WEBVTT NOTE This file was generated by Descript 00:00:00.050 --> 00:00:04.699 Edward: Welcome to the MIL News Weekly for 4-10 January 2026, your essential 00:00:04.699 --> 00:00:08.170 guide to the latest news impacting the military and veteran community. 00:00:08.680 --> 00:00:12.380 Whether you're currently serving in uniform, a military retiree, a veteran, 00:00:12.420 --> 00:00:16.639 or a family member, this is your source for the critical updates you need to know. 00:00:16.980 --> 00:00:20.670 Each week, we cut through the noise to bring you the most important developments 00:00:20.670 --> 00:00:23.950 from the Pentagon, Capitol Hill, and the Department of Veterans Affairs. 00:00:24.350 --> 00:00:28.000 We’ll cover everything from new policies and pay raises affecting 00:00:28.000 --> 00:00:31.830 active and reserve forces, to changes in healthcare and benefits for 00:00:31.830 --> 00:00:36.160 retirees, and the latest on VA services and legislation for our veterans. 00:00:36.530 --> 00:00:37.410 Let's get you informed. 00:00:37.770 --> 00:00:39.130 Here’s what’s happened this past week. 00:00:39.473 --> 00:00:42.463 Issues That Affect Active and Reserve Military Personnel 00:00:42.811 --> 00:00:46.071 Compensation and Benefits: The 2026 Financial Landscape 00:00:46.433 --> 00:00:49.593 As the new year commences, the primary focus for service members and their 00:00:49.593 --> 00:00:53.843 families is the financial adjustment resulting from the Fiscal Year 2026 00:00:54.133 --> 00:00:56.053 National Defense Authorization Act. 00:00:56.473 --> 00:01:01.243 Effective 1 January 2026, a statutory pay raise of 3.8 00:01:01.243 --> 00:01:04.883 percent has been applied to all ranks and branches, a figure that 00:01:04.883 --> 00:01:10.003 was finalized and signed into law by President Trump on 18 December 2025. 00:01:10.553 --> 00:01:14.663 This raise is not merely a bureaucratic adjustment but a strategic retention 00:01:14.663 --> 00:01:18.953 tool designed to maintain the purchasing power of military families in an economy 00:01:18.953 --> 00:01:20.943 recovering from inflationary pressures. 00:01:21.283 --> 00:01:23.473 Basic Pay Analysis and Economic Context 00:01:23.847 --> 00:01:24.497 The 3.8 00:01:24.497 --> 00:01:28.307 percent increase is pegged to the Employment Cost Index (ECI), a 00:01:28.307 --> 00:01:31.917 quarterly economic series detailing the changes in the costs of labor for 00:01:31.917 --> 00:01:33.897 businesses in the United States economy. 00:01:34.277 --> 00:01:37.807 By law, military pay raises are intended to match wage growth in the 00:01:37.807 --> 00:01:41.537 private sector to ensure the Department of Defense can compete for talent. 00:01:42.127 --> 00:01:46.527 Unlike the Fiscal Year 2025 adjustment, which applied targeted, irregular 00:01:46.527 --> 00:01:50.117 increases to junior enlisted personnel to address a recruiting crisis, 00:01:50.477 --> 00:01:54.947 the 2026 adjustment is a uniform percentage applied across the board. 00:01:55.417 --> 00:01:59.117 This return to uniformity suggests a stabilization in the Department’s 00:01:59.117 --> 00:02:02.837 compensation strategy, focusing on sustaining the entire force 00:02:02.837 --> 00:02:06.137 structure rather than emergency patching of specific cohorts. 00:02:06.469 --> 00:02:09.519 For the junior enlisted force, specifically those in the pay grade 00:02:09.519 --> 00:02:13.329 of E-1 with less than four months of service, the monthly basic pay 00:02:13.329 --> 00:02:15.949 has risen to approximately $2,407. 00:02:16.729 --> 00:02:20.799 This baseline is critical; it represents the entry-level value proposition for 00:02:20.799 --> 00:02:22.699 young Americans considering service. 00:02:23.089 --> 00:02:27.339 When annualized, this base pay, combined with tax-free allowances, attempts 00:02:27.339 --> 00:02:30.559 to offer a competitive alternative to the private sector labor market. 00:02:30.913 --> 00:02:34.513 Moving up the rank structure, the financial impact becomes more pronounced. 00:02:34.993 --> 00:02:39.023 A Staff Sergeant or Petty Officer First Class (E-6) with over a decade of 00:02:39.023 --> 00:02:43.763 service—often considered the operational backbone of the military—will now see a 00:02:43.763 --> 00:02:48.283 monthly basic pay of approximately $4,759. 00:02:49.003 --> 00:02:52.173 This demographic is crucial for retention, as these individuals 00:02:52.173 --> 00:02:55.873 possess the institutional knowledge and technical expertise required 00:02:55.873 --> 00:02:57.213 to train the next generation. 00:02:57.693 --> 00:03:00.943 The increase serves as a hedge against the lucrative offers these skilled 00:03:00.943 --> 00:03:04.703 technicians often receive from defense contractors and the private sector. 00:03:04.963 --> 00:03:08.653 In the officer corps, the adjustments ensure that leadership compensation 00:03:08.653 --> 00:03:10.843 remains commensurate with responsibility. 00:03:11.333 --> 00:03:15.913 A newly commissioned Second Lieutenant or Ensign (O-1) now enters the service with a 00:03:15.913 --> 00:03:19.203 monthly base pay of approximately $4,150. 00:03:19.923 --> 00:03:23.333 Further along the career path, a Major or Lieutenant Commander (O-4) 00:03:23.333 --> 00:03:28.393 with over ten years of service will earn approximately $9,419 per month. 