 reservists were supporting current contingency 

operations.



Citing the increased use of the reserves to support military 

operations, House Report 107-436 accompanying the Fiscal Year 2003 

National Defense Authorization Act directed us to review compensation 

and benefit programs for reservists. Our review is ongoing, but today I 

would like to present preliminary observations based on our review in 

three areas: 

(1) income protection for reservists called to active duty, (2) family 

support programs, and (3) health care access.[Footnote 2] All three of 

these issues are potential areas of concern to a reservist called to 

active duty for a contingency operation. We plan to issue a final 

report on these three issues later this year. In addition, you have 

asked us to discuss the results of our recently completed review 

concerning employer support for reservists, another potential area of 

concern to mobilized or deployed reservists.[Footnote 3] Finally, Mr. 

Chairman, while the legislation directed us to review the retirement 

system for the reserves, we have not yet begun that work. As discussed 

with your offices, we plan to review the reserve retirement system in 

the future. While we have not conducted a detailed review of this 

issue, I would like to offer some observations.



Before discussing these issues in more detail, I would like to note 

that one of the Department of Defenseís (DOD) guiding principles for 

military compensation is that servicemembers--both reservists and 

active component members--be treated fairly. Military compensation for 

reservists is affected by the type of military duty they perform. In 

peacetime--when a reservist is on active duty for training or on 

military duty not related to a contingency operation--certain 

thresholds are imposed at particular points in service before a 

reservist is eligible to receive the same compensation as a member 

serving full-time. For contingency operations, these same thresholds 

generally do not apply. Reservists activated for contingency operations 

such as Noble Eagle and Enduring Freedom are generally eligible to 

receive the same compensation and benefits as active component 

personnel. I should also note here that in a recent report comparing 

the benefits offered by the military with those offered in the private 

sector, we found no significant gaps in the benefits available to 

military personnel.[Footnote 4]



To date, we have met with and gathered information from DOD officials 

in the Office of the Assistant Secretary of Defense for Reserve 

Affairs, the Office of Military Compensation, the Office of Family 

Policy, the National Guard Bureau, the Army National Guard, the Air 

National Guard, the Army Reserve, the Air Force Reserve, the Naval 

Reserve, the Marine Corps Reserve, the TRICARE Management Activity, the 

National Committee for Employer Support of the Guard and Reserve, and 

other organizations. We obtained the results and DODís preliminary 

analysis of the 2000 Survey of Reserve Component Personnel.[Footnote 5] 

We reviewed DOD proposals concerning income loss. We also reviewed 

DODís progress in implementing recommendations that we made in prior 

reports.



Let me turn now to the specific issues.



Summary:



The preliminary results of our review indicate that reservists 

experience widely varying degrees of income loss or gain when they are 

called up for a contingency operation. While income loss data for 

current operations Noble Eagle and Enduring Freedom were not available, 

data for past military operations show that 41 percent of drilling unit 

members reported income loss, while 30 percent reported no change and 

29 percent reported an increase in income. This information is based on 

self-reported survey data for mobilizations or deployments of varying 

lengths of time. DODís analysis of the data shows that, as would be 

expected, certain groups, such as medical professionals in private 

practice, tend to report much greater income loss than the average 

estimated for all reservists.



Although reservists called up to support a contingency operation are 

generally eligible for the same family support and health care benefits 

as active component personnel, reservists and their families face 

challenges in understanding and accessing their benefits. Among the 

challenges, reservists typically live farther from military 

installations than their active duty counterparts, are not part of the 

day-to-day military culture, and may change benefit eligibility status 

many times throughout their career. Some of these challenges are unique 

to reservists; others are also experienced by active component members 

but may be magnified for reservists. Outreach to reservists and their 

families is likely to remain a continuing challenge for DOD in the 

areas of family support and health care. We will continue to look at 

DODís outreach efforts as we complete our study.



Outreach is also a critical component of maintaining and enhancing 

employersí support for reservists. Although DOD has numerous outreach 

efforts in this area, we found that a sizeable number of reservists and 

employers were unsure about their rights and responsibilities. For 

example, a 1999 DOD survey found that 31 percent of employers were not 

aware of laws protecting reservists. Our recent work has shown that 

several factors, such as the lack of data on reservistsí employers, 

have hampered DODís outreach efforts to both employers and reservists. 

However, DOD is taking positive actions in this area, such as moving 

ahead with plans to collect employer data from all reserve personnel.



Reservists have identified income loss, family burdens, and employer 

support as serious concerns during prior mobilizations and deployments. 

However, it is unclear how the problems reservists experience in these 

areas affect their overall satisfaction with military life and, 

ultimately, their decision to stay in the military or leave.



