MESSRS. CHAIRMEN and DISTINGUISHED MEMBERS OF THE COMMITTEES:

Gold Star Wives of America, Inc., is a Congressionally chartered veteran service organization comprised of the widowed spouses of military service members who died while on active duty or who died as a result of service-connected disabilities. Our membership consists of over 13,000 widows, but very few widowers, which mirrors the overwhelming female gender composition (almost 100%) of the nation’s surviving spouses receiving Dependency and Indemnity Compensation (DIC). There were 284,999 surviving spouses receiving DIC on January 31, 2000. The average age of a widow receiving DIC is 70 years of age, although there is a sizable minority of widows under 40 years of age. World War II continues to be the campaign with the most numerous DIC recipients (112,028), followed closely by Vietnam-era widows (94,140). Since our constituency is almost exclusively female, I will use the female gender in this Statement.

INTRODUCTION

We thank both Committees for inviting Gold Star Wives to give oral testimony before you today. As you are aware, our needs and especially those of active-duty widows are not always apparent to the other veteran service organizations, however helpful and supportive they have always been of us.

THANK YOU FOR COMPLETING THE

REMARRIAGE REINSTATEMENT PROGRAM

First and foremost, we want to publicly thank the members of both Veterans Affairs Committees for your fine efforts and success in securing the remainder of the VA benefits lost in OBRA of 1990 to DIC widows after their remarriages terminated. We especially want to thank Rep. Lane Evans and his fine staff for their initiative and leadership. Reinstatement of CHAMPVA, education and home loan benefits will be invaluable for the reinstated widows who qualify for those benefits.

CHAMPVA-65 AS SECOND PAYER

TO MEDICARE

Our most important legislative goal for this second year of the 106^th Congress is to obtain medical benefits for all Medicare-eligible DIC widows. There are significant legislative proposals in the Armed Services Committees to obtain better medical benefits, including a prescription benefit, for the KIA widows, who were entitled to CHAMPUS/TRICARE before becoming Medicare-eligible. (H.R. 2966/3573, S 2003, and others).

Most Medicare-eligible DIC widows, however, will not be eligible for the proposed Department of Defense (DoD) funded medical benefits legislation because they are the widows of veterans who died of service-connected disabilities, or are otherwise disqualified from receiving DoD funded medical benefits. The widows left out of the DoD legislation are the widows who were entitled to receive medical benefits through CHAMPVA before they became Medicare-eligible. Medicare does not provide a prescription benefit.

GSW proposes that CHAMPVA benefits be reinstated to widows who are now disqualified from the program because they are Medicare-eligible. This extension of CHAMPVA coverage will ensure that the widow continues to receive a prescription drug coverage when she becomes elderly, and needs it most.

Nationally, 33 - 37% of all Medicare beneficiaries have no prescription drug coverage. A recent GSW survey ( Exhibit A), however, reveals that almost one half of GSW members (49.4%) have no prescription coverage whatsoever. Almost one half (47%) of these Medicare-eligible GSWs without a drug benefit are forced to skip or reduce their prescribed medication dosages due to economic hardship. Nationally, one in eight elderly Americans on Medicare skimp on their medications; among GSWs, however, the number is almost one in four (23%), who engage in this painfully unhealthy practice. We are not surprised that GSW widows are so much worse off than the general population. Widows who have spent years taking care of other family members are less likely to have a vested health insurance plan for their old age than other Americans.

We find it ironic that the very widows who continue to pay for the price of freedom, long after the wars ostensibly ended, must now also pay the world’s highest prices for their prescription drugs. The pharmaceutical companies thrive in the free market made possible, in large part, by the sacrifices of Gold Star Wives and their dead husbands. We are not advocating price controls. Rather, we would like you to extend the CHAMPVA program to include this relatively small class of elderly widows.

The vast majority of affected widows are WWII, Korean and Vietnam widows. (Some Vietnam widows are now over 70 years of age.) For the most part, these widows are in their 70's and 80's and do not have the time to wait until Congress fully implements a drug prescription program under Medicare. The Medicare drug plan will be too little, too late for our elderly widows. In light of our aging widow population, time is of the essence. Barring a future large scale armed conflict, the cost of extending CHAMPVA to those who are Medicare-eligible will significantly decrease over time.

We look forward to working with Members of these Committees to design a good, effective and realistic program. GSW conducted a Prescription Survey in late December 1999/early January 2000 to assist the Committees to design a program. Please see attached Prescription Survey results, Exhibit A.

DIC/SBP OFFSET

This next issue is being raised with these Committees because the issue is egregious, and interrelated with our VA DIC benefits. We hope the Members of these Committees, who are also members of the Armed Services Committees, will raise the issue with their colleagues.