00:03:28.903 --> 00:03:32.683 It is important to note, however, that compensation for the most senior officers 00:03:32.873 --> 00:03:37.253 (O-7 through O-10) remains capped by Level II of the Executive Schedule. 00:03:37.793 --> 00:03:42.283 This statutory cap, which was set at $18,808.20 00:03:42.343 --> 00:03:46.663 per month in 2025, ensures that military leadership is not 00:03:46.663 --> 00:03:50.423 compensated at a rate exceeding that of senior government civilians. 00:03:50.743 --> 00:03:54.563 While the 2026 cap will adjust slightly, the principle of compression 00:03:54.563 --> 00:03:58.073 at the top remains a topic of discussion among manpower analysts. 00:03:58.446 --> 00:03:59.826 The Expansion of Allowances 00:04:00.117 --> 00:04:04.437 While basic pay constitutes the taxable salary of a service member, the system 00:04:04.437 --> 00:04:08.777 of allowances accounts for a significant portion of total military compensation. 00:04:09.377 --> 00:04:13.477 These tax-exempt payments have undergone substantial revisions effective 00:04:13.537 --> 00:04:18.237 1 January 2026, aimed at directly addressing the cost of living and the 00:04:18.237 --> 00:04:20.087 unique hardships of military life. 00:04:20.468 --> 00:04:23.208 The Department of Defense has implemented an average 4.2 00:04:23.208 --> 00:04:26.088 percent increase in BAH rates for 2026. 00:04:26.638 --> 00:04:29.818 This adjustment comes on the heels of consecutive years of significant 00:04:29.818 --> 00:04:31.838 increases, including a 5.4 00:04:31.838 --> 00:04:35.598 percent rise in previous cycles, reflecting a concerted effort to catch 00:04:35.598 --> 00:04:37.188 up with a volatile housing market. 00:04:37.808 --> 00:04:42.348 The BAH program is designed to cover 95 percent of housing costs, with the 00:04:42.348 --> 00:04:46.318 service member expected to contribute the remaining 5 percent out of pocket. 00:04:46.660 --> 00:04:47.310 The 4.2 00:04:47.310 --> 00:04:51.650 percent average is a national aggregate; the actual impact is highly localized. 00:04:51.970 --> 00:04:56.070 Service members stationed in high-cost coastal areas such as San Diego, 00:04:56.150 --> 00:04:59.810 California, Norfolk, Virginia, and the National Capital Region will 00:04:59.810 --> 00:05:03.850 likely see increases exceeding the average, reflecting the acute rental 00:05:03.850 --> 00:05:05.420 market pressures in these zones. 00:05:05.840 --> 00:05:09.830 Conversely, installations in rural areas with stagnant housing markets 00:05:09.940 --> 00:05:11.470 may see minimal adjustments. 00:05:11.930 --> 00:05:16.580 A critical feature of the BAH system is "rate protection," which ensures 00:05:16.580 --> 00:05:20.730 that a service member already residing in a location will not see their BAH 00:05:20.860 --> 00:05:22.850 decrease if the local market rates fall. 00:05:23.380 --> 00:05:27.270 They retain the higher, legacy rate, providing financial stability for 00:05:27.270 --> 00:05:28.950 lease agreements already in place. 00:05:29.318 --> 00:05:33.428 To offset the rising cost of food, BAS has been increased by 2.4 00:05:33.738 --> 00:05:35.238 percent for 2026. 00:05:35.758 --> 00:05:39.328 This allowance is adjusted annually based on the United States Department 00:05:39.328 --> 00:05:41.178 of Agriculture's food cost index. 00:05:41.618 --> 00:05:46.268 Unlike BAH, BAS is a flat rate based on status (officer vs. 00:05:46.268 --> 00:05:50.428 enlisted) rather than location or rank, operating on the assumption that the 00:05:50.428 --> 00:05:54.808 cost of a standard basket of goods is relatively consistent for service members 00:05:54.808 --> 00:05:56.848 across the continental United States. 00:05:57.172 --> 00:06:00.402 In a move that directly addresses the strains of operational tempo on 00:06:00.402 --> 00:06:05.442 military families, the Fiscal Year 2026 NDAA legislated an increase 00:06:05.442 --> 00:06:10.152 in the Family Separation Allowance from $250 to $300 per month. 00:06:10.712 --> 00:06:15.362 This represents the first statutory increase to FSA in nearly two decades. 00:06:15.902 --> 00:06:19.232 This allowance is payable to service members with dependents who are 00:06:19.232 --> 00:06:23.572 deployed, sent on temporary duty, or otherwise separated from their families 00:06:23.572 --> 00:06:25.602 for more than 30 consecutive days. 00:06:26.292 --> 00:06:30.632 The $50 increase, while modest in absolute terms, is a symbolic 00:06:30.632 --> 00:06:33.912 recognition by Congress of the enduring burden placed on military 00:06:33.912 --> 00:06:35.772 families during prolonged absences. 00:06:36.109 --> 00:06:37.939 Financial Hygiene and Tax Withholding 00:06:38.282 --> 00:06:43.022 With the commencement of the new tax year on 1 January 2026, the Defense 00:06:43.022 --> 00:06:48.292 Finance and Accounting Service (DFAS) and military financial counselors are urging 00:06:48.292 --> 00:06:50.442 a universal review of tax withholdings. 00:06:50.922 --> 00:06:51.702 The 3.8 00:06:51.702 --> 00:06:55.652 percent pay raise, combined with any changes in spousal income or 00:06:55.652 --> 00:06:59.602 family size, fundamentally alters a service member's tax liability. 