Background:



Since the end of the Cold War, there has been a shift in the way 

reserve forces have been used. Previously, reservists were viewed 

primarily as an expansion force that would supplement active forces 

during a major war. Today, reservists not only supplement but also 

replace active forces in military operations worldwide.[Footnote 6] In 

fact, DOD has stated that no significant operation can be conducted 

without reserve involvement. As shown in figure 1, reserve 

participation in military operations spiked in fiscal 

years 1991 (Desert Shield and Desert Storm) and 2002 (Noble Eagle and 

Enduring Freedom).



Figure 1: Annual Number of Days Per Capita for Reserve Mobilizations 

and Support to the Services and Combatant Commands (Fiscal Years 1986-

2002):



[See PDF for image]



[End of figure]



Mobilizations are operations using the Presidential Selected Reserve 

Call-up or mobilization authorities. Support of the services or 

combatant commands is mission assistance provided under voluntary 

orders and includes both contingency operations and other missions. The 

figure excludes days for training as well as support for counter-drug 

operations, exercises, and domestic emergencies.



Per capita calculations are derived by dividing the total days of 

support for these missions by the end strength of the Selected Reserve. 

However, force structure within the selected reserves qualifies only a 

portion of those available to serve for a particular mission. Despite 

this, the data highlight trends in the average number of support days 

served by reservists.



There have been wide differences in the operational tempos[Footnote 7] 

of individual reservists in certain units and occupations. Prior to the 

current mobilization, personnel in the fields of aviation, special 

forces, security, intelligence, psychological operations, and civil 

affairs were in high demand, experiencing operational tempos that were 

two to seven times higher than those of the average reservist. Since 

September 2001, operational tempos have increased significantly for 

reservists in all of DODís reserve components due to the partial 

mobilization in effect to support operations Noble Eagle and Enduring 

Freedom.



For each year between fiscal years 1997 and 2002, the reserves on the 

whole achieved at least 99 percent of their authorized end strength. In 

4 of these 6 years, they met at least 100 percent of their enlistment 

goals. During this time period, enlistment rates fluctuated from 

component to component. Overall attrition rates have decreased for five 

of DODís six reserve components.[Footnote 8] Between fiscal years 1997 

and 2002, only the Army National Guard experienced a slight overall 

increase in attrition. The attrition data suggest there has not been a 

consistent relationship between a componentís average attrition rate 

for a given year and the attrition rate for that componentís high 

demand capabilities (which include units and occupations). Attrition 

rates for high demand capabilities were higher than average in some 

cases but lower for others. Aviation in the Army National Guard, for 

instance, has had higher than average attrition for 4 of the 

5 years it was categorized as a high demand capability.



Reservists Have Reported Widely Varying Degrees of Income Loss Or Gain:



Preliminary analysis of income changes reported by reservists who 

mobilized or deployed for past military operations indicates that they 

experienced widely varying degrees of income loss or gain. The source 

for this analysis is DODís 2000 Survey of Reserve Component Personnel, 

which predates the mobilization that began in September 2001. The data 

show that 41 percent of drilling unit members reported income loss 

during their most recent mobilization or deployment, while 30 percent 

reported no change and 29 percent reported an increase in income (see 

table 1).



Table 1: Drilling Unit Membersí Total Reported Change in Income for 

Mobilizations or Deployments Prior to 2001:



Income change: Decreased $50,000 or more; Percentage: 0.9.



Income change: Decreased $25,000 to $49,999; Percentage: 1.5.



Income change: Decreased $10,000 to $24,999; Percentage: 4.1.



Income change: Decreased $5,000 to $9,999; Percentage: 6.0.



Income change: Decreased $2,500 to $4,999; Percentage: 8.9.



Income change: Decreased $1 to $2,499; Percentage: 19.5.



Income change: No change in income; Percentage: 30.



Income change: Increased $1 to $2,499; Percentage: 16.6.



Income change: Increased $2,500 to $4,999; Percentage: 6.8.



Income change: Increased $5,000 or more; Percentage: 5.7.



Source: DOD 2000 Reserve Component Survey:



[End of table]



Based on the survey data, DOD estimated that the average total income 

change for all members (including losses and gains) was almost $1,700 

in losses. This figure should be considered with caution because of the 

estimating methodology that was used and because it is unclear what 

survey respondents considered as income loss or gain in answering this 

question.[Footnote 9] Further, reservists are mobilized or deployed for 

varying lengths of time, which can affect their overall income loss or 

gain. About

31 percent of all reservists who had at least one mobilization or 

deployment had been mobilized or deployed for less than 1 month. For 

the entire population, members spent an estimated 3.6 months mobilized 

or deployed for their most recent mobilization.



