Home  »  Military & Veteran Benefits   »   Military Benefits Changes for 2021

Military Benefits Changes for 2021

military benefits changes 2021

2021 Benefit Updates for Veterans and Military

These are the changes that have been announced so far. Please keep checking back, as we will continue updating new changes to your military benefits for 2021.

>> Stay up-to-date on all the military benefits you care about!  Sign up for the MyMilitaryBenefits Benefits newsletter today!

TRICARE

New Monthly Premiums For TRICARE Young Adult Plans in 2021

One of the upcoming changes for 2021 is an increase in premiums for TRICARE Young Adult (TYA)TRICARE Young Adult is available for purchase by qualified dependent children under the age of 26.

TYA Select will increase by 12.7%, which means going from $228 to $257 per month. 

TYA Prime is going up by 22%, from $376 to $459 per month.

Beginning on Jan. 1, 2021, Military dependents who use, or plan to use, Tricare Young Adult (TYA) for their health coverage will see a spike in premium costs.

This large price increase is particularly concerning because, thanks to Covid-19, it comes at a time when access to healthcare is more urgent than ever, meanwhile, many families are struggling financially.

These changes reflect the increase in TYA program costs for calendar year 2021.

About TRICARE Young Adult

TYA was created to ensure that military children had access to their parents’ health insurance in line with the Affordable Care Act (ACA) requirements. Military dependents are eligible to enroll in the TYA program once they have aged out of Tricare, either on their 21st birthday or their 23rd if they are full-time students. They may remain on TYA until they turn 26.

While the ACA allows adult children to stay on their parents’ insurance without adding any extra cost to their family plan, the law that created TYA mandated that it be cost-neutral, meaning the premiums have to cover the use and cost of the program. Consequently, TYA premiums are based on commercial insurance rates and coverage, which is why they’re going up.

Group A Retired Beneficiaries

TRICARE Select Group A will be required to start paying a new monthly enrollment fee to maintain their coverage. This will begin January 1st, 2021.

You’re considered a Group A retired beneficiary if your initial enlistment or appointment ––or that of your uniformed services sponsor–– began before Jan. 1, 2018.

>> Frustrated with your VA disability rating?  Register for a free consultation for help with increasing your rating to get the compensation you deserve.  Please go here.

 

Enrollment fees will be priced as follows:

Individual Group A military retirees under age 65, will pay $12.50 a month for individual coverage, or $150 annually.

Enrollment fees for those with families will be $25 a month, or $300 annually.

The Catastrophic Cap will increase from $3,000 to $3,500, and the enrollment fees can apply towards it. 

Those fees were put into law in the Fiscal 2017 National Defense Authorization Act but were delayed until January 2021.

The fees don’t apply to retirees in the Tricare for Life program, nor does it affect Chapter 61 retirees (SRSC) receiving disability retirement and their family members, and survivors of deceased active duty service members.

Active duty family members don’t pay Tricare Select enrollment fees.

Group A must pay these fees by December 31, 2020.  

If you are a Tricare Select Group A member and want to learn more about this change, and/or set up enrollment, click here.

Tricare Prescription Drug Costs Will Stay the Same

Prescriptions will continue to be available at no cost for those who can use a pharmacy at a military treatment facility.

Co-payments for medications available at retail pharmacies and through the Tricare mail-order system will not increase next year. 30-day prescriptions at Tricare network pharmacies for generic drugs will remain at $13, and brand name prescriptions will remain at $33.

Co-payments for prescriptions available through Tricare’s home delivery program will also stay the same, a 90-day supply of a generic drug delivered by mail will be $10, a brand-name medication, $29 for a 90-day prescription, and $60 for a medication not listed in the Tricare formulary.

>> Stay up-to-date on all the military benefits you care about!  Sign up for the MyMilitaryBenefits Benefits newsletter today!

 

COLA Increases

COLA will have an increase of 1.3% in 2021 which is lower than the 2020 increase of 1.6%. The increases in COLA are based on the increase in the CPI-W, from the 3rd quarter of 2019 through the third quarter of 2020. Increases can change year to year. The last few years have seen 0.3% in 2017, 2.0% in 2018, 2.8% in 2019, and 1.6% in 2020. Military retirees, those who receive disability payments, or other benefits from the Department of Veterans Affairs, federal retirees, as well as Social Security recipients, will all see the 1.3% increase in their monthly payments.