00:06:59.979 --> 00:07:03.839 Personnel are advised to utilize the Internal Revenue Service Tax Withholding 00:07:03.839 --> 00:07:08.879 Estimator to determine the correct number of allowances to claim on their W-4 forms. 00:07:09.349 --> 00:07:13.879 Adjustments made in early January 2026 can prevent the dual pitfalls of 00:07:13.879 --> 00:07:17.549 under-withholding—which results in a tax bill and potential penalties—or 00:07:18.269 --> 00:07:22.159 excessive over-withholding, which acts as an interest-free loan to the government. 00:07:22.849 --> 00:07:27.319 Furthermore, DFAS has clarified the nature of "mid-month pay," often a 00:07:27.319 --> 00:07:29.399 source of confusion for junior personnel. 00:07:29.839 --> 00:07:33.099 It is technically an advance or "micro-loan" of half the 00:07:33.099 --> 00:07:36.269 estimated net monthly pay, rather than a separate earning event. 00:07:36.789 --> 00:07:39.769 Understanding this distinction is vital for personal budgeting 00:07:39.769 --> 00:07:40.919 and cash flow management. 00:07:41.271 --> 00:07:44.321 Legislative Landscape: Appropriations and Contingency Planning 00:07:44.717 --> 00:07:48.737 The 119th Congress returned to session in January 2026 with a 00:07:48.737 --> 00:07:52.537 robust agenda focused on securing the funding necessary to support the 00:07:52.537 --> 00:07:54.627 authorizations granted in the NDAA. 00:07:55.047 --> 00:07:58.177 While the NDAA provides the legal authority for defense programs, 00:07:58.417 --> 00:08:01.427 the appropriations bills provide the actual treasury funds. 00:08:01.897 --> 00:08:04.707 Two pieces of legislation were central to the discourse during 00:08:04.707 --> 00:08:06.957 the week of 4 January 2026. 00:08:07.201 --> 00:08:07.551 H.R. 00:08:07.551 --> 00:08:10.661 5401: Pay Our Troops Act of 2026 00:08:10.869 --> 00:08:12.529 Sponsor: Representative Jennifer A. 00:08:12.529 --> 00:08:19.209 Kiggans Status: Introduced 16 September 2025; Active in January 2026 discussions. 00:08:19.727 --> 00:08:20.227 H.R. 00:08:20.227 --> 00:08:26.097 5401, titled the "Pay Our Troops Act of 2026," has emerged as a critical safety 00:08:26.097 --> 00:08:30.177 net for the military community amidst the perennial threat of legislative gridlock. 00:08:30.887 --> 00:08:34.397 As the fiscal landscape remains contentious, this bill is designed to 00:08:34.457 --> 00:08:37.977 insulate the men and women of the Armed Forces from the effects of a government 00:08:37.977 --> 00:08:40.197 shutdown or a lapse in appropriations. 00:08:40.568 --> 00:08:44.168 The bill authorizes continuing appropriations specifically for the 00:08:44.168 --> 00:08:47.378 pay and allowances of members of the Armed Forces, including the Coast 00:08:47.378 --> 00:08:52.128 Guard, during any period in Fiscal Year 2026 where interim or full-year 00:08:52.128 --> 00:08:54.248 appropriations are not in effect. 00:08:54.778 --> 00:08:58.518 The scope of this protection extends to active duty personnel and 00:08:58.518 --> 00:09:01.868 members of the reserve components who are performing active service. 00:09:02.163 --> 00:09:05.503 Crucially, the legislation recognizes the integrated nature 00:09:05.503 --> 00:09:07.103 of the modern military force. 00:09:07.503 --> 00:09:11.193 It extends funding coverage to civilian personnel and contractors of the 00:09:11.193 --> 00:09:15.043 Department of Defense—and the Department of Homeland Security in the case of 00:09:15.043 --> 00:09:18.503 the Coast Guard—whom the Secretary determines are providing essential 00:09:18.503 --> 00:09:20.443 support to members of the Armed Forces. 00:09:20.973 --> 00:09:24.753 This provision addresses the "hollow force" phenomenon observed in previous 00:09:24.753 --> 00:09:28.673 shutdowns, where uniformed personnel were required to report for duty 00:09:28.943 --> 00:09:32.543 but lacked the necessary logistical, administrative, and maintenance 00:09:32.543 --> 00:09:34.213 support from the civilian workforce. 00:09:34.753 --> 00:09:38.333 The funding authority under this bill would expire upon the enactment of 00:09:38.333 --> 00:09:43.843 a full appropriations bill or on 1 January 2027, whichever comes first. 00:09:44.151 --> 00:09:44.601 H.R. 00:09:44.601 --> 00:09:48.571 3944: Military Construction, Veterans Affairs, and Related 00:09:48.571 --> 00:09:51.231 Agencies Appropriations Act, 2026 00:09:51.551 --> 00:09:57.341 Sponsor: Representative John Carter Status: Passed House 25 June 2025; 00:09:57.571 --> 00:10:01.751 Senate action ongoing; parts included in package passed November 2025. 00:10:02.169 --> 00:10:02.579 H.R. 00:10:02.579 --> 00:10:06.219 3944 represents the fiscal machinery behind the military's 00:10:06.219 --> 00:10:08.979 physical infrastructure and the veteran support system. 00:10:09.589 --> 00:10:13.259 While a significant portion of this bill addresses Veterans Affairs, its 00:10:13.259 --> 00:10:17.439 provisions for Military Construction (MILCON) are vital for the quality 00:10:17.439 --> 00:10:21.309 of life and operational readiness of active duty and reserve personnel. 00:10:21.658 --> 00:10:26.168 The bill appropriates over $19 billion for military construction projects. 