DODís preliminary analysis of the survey data show that certain groups 

reported greater losses of income on average. Self-employed reservists 

reported an average income loss of $6,500. Physicians/registered 

nurses, on the whole, reported an average income loss of $9,000. 

Physicians/registered nurses in private practice reported an average 

income loss of $25,600. Income loss also varied by reserve component 

and pay grade group. Average self-reported income loss ranged from $600 

for members of the Air National Guard up to $3,800 for Marine Corps 

Reservists. Senior officers reported an average income loss of $5,000 

compared with $700 for junior enlisted members. When asked to rank 

income loss among other problems they have experienced during 

mobilization or deployment, about half of drilling unit members ranked 

it as one of their most serious problems.[Footnote 10] DODís 

preliminary analysis presents little data on those groups who reported 

overall income gain. Two groups who were identified as reporting a gain 

were clergy and those who worked for a family business without pay.



Concerns were raised following the 1991 Gulf War that income loss would 

adversely affect retention of reservists. According to a 1991 DOD 

survey of reservists activated during the Gulf War, economic loss was 

widespread across all pay grades and military occupations. In response 

to congressional direction,[Footnote 11] DOD in 1996 established the 

Ready Reserve Mobilization Income Insurance Program, an optional, self-

funded income insurance program for members of the Ready Reserve 

ordered involuntarily to active duty for more than 30 days. Reservists 

who elected to enroll could obtain monthly coverage ranging from $500 

to $5,000 for up to 12 months within an 18-month period. Far fewer 

reservists than DOD expected enrolled in the program. Many of those who 

enrolled were activated for duty in Bosnia and, thus, entitled to 

almost immediate benefits from the program. The program was terminated 

in 1997 after going bankrupt. We reported in 1997 that private sector 

insurers were not interested in underwriting a reserve income 

mobilization insurance program due to concerns about actuarial 

soundness and unpredictability of the frequency, duration, and size of 

future call-ups.[Footnote 12] Certain coverage features would violate 

many of the principles that private sector insurers usually require to 

protect themselves from adverse selection. These include voluntary 

coverage and full self-funding by those insured, the absence of rates 

that differentiated between participants based on their likelihood of 

mobilization, the ability to choose coverage that could result in full 

replacement of their lost income rather than those insured bearing some 

loss, and the ability to obtain immediate coverage shortly before an 

insured event occurred. According to DOD officials, private sector 

insurers remain unsupportive of a new reserve income insurance 

mobilization program and the amount of federal underwriting required 

for the program is prohibitive. The Department has no plans to 

implement a new mobilization insurance program.



A 1998 study by RAND found that income loss, while widespread during 

the Gulf War, did not have a measurable effect on enlisted 

retention.[Footnote 13] The study was cautiously optimistic that 

mobilizing the reserves under similar circumstances in the future would 

not have adverse effects on recruiting and retention. However, the 

effects of future mobilizations can depend on the mission, the length 

of time reservists are deployed, the degree of support from employers 

and family members, and other factors.



Certain federal protections, pay policies, and employer practices can 

help to alleviate financial hardship during deployment. For example, 

the Soldiersí and Sailorsí Civil Relief Act caps debt interest rates at 

6 percent annually. Income that servicemembers earn while mobilized in 

certain combat zones is tax-free. For certain operations, DOD also 

authorized reservists to receive both full housing allowances and per 

diem for their entire period of activation. In addition, some employers 

make up the difference between civilian and military pay for their 

mobilized employees. This practice varies considerably among employers. 

Servicemembers can also obtain emergency assistance in the form of 

interest-free loans or grants from service aid societies to pay for 

basic living expenses such as food or rent during activation. DOD is 

exploring debt management alternatives, such as debt restructuring and 

deferment of principle and interest payments, as ways to address income 

loss. The Army has proposed a new special pay targeting critical health 

care professionals in the reserves who are in private practice and are 

deployed involuntarily beyond the established rotational schedule.



Reservists and Their Families Face Challenges in Understanding and 

Accessing Family Support Services:



Reservists who have been activated for previous contingency operations 

have expressed concerns about the additional burdens placed on their 

families while they are gone. More than half of all reservists are 

married and about half have children or other legal dependents. 

According to the 2000 survey, among the most serious problems 

reservists said they experienced when mobilized or deployed are the 

burden placed on their spouse and problems created for their children.