Our government unduly profits at the expense of retired servicemembers who die of their service-connected disabilities and their widows who paid into the Survivors Benefit Plan (SBP), and this is how the scheme works:

A servicemember receiving or entitled to receive retired pay may participate in SBP to ensure his widow will have an annuity in the event of his death. Should the retired servicemember die of his service-connected disability, however, his widow’s SBP will be offset dollar for dollar by her DIC. (The SBP/DIC offset currently affects over 44,000 survivors). Many widows of these disabled retirees, especially of the enlisted retirees, receive little or no SBP monies, in spite of the thousands of dollars they and their husbands voluntarily paid over many years in SBP premiums. As consolation, the Department of Defense returns the many years of unused premiums to those widows - lump sum taxable, and without interest. Although the disabled retiree typically could not enjoy much of a tax benefit at the time he incrementally paid the premiums, the widow must pay full tax on the lump sum in the year she receives the premium refund.

This scheme goes beyond what is required of premiums to subsidize an aggregated risk pool. Although the SBP premiums are actuarially computed, the significantly reduced amount of the DIC widow’s SBP annuity is justified primarily on the fact that the retiree died as a result of his service-connected disability. We think the scheme is unconscionable, not to mention we believe it discriminates against military retirees based upon the nature of their disability in violation of the Americans with Disabilities Act. This is not a "concurrent receipts" issue because the disabled retiree and his spouse actually pay a monthly premium for the SBP annuity.

One may ask why a service-connected disabled retiree would participate in the SBP plan. Affected GSW members respond that neither they, nor their husbands, knew the SBP program was financed in major part at their expense. There was no disclosure. The government’s share of the SBP program is 27%, which is far below their historical 40% contribution rate to the federal civilian survivor plans. The lower federal contribution rate to the SBP is made possible by the excessive premiums charged to the class of service-connected disabled retirees.

The SBP program needs to be redesigned. In the meantime, and in recognition that the retiree and his spouse actually paid thousands of dollars in SBP premiums, Gold Star Wives are requesting that the widow be offered the option of receiving the remaining actuarial value of the couple’s unused SBP premiums in the form of an annuity for the remainder of the widow’s life, without government contribution. Since the DIC widow’s SBP would be 100% personally fully funded, without government contribution, there would be no "double dipping," and therefore, no DIC offset. This proposal differs from a "concurrent receipts" scenario in that the retired couple would actually personally fully fund the SBP annuity. This proposal is no more a "double dipping" issue than the retirees’ issue calling for SBP premiums to be considered fully paid after 30 years. Both proposals simply require an acknowledgment that at some point the couple has more than fully paid for the SBP annuity.

We are hoping the Members of this Joint Committee will look into this very serious, and demoralizing problem, and work with Members of the respective Armed Services Committees to rectify it. Gold Star Wives look forward to working with Members of these Committees who are also Members of their respective Armed Services Committees to explore alternative means of paying the SBP annuity to the surviving spouses of retirees who die of service-connected disabilities.

RETENTION OF DIC UPON REMARRIAGE AFTER AGE 55

Every federal survivorship program, including the Social Security program, allows surviving spouses to remarry after a particular age without losing their federal survivor benefits. The notable exception is the VA’s DIC program, which remains the most restrictive of all federal survivorship programs. The DIC program has the highest percentage of female participants (almost 100%) of any federal survivor program, and we believe that is why our program continues to be the most punitive to participants who remarry.

Congress acknowledged the changing realities of marriage when it allowed all other classes of federal survivors, including Social Security survivors, to retain survivorship benefits after remarriage upon attaining a certain age. When a person marries after the age of 50 or 55, it is not usually for the first time. Both partners to the marriage generally have pre-existing financial obligations to a former spouse or to their children. The older marrying couple often does not have the protection of a pension survivorship plan because the option went to a previous spouse, or because the pension is already in payout status. When a Gold Star Wife remarries in her older years, she typically takes on every bit as much financial responsibility as does her husband. If during remarriage, a husband has a final illness, the Gold Star Wife has an obligation to spend her savings on his illness after exhausting their joint assets. The concept of a woman marrying to "be supported" by a husband is just not a reality anymore, and the concept certainly is not true of older marrying couples. Marriage among the elderly is very much an economic partnership.

Without their DIC, most Gold Star Wives would be indigent. This means that she must go into the marriage with "hat in hand." Gold Star Wives would like to remarry with dignity, much the same as the widows of federal civilian employees. She does not want to become a financial burden on a retired man who himself is on a fixed income. Since the average age of a DIC recipient is 70, and growing older, we do not expect great numbers to remarry.

We are asking that a bill be introduced to give DIC widows parity with all other federal survivors. If anything, we are more, not less deserving than they.

EDUCATION BENEFITS

In FY 1999, only 2186 DIC widows used their Survivor and Dependents Educational Assistance benefits. This participation rate is less than 1% and the number using the benefit is declining. Gold Star Wives surveyed our membership in the Spring of 1999 to determine why the numbers using the benefit were down; which widows were most likely to use their benefits; and the reasons why they did or did not use them. The survey results are stated in Exhibit B.