00:10:26.668 --> 00:10:30.068 A major focus of this funding is the improvement of living quarters, with 00:10:30.068 --> 00:10:34.188 specific line items dedicated to barracks renovation and the construction 00:10:34.188 --> 00:10:35.828 of new child development centers. 00:10:36.358 --> 00:10:39.448 These investments address two of the most persistent quality-of-life 00:10:39.508 --> 00:10:43.038 complaints from service members: substandard housing conditions and 00:10:43.038 --> 00:10:44.678 the lack of affordable childcare. 00:10:44.918 --> 00:10:48.998 Furthermore, the bill funds critical operational facilities in the Indo-Pacific 00:10:48.998 --> 00:10:52.988 region, supporting the strategic pivot to Asia and the dispersal of forces 00:10:52.988 --> 00:10:55.088 required for modern deterrence doctrines. 00:10:55.466 --> 00:10:58.396 For the Reserve Component, the bill is particularly significant. 00:10:58.886 --> 00:11:01.076 It allocates $358.5 00:11:01.076 --> 00:11:05.826 million for Army National Guard military construction and $210.5 00:11:05.826 --> 00:11:08.806 million for Air National Guard military construction. 00:11:09.376 --> 00:11:13.226 These funds are earmarked for readiness centers, maintenance shops, and 00:11:13.226 --> 00:11:17.066 training ranges that allow Guard units to train on the same modern equipment 00:11:17.096 --> 00:11:18.926 as their active duty counterparts. 00:11:19.286 --> 00:11:23.466 Additionally, the bill includes strict oversight mandates for privatized 00:11:23.466 --> 00:11:27.096 military housing, requiring detailed reports on the condition of family 00:11:27.096 --> 00:11:30.706 housing at installations like Fort Leonard Wood, Missouri, to ensure that 00:11:30.746 --> 00:11:35.006 issues such as mold and maintenance backlogs are aggressively remediated. 00:11:35.391 --> 00:11:37.861 Executive Action: Prioritizing the Warfighter 00:11:38.207 --> 00:11:42.807 On 7 January 2026, President Trump signed a potentially paradigm-shifting 00:11:42.807 --> 00:11:47.187 Executive Order titled "Prioritizing the Warfighter in Defense Contracting". 00:11:47.677 --> 00:11:51.537 This directive represents a new, aggressive posture by the executive branch 00:11:51.537 --> 00:11:55.227 towards the defense industrial base, signaling a shift from a laissez-faire 00:11:55.227 --> 00:11:58.837 approach to one of strict accountability and production prioritization. 00:11:59.208 --> 00:12:02.348 The Executive Order is predicated on the assertion that the defense 00:12:02.348 --> 00:12:06.858 industrial base has, in recent years, prioritized investor returns over 00:12:06.858 --> 00:12:08.478 national security requirements. 00:12:08.938 --> 00:12:12.418 The text of the order explicitly criticizes the practice of stock 00:12:12.518 --> 00:12:16.238 buybacks and excessive dividend payouts by defense contractors who 00:12:16.238 --> 00:12:19.908 are simultaneously failing to meet production targets or delivery schedules. 00:12:20.368 --> 00:12:24.418 The objective is to force a reallocation of corporate capital back into 00:12:24.418 --> 00:12:28.598 research and development, manufacturing infrastructure, and workforce expansion. 00:12:28.936 --> 00:12:32.106 Under the provisions of the order, the Secretary of Defense is empowered 00:12:32.106 --> 00:12:36.226 to prohibit defense contractors from engaging in stock buybacks or issuing 00:12:36.226 --> 00:12:39.706 dividends if they are found to be "underperforming" on government contracts. 00:12:40.206 --> 00:12:44.016 The definition of "underperformance" is broad, encompassing insufficient 00:12:44.016 --> 00:12:47.836 production speed, lack of investment in capacity, or a failure to 00:12:47.836 --> 00:12:51.146 prioritize government orders over other commercial interests. 00:12:51.483 --> 00:12:53.553 The timeline for implementation is aggressive. 00:12:53.953 --> 00:12:57.663 The Secretary of Defense is directed to identify underperforming contractors 00:12:57.663 --> 00:13:02.493 within 30 days of the order—by early February 2026—and to develop future 00:13:02.493 --> 00:13:05.553 contract provisions that would curb executive pay and corporate 00:13:05.553 --> 00:13:07.273 distributions within 60 days. 00:13:07.763 --> 00:13:11.733 For active duty commanders and logistics officers, this Executive Order aims 00:13:11.733 --> 00:13:15.573 to alleviate the chronic supply chain bottlenecks that have plagued readiness. 00:13:16.043 --> 00:13:19.043 The intent is to increase the availability of munitions, spare 00:13:19.043 --> 00:13:21.353 parts, and next-generation platforms. 00:13:21.783 --> 00:13:25.463 However, industry analysts warn of potential short-term friction between 00:13:25.463 --> 00:13:29.033 the Department of Defense and major prime contractors, which could lead 00:13:29.033 --> 00:13:32.803 to legal challenges or contract renegotiations before the desired 00:13:32.803 --> 00:13:34.473 production efficiencies are realized. 00:13:34.725 --> 00:13:36.615 Operational Context and Deployments 00:13:37.020 --> 00:13:42.360 The news cycle from 4 January 2026 to 10 January 2026 underscores the 00:13:42.360 --> 00:13:44.510 volatile global environment in which U.S. 00:13:44.510 --> 00:13:46.200 forces are currently operating. 00:13:46.700 --> 00:13:50.720 The active and reserve components are engaged in a complex web of deterrence, 00:13:50.800 --> 00:13:53.340 combat support, and domestic operations. 