The 1991 Gulf War was a milestone event that highlighted the importance 

of reserve family readiness. Lessons learned showed that families of 

activated reservists, like their active duty counterparts, may need 

assistance preparing wills, obtaining power of attorney, establishing 

emergency funds, and making child care arrangements. They may also need 

information on benefits and entitlements, military support services, 

and information on their reemployment rights. DOD has recognized that 

family attitudes affect reserve member readiness, satisfaction with 

reserve participation, and retention. Military members who are 

preoccupied with family issues during deployments may not perform well 

on the job, which in turn, negatively affects the mission. Research has 

shown that families of reservists who use family support services and 

who are provided information from the military cope better during 

activations. Under a 

1994 DOD policy, the military services must ďensure National Guard and 

Reserve members and their families are prepared and adequately served 

by their servicesí family care systems and organizations for the 

contingencies and stresses incident to military service.Ē:



Although activated reservists and their family members are eligible for 

the same family support services as their active duty counterparts, 

they may lack knowledge about or access to certain services. The 2000 

DOD survey suggests that more than half of all reservists either 

believe that family support services are not available to them or do 

not know whether such services are available. Table 2 shows drilling 

unit membersí responses on the availability of selected programs and 

services.



Table 2: Reservistsí Views on Availability of Selected Family Support 

Programs or Services:



Percentage of drilling unit members.



Services for families during separation; Percentage of drilling unit 

members: Available off installation, on installation or both: 25; 

Percentage of drilling unit members: Not available: 13; Percentage of 

drilling unit members: Donít know: 62.



Crisis referral services; Percentage of drilling unit members: 

Available off installation, on installation or both: 15; Percentage of 

drilling unit members: Not available: 17; Percentage of drilling unit 

members: Donít know: 68.



Financial counseling/management education; Percentage of drilling unit 

members: Available off installation, on installation or both: 22; 

Percentage of drilling unit members: Not available: 16; Percentage of 

drilling unit members: Donít know: 61.



Family support centers; Percentage of drilling unit members: Available 

off installation, on installation or both: 35; Percentage of drilling 

unit members: Not available: 14; Percentage of drilling unit members: 

Donít know: 51.



Source: DOD 2000 Reserve Component Survey:



Note: Rows may not add to 100 percent due to rounding.



[End of table]



According to DOD officials, operations Noble Eagle and Enduring Freedom 

have highlighted the fact that not all reserve families are prepared 

for potential mobilization and deployment. They told us that since many 

families never thought their military members would be mobilized, 

families had not become involved in their family readiness networks. 

DOD has found that the degree to which reservists are aware of family 

support programs and benefits varies according to component, unit 

programs, command emphasis, reserve status, and the willingness of the 

individual member to receive or seek out information. Results from the 

2000 DOD survey show that about one-fourth of drilling unit members 

said their arrangements for their dependents were not realistically 

workable for deployments lasting longer than 30 days. Furthermore, 

about 4 of every 10 drilling unit members thought it was unlikely or 

very unlikely that they would be mobilized or deployed in the next 5 

years. Again, this survey predates the events of September 11, 2001, 

and the ensuing mobilization.



Among the key challenges in providing family support are the long 

distances that many reservists live from installations that offer 

family support services, the difficulty in persuading reservists to 

share information with their families, the unwillingness of some 

reservists and their families to take the responsibility to access 

available information, conflicting priorities during drill weekends 

that limit the time spent on family support, and a heavy reliance on 

volunteers to act as liaisons between families and units. In 2000, 

about 40 percent of drilling unit members lived 50 miles or farther 

from their home units.



DOD has recognized the need for improved outreach and awareness. For 

example, the Department has published benefit guides for reservists and 

family members and has enhanced information posted on its Web sites. 

DOD published a ďGuide to Reserve Family Member BenefitsĒ that informs 

family members about military benefits and entitlements and a family 

readiness ďtool kitĒ to enhance communication about pre-deployment and 

mobilization information among commanders, servicemembers, family 

members, and family program managers. Each reserve component also 

established family program representatives to provide information and 

referral services, with volunteers at the unit level providing 

additional assistance. The U.S. Marine Corps began offering an employee 

assistance program in December 2002 to improve access to family support 

services for Marine Corps servicemembers and their families who reside 

far from installations. Through this program, servicemembers and their 

families can obtain information and referrals on a number of family 

issues, including parenting; preparing for and returning from 

deployment; basic tax planning; legal issues; and stress. 

Notwithstanding these efforts, we believe, based on our review to date, 

that outreach to reservists and their families will likely remain a 

continuing challenge for DOD.