Retirement Pay

When it comes to retirement pay, it is important to keep in mind that since the increase for the year is calculated differently than active duty pay, the raises can seem a little different based on the year. Based on the 1.3% increase, in 2021 you would receive $13 for every $1,000 in government benefits you receive. If a veteran is receiving around $2,000 a month as retirement pay, they would see an increase of $26 a month.

A veteran who entered military service after July 31, 1986, has had the option of going with the “Career Status Bonus” or (CSB)/REDUX instead of the “High 3-year average” option with regards to retirement pay. This means that they would have received $30,000 during their 15th year of service and will see a reduced retirement rate until they are 62 years old. This also means that their COLA increase is reduced by 1%, which would change the amount of the increase they would see in 2021.

VA Disability

VA Disability payments would also increase in 2021. A veteran with a 60% rating would see about a $15 a month increase, while a veteran with a 100% rating would see about a $40 a month increase. The amount they would receive depends on their rating as well as their veteran dependent status. The rate for 2021 would be 1.3% and is based on COLA rates. 

RELATED: VA Disability Pay for 2021 (with chart)

 

>> Frustrated with your VA disability rating?  Register for a free consultation for help with increasing your rating to get the compensation you deserve.  Please go here.

 

Social Security Payments

Beyond veteran payments are social security payments. According to the Social Security Administration, the average monthly Social Security benefit in June 2020 was $1,514 for the retired worker. Based on this, the average beneficiary would see an increase of $20 in 2021.

3.0% Military Pay Increase

In February of this year, the White House proposed a 3.0% pay increase for service members to take place on January 1, 2021. For junior enlisted, this would be an increase of almost $800 a year and down from 3.1% in 2020, and up from 2.6% in 2019.

The main guideline for determining military pay raises comes from the quarterly report of the US Employment Cost Index (ECI) which is put out by the Bureau of Labor Statistics (BLS).

The fiscal 2021 NDAA was passed and the 3.0% raise took effect as of Jan 1, 2021.

BAH 2021 Rates

BAH is the Basic Allowance for Housing. The 2021 BAH rates have been updated as of 12/15/2020. You can use the calculator here to figure out what your 2021 BAH rates will be. Remember, if your rate goes down you are grandfathered into the old rate unless you move or change rank.

RELATED: BAH Calculator

BAH is based on your rank, dependent status, and geographic location. BAH is intended to cover 95% of your housing costs. This % can change each year and was 99% just a few years ago. Your rates are based on your duty station zip code.

Your new BAH rate will go into effect on January 1st and you will see it in your January 15, 2021 paycheck.

The proposed BAH increase is approved by Congress and the President. That being said, individual rates are based on the cost of living in your exact location. In 2021, the rate ended up being 2.9%. In 2020, it was 2.8%. 

BAS 2021 Rates

BAS (Basic Allowance for Subsistence) 2021 rates were updated on December 14th, 2020. They have gone up 3.7%. Officers will now receive $266.18 a month and enlisted will receive $386.50. They had a proposed increase of 2.4% for 2020, that ended up being .90% once approved.

BAS is meant to be used to pay for food for enlisted and officers. It is only intended to help pay for food, not to cover all the costs. The rate also does not change based on dependents because the money is not meant to cover food for family members.

The increase will take place on January 1st and you will see it on your January 15th, 2021 paychecks.

Thrift Savings Plan (TSP) Limits Will Stay the Same

The IRS recently announced that the maximum amount of money service members can contribute to their tax-deferred, or tax-free, retirement savings plans such as the Thrift Savings Plan (TSP) will stay the same in 2021.

The maximum contribution rates in 2021 will be:

  • $19,500 for regular TSP or 401(k) contributions
  • $6,500 for catch-up contributions for those 50 and over
  • $58,000 annual limit for tax-free combat zone pay (up from $57,000 for 2020)

We will update as more 2021 military benefits changes are announced!

 

>> Stay up-to-date on all the military benefits you care about!  Sign up for the MyMilitaryBenefits Benefits newsletter today!

 

RELATED:

 

 

About the author

+ posts

Julie Provost is a freelance writer, and blogger. She lives in Tennessee with her National Guard husband and three boys.