00:13:53.682 --> 00:13:57.632 In Eastern Europe, the conflict in Ukraine continues to consume vast amounts 00:13:57.632 --> 00:13:59.422 of materiel and strategic attention. 00:14:00.022 --> 00:14:03.442 Intelligence reports released during the week indicate that Russian military 00:14:03.442 --> 00:14:08.132 fatalities in Ukraine have reached unsustainable levels, with over 35,000 00:14:08.132 --> 00:14:10.982 personnel lost in December 2025 alone. 00:14:11.722 --> 00:14:14.482 This rate of attrition is forcing a potential shift in Russian 00:14:14.482 --> 00:14:18.132 tactics, raising the specter of asymmetric escalation or the 00:14:18.132 --> 00:14:19.792 use of unconventional weapons. 00:14:20.052 --> 00:14:20.382 U.S. 00:14:20.382 --> 00:14:23.872 forces in Europe remain on high alert, bolstering the eastern flank 00:14:23.872 --> 00:14:27.342 of the NATO alliance and managing the logistics of aid to Ukraine. 00:14:27.723 --> 00:14:30.053 In the Middle East, tensions with Iran remain acute. 00:14:30.533 --> 00:14:34.973 Pentagon briefings on 10 January 2026 provided updates on the U.S. 00:14:35.013 --> 00:14:39.373 strategic posture following recent strikes on Iranian nuclear infrastructure and 00:14:39.373 --> 00:14:43.163 continued kinetic operations against Houthi rebels in Yemen to secure 00:14:43.163 --> 00:14:45.163 freedom of navigation in the Red Sea. 00:14:45.633 --> 00:14:49.363 These operations involve a significant naval and air presence, requiring 00:14:49.363 --> 00:14:53.153 sustained deployments of carrier strike groups and land-based air wings. 00:14:53.517 --> 00:14:57.757 Domestically, the National Guard continues to fulfill its dual role as a combat 00:14:57.757 --> 00:15:00.037 reserve and a homeland security force. 00:15:00.447 --> 00:15:04.677 Approximately 175 members of the West Virginia National Guard remain 00:15:04.677 --> 00:15:06.407 deployed in Washington, D.C., 00:15:06.537 --> 00:15:10.217 supporting the "crime emergency" declaration issued in late 2025. 00:15:10.787 --> 00:15:14.457 This mission involves static security and roving patrols, highlighting the 00:15:14.457 --> 00:15:17.837 continued reliance on the Guard for domestic law enforcement support duties. 00:15:18.209 --> 00:15:20.579 Issues That Affect Retired Military Personnel 00:15:20.946 --> 00:15:23.266 2026 Cost-of-Living Adjustment (COLA) 00:15:23.564 --> 00:15:27.394 Effective 1 December 2025, and reflected in the first retirement 00:15:27.394 --> 00:15:32.344 checks of 2026 which were paid on 31 December 2025, military retired 00:15:32.344 --> 00:15:34.064 pay has been adjusted by 2.8 00:15:34.134 --> 00:15:34.534 percent. 00:15:35.024 --> 00:15:38.684 This adjustment is statutorily linked to the Consumer Price Index for Urban 00:15:38.684 --> 00:15:43.044 Wage Earners and Clerical Workers (CPI-W), ensuring that the purchasing 00:15:43.044 --> 00:15:46.374 power of the annuity is preserved against the erosion of inflation. 00:15:46.737 --> 00:15:50.277 For the majority of retirees—those under the "High-3" or "Final 00:15:50.307 --> 00:15:52.827 Pay" retirement systems—this 2.8 00:15:52.827 --> 00:15:55.087 percent increase is applied fully. 00:15:55.567 --> 00:15:59.427 To illustrate the impact: a retiree who previously received a monthly 00:15:59.427 --> 00:16:05.537 gross payment of $2,500 will see an increase of approximately $70, bringing 00:16:05.537 --> 00:16:08.637 the new monthly total to $2,570. 00:16:09.407 --> 00:16:14.727 A retiree with a $4,000 monthly annuity will see an increase of roughly $112, 00:16:14.977 --> 00:16:18.687 resulting in a new payment of $4,112. 00:16:19.069 --> 00:16:23.669 However, a specific subset of the retiree population faces a different reality. 00:16:24.109 --> 00:16:29.689 Retirees who entered service after 1 August 1986 and elected the "CSB/Redux" 00:16:29.689 --> 00:16:34.029 retirement plan at their 15-year mark receive a permanently reduced COLA. 00:16:34.449 --> 00:16:38.879 Under the terms of the CSB/Redux plan, which offered a $30,000 cash 00:16:38.919 --> 00:16:44.069 bonus while active, the annual COLA is capped at the CPI minus 1 percent. 00:16:44.569 --> 00:16:47.859 Consequently, these retirees are receiving only a 1.8 00:16:47.859 --> 00:16:49.809 percent increase for 2026. 00:16:50.479 --> 00:16:53.759 While the 1 percent difference may seem minor in a single year, the 00:16:53.759 --> 00:16:57.509 compounding effect over decades of retirement results in a significant 00:16:57.509 --> 00:17:01.359 divergence in purchasing power compared to their High-3 counterparts. 00:17:01.839 --> 00:17:06.709 A "catch-up" provision exists at age 62 to restore the base amount, but 00:17:06.709 --> 00:17:10.469 the years of reduced growth represent a permanent loss of potential income. 00:17:10.810 --> 00:17:15.540 Beneficiaries of the Survivor Benefit Plan (SBP) also see their annuity 00:17:15.540 --> 00:17:17.670 payments increased by the full 2.8 00:17:17.670 --> 00:17:21.110 percent, ensuring that the widows and widowers of service members 00:17:21.110 --> 00:17:22.630 maintain their financial footing. 