Challenges in Accessing DOD Health Care Benefits Are Magnified for 

Reservists:



Reservists who are mobilized for a contingency operation are confronted 

with health care choices and circumstances that are more complex than 

those faced by active component personnel. Reservistsí decisions are 

affected by a variety of factors--whether they or their spouses have 

civilian health coverage, the amount of support civilian employers 

would be willing to provide with health care premiums, and where they 

and their dependents live. If dependents of reservists encounter 

increased future difficulties in maintaining their civilian health 

insurance due to problems associated with longer mobilizations and 

absence from civilian employment, they may rely on DOD for their health 

care benefits to a greater degree than they do today.



When activated for a contingency operation, reservists and their 

dependents are eligible for health care benefits under TRICARE, DODís 

managed health care program. TRICARE offers beneficiaries three health 

care options: Prime, Standard, and Extra. TRICARE Prime is similar to a 

private HMO plan and does not require enrollment fees or co-payments. 

TRICARE Standard, a fee-for-service program, and TRICARE Extra, a 

preferred provider option, require co-payments and annual deductibles. 

None of these three options require reservists to pay a premium. 

Benefits under TRICARE are provided at more than 500 military treatment 

facilities worldwide, through a network of TRICARE-authorized civilian 

providers, or through non-network physicians who will accept TRICARE 

reimbursement rates.



Reservists who are activated for 30 days or less are entitled to 

receive medical care for injuries and illnesses incurred while on duty. 

Reservists who are placed on active duty orders for 31 days or more are 

automatically enrolled in TRICARE Prime and receive most care at a 

military treatment facility. Family members of reservists who are 

activated for 31 days or more may obtain coverage under TRICARE Prime, 

Standard, or Extra.[Footnote 14] Family members who participate in 

Prime obtain care at either a military treatment facility or through a 

network provider. Under Standard or Extra, beneficiaries must use 

either a network provider or a non-network physician who will accept 

TRICARE rates.



Upon release from active duty that extended for at least 30 days, 

reservists and their dependents are entitled to continue their TRICARE 

benefits for 60 days or 120 days, depending on the membersí cumulative 

active duty service time. Reservists and their dependents may also 

elect to purchase extended health care coverage for a period of at 

least 18, but no more than 36, months under the Continued Health Care 

Benefit Program.



Despite the availability of DOD health care benefits with no associated 

premium, many reserve family members elect to maintain their civilian 

health care insurance during mobilizations. In September 2002, we 

reported that, according to DODís 2000 survey, nearly 80 percent of 

reservists reported having health care coverage when they were not on 

active duty. Of reservists with civilian coverage, about 90 percent 

maintained it during their mobilization.[Footnote 15] Reservists we 

interviewed often told us that they maintained this coverage to better 

ensure continuity of health benefits and care for their dependents. 

Many reservists who did drop their civilian insurance and whose 

dependents did use TRICARE reported difficulties moving into and out of 

the system, finding a TRICARE provider, establishing eligibility, 

understanding TRICARE benefits, and knowing where to go for assistance 

when questions and problems arose. While reserve and active component 

beneficiaries report similar difficulties using the TRICARE system, 

these difficulties are magnified for reservists and their dependents. 

For example, 75 percent of reservists live more than 50 miles from 

military treatment facilities, compared with 

5 percent of active component families. As a result, access to care at 

military treatment facilities becomes more challenging for dependents 

of reservists than their active component counterparts.



Unlike active component members, reservists may also transition into 

and out of TRICARE several times throughout a career. These transitions 

create additional challenges in ensuring continuity of care, 

reestablishing eligibility in TRICARE, and familiarizing or re-

familiarizing themselves with the TRICARE system. Reservists are also 

not part of the day-to-day military culture and, according to DOD 

officials, generally have less incentive to become familiar with 

TRICARE because it becomes important to them and their families only if 

they are mobilized. Furthermore, when reservists are first mobilized, 

they must accomplish many tasks in a compressed period. For example, 

they must prepare for an extended absence from home, make arrangements 

to be away from their civilian employment, obtain military 

examinations, and ensure their families are properly registered in the 

Defense Enrollment Eligibility Reporting System (DODís database system 

maintaining benefit eligibility status). It is not surprising that many 

reservists, when placed under condensed time frames and high stress 

conditions, experience difficulties when transitioning to TRICARE.



We recommended in September 2002 that DOD (1) ensure that reservists, 

as part of their ongoing readiness training, receive information and 

training on health care coverage available to them and their dependents 

when mobilized and (2) provide TRICARE assistance during mobilizations 

targeted to the needs of reservists and their dependents. DOD has added 

information targeted at reservists to its TRICARE Web site and last 

month, in response to our recommendation, developed a TRICARE reserve 

communications plan aimed at outreach and education of reservists and 

their families.



