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July 2018 News From MOAA National

Dateline: 7/6/2018

Senate passes NDAA

In an 85 to 10 vote, the Senate on Monday passed its version of the FY 2019 National Defense Authorization Act. The sprawling legislation must now be reconciled with the House, which passed its version of the bill in May.

The bill authorizes a 2.6 percent military pay raise, matching both the administration's request and what House lawmakers passed. The raise, consistent with private-sector wage growth, would be the biggest pay raise for servicemembers in eight years. This also aligns with MOAA's 2018 Storming the Hill agenda. 

Issues to Watch (* indicates MOAA's support)

TRICARE fees
House position: No new fees*
Senate position: Repeal grandfathering
MOAA Position: The most controversial provision in the Senate bill unwinds an important TRICARE grandfathering provision from last year's defense bill. The move repeals protections for health care beneficiaries who entered into the service prior to Jan. 1 from a new cost share structure, one with higher fees and pharmacy copays.
MOAA strongly opposes the Senate provision. According to the nonpartisan Congressional Budget Office, higher out-of-pocket costs will push 20,000 beneficiaries out of TRICARE.

Survivor Benefits
House position: “Sense of Congress” to end the widows tax ASAP*
Senate position: Nothing
MOAA position:  While the Senate remained silent on survivors benefits, the House included a language providing a “sense of Congress” that they “must work together to find a way to eliminate the widows' tax entirely.” It may seem like a small gesture, but the language provides a line in the sand for us to return to lawmakers and say “You've admitted this is wrong. Now let's work towards a solution.”

Housing allowance
House position: No change to BAH
Senate position: No change to BAH
MOAA position: BAH is an essential part of Regular Military Compensation and should not be reduced.

Senators offered hundreds of amendments to the bill, including several MOAA-supported proposals to eliminate the widows tax, expand concurrent receipt, and to provide transition assistance to military spouses, but only a handful of amendments were voted on.

Sens. Rand Paul (R-Kent.) and Lindsay Graham (R-S.C.) had a public intraparty feud of the amendment process, each accusing the other of holding up debate on the bill.

The fallout led Sen. Jim Inhofe (R-Okla.), who shepherded the defense bill while Sen. John McCain (R-Ariz.) remains home battling brain cancer, to say he's considering changing the rules for next year's defense bill.

Last week, the administration issued a tepid statement on the bill saying, given the short time between the bill's release and when it was voted on, it was not providing feedback at this time. The statement said the White House would continue to work with Congress as the defense bill goes through the legislative process.

The bill now moves to conference committee for House and Senate lawmakers to iron out differences between the two bills. Lawmakers say they expect to complete their work on the bill by the end of July.

Beware: Trusts and VA Home Loans Don’t Mix
If you’re a veteran nearing full retirement or getting your estate in order, you might be establishing a living trust instead of preparing a simple will. But are you also considering taking out a new VA Home Loan?

Beware: One MOAA life member recently found out the hard way that because he and his wife had transferred their home into an irrevocable living trust, they were ineligible for a new VA Home Loan on this property. The VA Home Loan Office told them that if a home is placed in trust, then both of the individuals had to qualify for the home loan — meaning both had to be veterans. 

The Code of Federal Regulation section on veteran loan guaranty (38 CFR § 36.4354 “Estate of Veteran in Real Property”) states, “The title of the estate in the realty acquired by the veteran, wholly or partly with the proceeds of a guaranteed or insured loan … shall be not less than: a life estate, provided that the remainder and reversionary interests are subject to the lien; or a beneficial interest in a revocable Family Living Trust …, provided the lien attaches to any remainder interest and the trust arrangement is valid under state law.”

In layman’s terms: You can put your home in a trust, but you can’t get a loan if you’ve put your home in an irrevocable trust. Unfortunately, this member and his spouse had done exactly that and were denied a refinancing VA Home Loan.

Generally, what is a trust? A property owner passes some or all of their property to a trust. The trustee manages the trust until such time that it can be transferred to the beneficiary, typically upon the death of the owner(s).

What are some of the benefits of a living trust? Two main benefits entice individuals and families toward a trust.  The first is a trust avoids probate, which typically means a faster transfer of assets to your beneficiaries. The second is that trusts provide privacy over the matter of asset distribution; wills do not. A will’s provisions are made public after death.

For a more detailed list of characteristics of trusts and wills please visit the MOAA website.

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