00:17:23.027 --> 00:17:23.967 While a 2.8 00:17:23.967 --> 00:17:28.487 percent increase is a positive adjustment, it represents a decrease from the 3.2 00:17:28.487 --> 00:17:32.597 percent COLA seen in 2024 and the significantly higher adjustments of 00:17:32.597 --> 00:17:34.567 the post-pandemic inflationary period. 00:17:35.227 --> 00:17:39.087 Financial planners and military associations advise retirees to 00:17:39.087 --> 00:17:42.527 carefully measure this increase against their personal inflation rates. 00:17:43.057 --> 00:17:46.427 For many seniors, the "personal CPI" is heavily weighted towards 00:17:46.427 --> 00:17:50.607 healthcare, prescription drugs, and housing—sectors where inflation 00:17:50.687 --> 00:17:55.267 often outpaces the general basket of goods used to calculate the CPI-W. 00:17:55.877 --> 00:18:00.517 The 2026 COLA, therefore, may essentially be a maintenance adjustment rather 00:18:00.517 --> 00:18:02.517 than a net gain in disposable income. 00:18:02.826 --> 00:18:04.436 TRICARE and Health Care Changes 00:18:04.726 --> 00:18:06.286 Pharmacy Copayment Increases 00:18:06.651 --> 00:18:12.091 Effective 1 January 2026, TRICARE pharmacy copayments have increased. 00:18:12.501 --> 00:18:16.611 These changes disproportionately affect the retired community, which utilizes 00:18:16.611 --> 00:18:20.661 maintenance medications at a higher rate than the younger active duty population. 00:18:21.211 --> 00:18:24.911 The Department of Defense continues to structure these costs to incentivize 00:18:24.911 --> 00:18:27.851 the use of the home delivery system over retail pharmacies. 00:18:28.179 --> 00:18:32.559 For a 30-day supply of a generic (Tier 1) drug at a retail network pharmacy, 00:18:32.859 --> 00:18:35.129 the copay remains steady at $16. 00:18:35.629 --> 00:18:39.389 However, utilizing the home delivery service for a 90-day supply of the 00:18:39.389 --> 00:18:42.229 same generic drug costs only $14. 00:18:42.819 --> 00:18:46.649 This pricing model implies that a retiree can obtain three times the 00:18:46.649 --> 00:18:50.309 medication for less than the cost of a single month at a retail counter. 00:18:50.649 --> 00:18:54.789 The divergence is even more pronounced for Brand-Name (Tier 2) drugs. 00:18:55.349 --> 00:19:01.609 A 30-day retail supply now costs $48, an increase of $5 from the 2025 rates. 00:19:01.909 --> 00:19:06.639 In contrast, a 90-day supply via home delivery costs $44. 00:19:07.249 --> 00:19:11.299 This means a retiree using retail pharmacies for a brand-name maintenance 00:19:11.299 --> 00:19:18.259 drug would pay $144 for a 90-day period ($48 x 3), whereas switching to mail 00:19:18.259 --> 00:19:24.749 order would cost only $44—a savings of $100 per medication every three months. 00:19:25.659 --> 00:19:31.539 Non-Formulary (Tier 3) drugs have seen the steepest hike, rising to $85 for both 00:19:31.539 --> 00:19:34.359 retail (30-day) and mail order (90-day). 00:19:34.906 --> 00:19:38.516 The cost differential is not accidental; it is a deliberate policy 00:19:38.516 --> 00:19:42.206 lever designed to shift volume to the more cost-efficient mail order 00:19:42.206 --> 00:19:44.036 system managed by Express Scripts. 00:19:44.626 --> 00:19:48.196 Retirees are strongly advised to review their prescription profiles in 00:19:48.196 --> 00:19:52.316 early January and proactively switch eligible maintenance drugs to Home 00:19:52.316 --> 00:19:54.696 Delivery to mitigate these rising costs. 00:19:54.928 --> 00:19:58.248 Defense Finance and Accounting Service (DFAS) Updates 00:19:58.498 --> 00:20:01.698 The administrative machinery of retirement pay is also undergoing 00:20:01.698 --> 00:20:05.828 modernization, requiring retirees to adapt to digital-first processes. 00:20:06.167 --> 00:20:07.347 Tax Season Preparation 00:20:07.816 --> 00:20:11.416 DFAS has released the schedule for the distribution of 2025 tax 00:20:11.416 --> 00:20:14.706 documents, a critical administrative event for the retired community. 00:20:15.196 --> 00:20:19.836 The 1099-R forms, which detail retired pay distributions and tax withholding, 00:20:20.026 --> 00:20:24.326 became available on the myPay online portal in mid-December 2025. 00:20:24.896 --> 00:20:27.156 Hard copies for those who have not opted out of mail 00:20:27.156 --> 00:20:28.836 delivery were sent via the U.S. 00:20:28.836 --> 00:20:32.386 Postal Service by 31 January 2026. 00:20:32.740 --> 00:20:36.340 A significant change for the 2026 tax season concerns the Affordable 00:20:36.340 --> 00:20:38.360 Care Act (ACA) documentation. 00:20:38.930 --> 00:20:43.720 In accordance with new IRS guidance, the 1095-B and 1095-C forms, 00:20:43.930 --> 00:20:46.870 which provide proof of health insurance coverage, are no longer 00:20:46.870 --> 00:20:48.910 automatically mailed to all retirees. 00:20:49.390 --> 00:20:54.640 As of the 2026 tax season, retirees must access these forms via myPay or 00:20:54.640 --> 00:20:59.810 request a reissue through the askDFAS online system starting 9 February 2026. 00:21:00.450 --> 00:21:04.540 This shift reduces administrative costs but requires retirees to ensure their 00:21:04.540 --> 00:21:09.460 myPay access credentials—login IDs and passwords—are active and up to date. 00:21:09.806 --> 00:21:11.396 CRDP/CRSC Open Season 00:21:11.760 --> 00:21:15.100 The annual Open Season for Concurrent Retirement and Disability Pay 00:21:15.250 --> 00:21:20.460 (CRDP) and Combat-Related Special Compensation (CRSC) is active from 00:21:20.460 --> 00:21:24.590 1 January 2026 to 31 January 2026. 