The TRICARE Web site is a robust source of information on DODís health 

care benefits. The Web site contains information on all TRICARE 

programs, TRICARE eligibility requirements, briefing and brochure 

information, location of military treatment facilities, toll free 

assistance numbers, network provider locations and other general 

network information, beneficiary assistance counselor information, and 

enrollment information. There is also a section of the Web site devoted 

specifically to reservists, with information and answers to questions 

that reservists are likely to have. Results from DODís 2000 survey show 

that about 9 of every 10 reservists have access to the Internet.



The TRICARE reserve communications planís main goals are to educate 

reservists and their family members on health care and dental benefits 

available to them and to engage key communicators in the active and 

reserve components. The plan identifies a number of tactics for 

improving how health care information is delivered to reservists and 

their families. Materials are delivered through direct mailing 

campaigns, fact sheets, brochures, working groups, and briefings to 

leadership officials who will brief reservists and to reservists 

themselves. The plan identifies target audiences and key personnel for 

information delivery and receipt. The plan identifies methods of 

measurement which will assist in identifying the degree information is 

being requested and received. We plan to look at the TRICARE reserve 

communications plan in more detail as we continue our study.



Under DOD authorities in the National Defense Authorization Acts for 

2000 and 2001, DOD instituted several demonstration programs to provide 

financial assistance to reservists and family members. For example, DOD 

instituted the TRICARE Reserve Component Family Member Demonstration 

Project to reduce TRICARE costs and assist dependents of reservists in 

maintaining relationships with their current health care providers. 

Participants are limited to family members of reservists mobilized for 

operations Noble Eagle and Enduring Freedom. The demonstration project 

eliminates the TRICARE deductible and the requirement that dependents 

obtain statements saying that inpatient care is not available at a 

military treatment facility before they can obtain nonemergency 

treatment from a civilian hospital. In addition, DOD may pay a non-

network physician up to 15 percent more than the current TRICARE rate. 

As we continue our study, we plan to review the results of the 

demonstration project and its impact on improving health care for 

reservistsí family members.



DOD Actions Needed to Better Manage Relations Between Reservists and 

Their Employers:



Most reservists have civilian jobs. The 2000 survey shows that 75 

percent of drilling unit members worked full-time in a civilian 

job.[Footnote 16] Of those with civilian jobs, 30 percent of reservists 

worked for government at the federal, state, or local level; 63 percent 

worked for a private sector firm; and 7 percent were self-employed or 

worked without pay in their family business or farm. The 2000 survey 

shows that one of the most serious problems reported by reservists in 

previous mobilizations and deployments was hostility from their 

supervisor. It should be noted, however, that many employers changed 

company policies or added benefits for deployed reservists after 

September 11, 2001. In a small nonprojectable sample of employers, we 

found that more than half provided health care benefits and over 40 

percent provided pay benefits that are not required by the Uniformed 

Services Employment and Reemployment Rights Act of 1994.[Footnote 17]



Maintaining employersí continued support for their reservist employees 

will be critical if DOD is to retain experienced reservists in these 

times of longer and more frequent deployments. DOD has activities aimed 

at maintaining and enhancing employersí support for reservists. The 

National Committee for Employer Support of the Guard and Reserve serves 

as DODís focal point in managing the departmentís relations with 

reservists and their civilian employers. Two specific functions of this 

organization are to (1) educate reservists and employers concerning 

their rights and responsibilities and (2) mediate disputes that may 

arise between reservists and their employers.



Although DOD has numerous outreach efforts, we have found that a 

sizeable number of reservists and employers were unsure about their 

rights and responsibilities. For example, a 1999 DOD survey found that 

31 percent of employers were not aware of laws protecting reservists. 

In a recent report, we listed several factors that have hampered DODís 

outreach efforts to both employers and reservists.[Footnote 18] DOD has 

lacked complete information on who reservistsí employers are; it does 

not know the full extent of problems that arise between employers and 

reservists; and it has no assurance that its outreach activities are 

being implemented consistently. We recommended that DOD take a number 

of actions to improve the effectiveness of outreach programs and other 

aspects of reservist-employer relations.



DOD concurred with most of these recommendations and has taken some 

actions. Most notably, DOD is moving ahead with plans to collect 

employer data from all of its reserve personnel. The data, if collected 

as planned, should help DOD inform all employers of their rights and 

obligations, identify employers for recognition, and implement 

proactive public affairs campaigns. However, DOD has not been as 

responsive to our recommendation that the services improve their 

compliance with DODís goal of issuing orders 30 days in advance of 

deployments so that reservists can notify their employees promptly. 