00:21:24.985 --> 00:21:27.895 This period allows eligible retirees to switch between 00:21:27.895 --> 00:21:29.455 the two forms of compensation. 00:21:29.915 --> 00:21:33.875 Most retirees with a Department of Veterans Affairs (VA) disability rating 00:21:33.875 --> 00:21:38.515 of 50 percent or higher automatically receive CRDP, which restores their 00:21:38.515 --> 00:21:42.135 retired pay that would otherwise be offset by their disability pay. 00:21:42.685 --> 00:21:45.405 However, CRDP is taxable income. 00:21:45.715 --> 00:21:49.225 Retirees with combat-related disabilities may be eligible for 00:21:49.225 --> 00:21:51.905 CRSC, which is a tax-free entitlement. 00:21:52.322 --> 00:21:54.732 The decision to switch is often complex. 00:21:55.142 --> 00:21:59.812 While CRSC is tax-free, it may pay a lower gross amount than CRDP 00:22:00.052 --> 00:22:03.332 depending on the specific disability rating and the percentage of that 00:22:03.332 --> 00:22:04.952 rating deemed "combat-related." 00:22:05.512 --> 00:22:10.642 Therefore, a retiree might choose the taxable CRDP if the net, after-tax 00:22:10.642 --> 00:22:13.062 amount is higher than the tax-free CRSC. 00:22:13.662 --> 00:22:17.492 Conversely, a retiree in a high tax bracket might benefit more 00:22:17.492 --> 00:22:19.592 from the tax-free nature of CRSC. 00:22:20.172 --> 00:22:24.632 DFAS encourages retirees to utilize online comparison calculators during 00:22:24.632 --> 00:22:28.302 this January window to determine the most financially advantageous 00:22:28.302 --> 00:22:30.312 option for their specific situation. 00:22:30.658 --> 00:22:32.628 Issues That Affect Veterans Affairs 00:22:32.917 --> 00:22:35.377 Disability Compensation and Legislative Support 00:22:35.723 --> 00:22:39.393 Aligned with the Social Security COLA, Department of Veterans Affairs disability 00:22:39.393 --> 00:22:42.053 compensation rates increased by 2.8 00:22:42.053 --> 00:22:44.923 percent effective 1 December 2025. 00:22:45.583 --> 00:22:48.473 This increase is vital for disabled veterans who rely on these 00:22:48.473 --> 00:22:51.973 tax-free payments as a primary or supplementary income source. 00:22:52.405 --> 00:22:55.175 For a veteran with a 100 percent disability rating and no 00:22:55.175 --> 00:23:01.505 dependents, the monthly rate has risen to approximately $3,938.58. 00:23:02.335 --> 00:23:06.125 This figure represents the baseline for the most severely disabled veterans, 00:23:06.335 --> 00:23:09.945 with additional amounts added for spouses, children, and parents. 00:23:10.415 --> 00:23:15.265 For a veteran with a 10 percent disability rating, the new rate is $180.42. 00:23:15.525 --> 00:23:19.325 Specific adjustments have also been made to Special Monthly Compensation 00:23:19.475 --> 00:23:24.095 (SMC) rates, which compensate for specific severe disabilities such as 00:23:24.095 --> 00:23:25.765 the loss of use of a limb or organ. 00:23:26.165 --> 00:23:29.715 For example, the SMC-K rate, often awarded for the loss of use of a 00:23:29.715 --> 00:23:33.875 creative organ, is now $139.87. 00:23:34.155 --> 00:23:37.065 The Major Richard Star Act: The Fight for Concurrent Receipt 00:23:37.426 --> 00:23:40.226 The legislative battle for the Major Richard Star Act (H.R. 00:23:40.226 --> 00:23:41.246 1282 / S. 00:23:41.246 --> 00:23:46.216 344) intensified significantly during the first week of January 2026. 00:23:46.776 --> 00:23:49.656 This legislation addresses a perceived inequity affecting 00:23:49.656 --> 00:23:50.926 combat-injured veterans. 00:23:51.261 --> 00:23:55.251 Under current law, veterans who are medically retired with fewer than 20 years 00:23:55.251 --> 00:23:59.671 of service due to combat injuries are subject to a "dollar-for-dollar offset." 00:24:00.351 --> 00:24:04.331 This means that for every dollar of VA disability compensation they 00:24:04.331 --> 00:24:08.741 receive, their Department of Defense retirement pay is reduced by one dollar. 00:24:08.951 --> 00:24:12.311 Effectively, they must fund their own disability compensation out 00:24:12.311 --> 00:24:13.851 of their earned retirement pay. 00:24:14.176 --> 00:24:18.086 The Major Richard Star Act seeks to eliminate this offset, allowing these 00:24:18.086 --> 00:24:21.876 combat-injured veterans to receive both their full vested longevity pay 00:24:22.006 --> 00:24:26.766 and their VA disability compensation—a policy known as "Concurrent Receipt." 00:24:27.366 --> 00:24:30.726 During the week of 4 January 2026, advocacy groups 00:24:30.726 --> 00:24:32.516 rallied support for S.Amdt. 00:24:32.856 --> 00:24:36.896 4056, a legislative amendment designed to attach the Major Richard 00:24:36.896 --> 00:24:40.666 Star Act to broader funding bills to bypass legislative gridlock. 00:24:41.116 --> 00:24:44.496 Supporters argue that the current offset acts as a "tax" 00:24:44.566 --> 00:24:46.006 on veterans for their injuries. 00:24:46.486 --> 00:24:49.666 Opponents in Congress continue to cite the high cost of the bill, 00:24:49.826 --> 00:24:54.286 estimated at over $7 billion over ten years, as a barrier to passage. 