While our recommendation acknowledged that it will not be possible to 

achieve the 30-day goal in all cases, our recommendation was directed 

at mature, ongoing contingency mobilization requirements, such as the 

requirements that have existed in Bosnia since 1995. We believe that 

DOD needs to return to its 30-day goal following the current crisis or 

it will risk losing employer support for its reserve forces.



I would like to take a moment, Mr. Chairman, to address the issue of 

reservists who are students. Almost one-fourth of drilling unit members 

responding to DODís 2000 survey said they were currently in school. 

While DOD has an active program to address problems that arise between 

reservists and their civilian employers, there is no federal statute to 

protect students. Student members of the reserves are not guaranteed 

refunds of tuition and fees paid for the term they cannot complete, and 

there is no federal statute for partial course credit or the right to 

return to the college or university upon completion of active service. 

Based on our recent work, we recommended that DOD add students as a 

target population to the mission and responsibilities of the National 

Committee for Employer Support of the Guard and Reserve, study in depth 

the problems related to deployments that student reservists have 

experienced, and determine what actions the National Committee for 

Employer Support of the Guard and Reserve might take to help students 

and their educational institutions. We feel DOD is giving this issue an 

appropriate amount of attention given its resources. Employer Support 

of the Guard and Reserve volunteers are directing students to available 

resources and the Office of the Assistant Secretary of Defense for 

Reserve Affairs has added student information and hyperlinks to its 

official Web site. One available resource, for example, is the 

Servicemembers Opportunity Colleges, which has volunteered to mediate 

any disputes that arise between reservists and their schools.[Footnote 

19] In addition, 12 states have enacted laws or policies to protect 

student reservists since our report was issued last June, making a 

current total of 15 states with such laws or polices.



Observations on Reserve Retirement Age:



The current reserve retirement system dates back to 1948 with the 

enactment of the Army and Air Force Vitalization and Retirement 

Equalization Act.[Footnote 20] The act established age 60 as the age at 

which reserve retirees could start drawing their retirement pay. At the 

time the act was passed, age 60 was the minimum age at which federal 

civil service employees could voluntarily retire. Active component 

retirees start drawing their retirement pay immediately upon 

retirement.



Several proposals have been made to change the reserve retirement 

eligibility age. In 1988, the 6th Quadrennial Review of Military 

Compensation concluded that the retirement system should be changed to 

improve retention of mid-career personnel and encourage reservists who 

lack promotion potential or critical skills to voluntarily leave after 

20 years of service. The study recommended a two-tier system that gives 

reserve retirees the option of electing to receive a reduced annuity 

immediately upon retirement or waiting until age 62 to begin receiving 

retirement pay. Recent legislative proposals have called for lowering 

the retirement pay eligibility age from 60 to 55, establishing a 

graduated annuity, or establishing an immediate annuity similar to that 

in the active duty military retirement system.



Mr. Chairman, I would like to make two observations about reforming the 

reserve retirement system.



First, equity between reservists and active duty personnel is one 

consideration in assessing competing retirement systems, but it is not 

the only one. Other important considerations are the impact of the 

retirement system on the age and experience distribution of the force, 

its ability to promote flexibility in personnel management decisions 

and to facilitate integration between the active and reserve 

components, and the cost. Changes to the retirement system could prove 

to be costly. Last year, the Congressional Budget Office estimated that 

lowering the retirement pay eligibility age from age 60 to 55 would 

cost $26.6 billion over 10 years.



Second, DOD currently lacks critical data needed to assess alternatives 

to the existing retirement system. According to a 2001 study conducted 

for the 9th Quadrennial Review of Military Compensation,[Footnote 21] 

DOD should 

(1) assess whether the current skill, experience, and age composition 

of the reserves is desirable and, if not, what it should look like now 

and in the future and (2) develop an accession and retention model to 

evaluate how successful varying combinations of compensation and 

personnel management reforms would be in moving the reserves toward 

that preferred composition. DOD has contracted with RAND and the 

Logistics Management Institute to study military retirement. RAND will 

review alternative military retirement systems recommended by past 

studies, develop a model of active and reserve retirement and 

retention, analyze their likely effects on the retirement benefits that 

individuals can expect to receive, and identify and analyze the 

obstacles and issues pertaining to the successful implementation and 

therefore the viability of these alternatives. The Logistics Management 

Institute will assess alternative retirement systems with a focus on 

portability, vesting, and equity. These studies are looking at seven 

alternatives to the reserve retirement system. Preliminary results from 

these studies are expected later this year. As discussed with your 

offices, we plan to review the reserve retirement system in the future.