00:24:54.646 --> 00:24:57.806 The issue garnered significant local media attention in states 00:24:57.806 --> 00:25:01.206 like Tennessee and Mississippi this week, with veterans' organizations 00:25:01.296 --> 00:25:05.106 urging constituents to pressure their representatives to prioritize the measure. 00:25:05.442 --> 00:25:05.792 H.R. 00:25:05.792 --> 00:25:08.402 983: MGIB-SR Tuition Fairness Act 00:25:08.693 --> 00:25:11.823 Signed into Law (Public Law 119-55). 00:25:12.123 --> 00:25:15.953 This newly enacted law serves as a critical bridge for disabled veterans who 00:25:15.953 --> 00:25:19.493 may be members of the Reserve Component looking to retrain for civilian careers. 00:25:20.043 --> 00:25:24.713 Effective 1 August 2026, the law mandates that public educational 00:25:24.713 --> 00:25:28.343 institutions charge in-state tuition rates to reservists using 00:25:28.343 --> 00:25:32.643 the Montgomery GI Bill-Selected Reserve (MGIB-SR), regardless of 00:25:32.643 --> 00:25:34.353 their actual residency status. 00:25:34.783 --> 00:25:38.363 This is particularly relevant for disabled veterans in the Reserves who 00:25:38.363 --> 00:25:42.283 may need to move across state lines to access specialized medical care or 00:25:42.283 --> 00:25:46.973 rehabilitation facilities but wish to continue their education simultaneously. 00:25:47.553 --> 00:25:51.653 By capping tuition at the in-state rate, the law ensures that their educational 00:25:51.653 --> 00:25:56.253 benefits cover a larger portion of the cost, reducing the need for student loans. 00:25:56.602 --> 00:25:57.012 H.R. 00:25:57.012 --> 00:25:59.442 3944: VA Funding Provisions 00:25:59.764 --> 00:26:01.514 The appropriations bill H.R. 00:26:01.514 --> 00:26:05.134 3944 contains specific provisions securing the financial 00:26:05.134 --> 00:26:06.404 future of veteran healthcare. 00:26:06.864 --> 00:26:09.034 It provides $133.5 00:26:09.034 --> 00:26:12.284 billion in discretionary funding and $312.3 00:26:12.284 --> 00:26:14.674 billion in mandatory funding for the VA. 00:26:15.114 --> 00:26:19.234 Most notably for disabled veterans, the bill includes $52.7 00:26:19.234 --> 00:26:22.604 billion for the Toxic Exposures Fund (TEF). 00:26:23.244 --> 00:26:27.094 This fund is the financial engine of the PACT Act, covering the costs of 00:26:27.094 --> 00:26:30.944 healthcare and disability compensation for veterans suffering from conditions 00:26:30.944 --> 00:26:34.724 related to burn pits, Agent Orange, and other environmental hazards. 00:26:35.224 --> 00:26:39.044 This continued funding ensures that the presumptive conditions established by 00:26:39.044 --> 00:26:43.544 the PACT Act remain fully supported, preventing a backlog in claims processing 00:26:43.654 --> 00:26:45.534 or a shortage of specialized care. 00:26:45.799 --> 00:26:47.799 Electronic Health Record Modernization (EHRM) 00:26:47.859 --> 00:26:51.259 The transition to the new Federal Electronic Health Record (EHR), 00:26:51.329 --> 00:26:54.579 based on the Oracle Cerner platform, reached a new milestone 00:26:54.579 --> 00:26:57.109 during the week of 4 January 2026. 00:26:57.559 --> 00:27:01.939 On 10 January 2026, VA officials provided updates on the deployment 00:27:01.939 --> 00:27:04.819 process within the VA Northern Indiana Health Care System. 00:27:05.217 --> 00:27:08.527 For disabled veterans, particularly those with complex, multi-system 00:27:08.527 --> 00:27:13.777 injuries requiring care from both DoD and VA specialists, the EHRM program 00:27:13.997 --> 00:27:16.477 promises a seamless continuity of care. 00:27:16.947 --> 00:27:20.257 The goal is a single, lifetime health record that follows the 00:27:20.257 --> 00:27:23.467 service member from their induction into the military through their 00:27:23.467 --> 00:27:25.197 transition to veteran status. 00:27:25.637 --> 00:27:28.967 This would eliminate the burden on disabled veterans to physically 00:27:28.967 --> 00:27:32.757 carry paper records between providers or request transfers of data. 00:27:33.137 --> 00:27:37.467 However, the program has been plagued by stability issues and cost overruns. 00:27:37.977 --> 00:27:41.677 The FY2026 appropriations bill provides $2.5 00:27:41.677 --> 00:27:45.107 billion for the program, which is less than the $3.5 00:27:45.107 --> 00:27:47.177 billion requested by the Administration. 00:27:47.847 --> 00:27:51.437 This funding shortfall may necessitate a slower, more deliberate rollout 00:27:51.437 --> 00:27:55.737 schedule to ensure system stability before expanding to new sites, a 00:27:55.737 --> 00:27:58.967 strategy intended to protect patient safety during the transition. 00:27:59.253 --> 00:28:00.893 And that's your Weekly Briefing. 00:28:01.323 --> 00:28:05.023 Staying on top of these changes is key to navigating your career, 00:28:05.123 --> 00:28:07.223 your retirement, and your benefits. 00:28:07.616 --> 00:28:08.556 Thank you for tuning in. 00:28:09.006 --> 00:28:12.956 Be sure to subscribe wherever you get your podcasts, so you never miss an update. 00:28:13.386 --> 00:28:16.626 We’ll be back next week with another roundup of the news that matters most 00:28:16.626 --> 00:28:18.486 to the military and veteran community.