Mr. Chairman, this completes our prepared statement. We would be happy 

to respond to any questions you or other members of the Subcommittee 

may have at this time.



Contacts and Acknowledgments:



For future questions about this statement, please contact Derek B. 

Stewart at (202) 512-5140 (e-mail address: stewartd@gao.gov) or Brenda 

S. Farrell at (202) 512-3604 (e-mail address: farrellb@gao.gov). 

Individuals making key contributions to this statement include 

Christopher E. Ferencik, Michael Ferren, Thomas W. Gosling, Chelsa L. 

Kenney, Krislin M. Nalwalk, and Timothy Wilson.



FOOTNOTES



[1] Unless specified, we use the terms ďreservesĒ and ďreservistsĒ to 

refer to the collective forces of the Air National Guard, Army National 

Guard, the Army Reserve, the Naval Reserve, the Marine Corps Reserve, 

and the Air Force Reserve. We did not include the Coast Guard Reserve 

in our review.



[2] We plan to address compensation issues in other reviews. For 

example, we have an ongoing review of special and incentive pays for 

reservists who perform duty in the polar regions.



[3] U.S. General Accounting Office, Reserve Forces: DOD Actions Needed 

to Better Manage Relations between Reservists and Their Employers, 

GAO-02-608 (Washington, D.C.:

June 13, 2002).



[4] U.S. General Accounting Office, Military Personnel: Active Duty 

Benefits Reflect Changing Demographics, but Opportunities Exist to 

Improve, GAO-02-935 (Washington, D.C.: Sept. 18, 2002).



[5] The population of interest targeted by the survey consisted of all 

Selected Reserve members of the reserve components below flag or 

general officer rank, with at least 

6 months of service when the surveys were first mailed in August 2000. 

The sample consisted of 74,487 members. Eligible respondents returned 

35,223 completed surveys.



[6] The average reservist trains 38 or 39 days per year. In addition to 

this training, some reservists provide support for counter-drug 

operations, domestic emergencies, exercises, and established and 

emerging operations, including those involving either presidential 

call-ups or mobilizations.



[7] For this testimony, operational tempo refers to the total days 

reservists spend participating in normal drills, training, and 

exercises, as well as domestic and overseas operational missions.



[8] Attrition is the total number of personnel losses from the selected 

reserves divided by the average selected reserve end strength for the 

year.



[9] The 2000 survey asked respondents: ďPlease estimate your (and your 

spouseís) total income change from all sources as a result of your most 

recent mobilization and deployment. If you (and your spouse) have 

continuing losses from a business or practice, include those in your 

estimate.Ē 



[10] The survey listed 22 possible problems and asked respondents to 

choose their top three most serious problems experienced during 

mobilization or deployment.



[11] See section 512, National Defense Authorization Act for Fiscal 

Year 1996 (P.L. 104-106, Feb. 10, 1996).



[12] U.S. General Accounting Office, Reserve Forces: Observations on 

the Ready Reserve Mobilization Income Insurance Program, GAO/

T-NSIAD-97-154 (Washington, D.C.:

May 8, 1997).



[13] RAND, The Effect of Mobilization on Retention of Enlisted 

Reservists After Operation Desert Shield/Storm, MR-943-OSD (1998). The 

study did not include officers.



[14] Until last week, family members of reservists generally became 

eligible for Prime when the reservist was activated for 179 days or 

more. Legislation passed in December

(P.L. 107-314, Sec. 702) made family members of reservists activated 

for more than 30 days eligible for the Prime benefit if they reside 

more than 50 miles, or an hourís driving time, from a military 

treatment facility. Last week, the Defense Department altered TRICARE 

policy such that all family members of reservists activated for more 

than 30 days are eligible for the Prime benefit.



[15] U.S. General Accounting Office, Defense Health Care: Most 

Reservists Have Civilian Health Coverage but More Assistance Is Needed 

When TRICARE Is Used, GAO-02-829 (Washington, D.C.: Sept. 6, 2002).



[16] This figure does not include reservists who work as civilian 

military technicians.



[17] Pub. L. 103-353 (Oct. 13, 1994), 38 U.S.C. secs. 4301-4333.



[18] GAO-02-608.



[19] The Servicemembers Opportunity Colleges is a consortium of 

national higher education associations and more than 1,500 colleges. 

The organization helps to coordinate postsecondary educational 

opportunities for servicemembers through voluntary programs that are 

funded by the military services.



[20] June 29, 1948, ch. 708, 62 stat. 1081.



[21] RAND, Reforming the Reserve Retirement System, PM-1278-NDRI (Dec. 

2001).