Gold Star Wives have been working with a consortium of veterans service organizations to improve the MGIB, and widows’ Chapter 35 education benefits. We propose that our education benefit be capped, not by a number of months of usage, but by a set amount of money (subject to COLAs). Currently, the amount being discussed among the veteran service organizations is approximately $36,000, the average cost of four years of out-of-state college public education; that the benefit be used at a rate as determined by the widow; and that the 10 year delimitation date be extended to 20 years.

The GSWs who use the benefit are typically under age 40. (See Survey results, exhibit B). But many of the young widows who use the education benefit have an additional cost not shared by the vast majority of veterans using their education benefits - and that is the cost of child care (approximately $600 per month). This cost, which merely allows the widow to leave the home, far exceeds her current monthly education benefit of $485 per month. She must pay all tuition, books and fees out of her DIC and Social Security income; or she must also work. Of course, working increases her child care expense and therefore is not an efficient use of her time if she is also a full-time student and full-time mother. Unlike the vast majority of the veterans attending school, we widows do not have a second parent to assist with child care while we attend school.

The survey data supports GSW’s prior contentions that family and work responsibilities prevent DIC widows from using their education benefits. A few of the widows who used the benefit added comments to the survey stating that the education benefit was the most useful of all the survivor benefits. The young widow who has the most to gain from using the education benefit, however, is often hamstrung by her family and work responsibilities in her early years of widowhood. Our proposal would encourage widows to use the benefit while they are still young because it could pay child care and tuition without requiring the widow to also work. Additionally, these widows will later return the investment via their increased tax dollars.

GSW SUPPORTS H.R. 3193

DUTY TO ASSIST VETERANS ACT

GSW supports Rep. Lane Evans’ bill to reestablish the duty of the Department of Veterans Affairs to assist claimants for benefits in developing claims without the claimants first having to show the claim is "well-grounded", and the bill clarifies the burden of proof for such claims.

Some widows, including the Agent Orange widows, spent many years before and after their husbands’ deaths trying to establish the service-connection. These widows, and especially elderly widows require a non-adversarial Department of Veterans Affairs to assist them in making their applications for benefits. Active duty widows also occasionally have difficult claims when the circumstances surrounding their husbands’ deaths are not adequately or competently investigated.

H.R. 3193 does not seek to change the ultimate burden of proof when submitting a claim for benefits. The widow must ultimately show a service-connection.

We widows have already suffered the brunt of this country’s past wars. Why should new widows face yet another war with the Agency charged to protect them?

GSW SUPPORTS H.R. 70

REQUIREMENTS FOR BURIAL IN ARLINGTON NATIONAL CEMETERY

GSW wholeheartedly supports H.R. 70, introduced last year by Chairman Bob Stump, and Representatives Lane Evans and Michael Bilirakas. The bill provides that unremarried, and formerly remarried widows may be buried in their husbands’ gravesite. A widow whose husband’s remains have never been recovered may also be buried in Arlington so long as her husband is not also memorialized elsewhere in the VA national cemetery system. The eligibility provisions of the bill provide the exclusive authority for burial in Arlington National Cemetery.

COST OF LIVING ADJUSTMENT (COLA)

Gold Star Wives thank the Members of these Committees for their support in obtaining an across the board 2.4% COLA we received on January 1, 2000. This is the same COLA rate that was paid to Social Security and other federal beneficiaries.

For most DIC widows, the 2.4% COLA resulted in a DIC monthly increase of $20.00. All too many widows, unfortunately, saw their entire COLA increase eaten up entirely by bigger increases in their medical costs.

THE TWO-TIERED "NEW-LAW" DIC STRUCTURE IS INEQUITABLE

In 1992, Congress amended the method for determining the amount of DIC to "establish parity among surviving spouses." Military Compensation Background Papers, Department of Defense, 5^th Edition, September 1996, pg. 630, citing, House Report No. 753, Part 1, pg. 11, accompanying H.R. 5008, 102d Congress, 2d Session (1992). The DIC Reform Act changed the method of determining the amount of the DIC awarded from being based on the servicemember’s rank, to a "more equitable" system in which all survivors would receive awards of the same amount. The Department of Veterans Affairs supported the change because:

The large majority of DIC recipients are awarded the benefit following post-service deaths, many occurring several decades after separation from service. In those cases, the military rank attained by the deceased is not related to his or her income prior to death.

Military Compensation Background Papers, at 630.

The Reform Act, however, did not make any provision for the very measurable loss of income and expected, but unrealized, retirement benefits in the case of active duty deaths. The widows of career Senior NCOs and Field Grade Officers are hurt under the DIC Reform Act because they spent many years supporting their husbands’ careers to earn the retirement, only to be totally ineligible for the earned retirement by their husband’s untimely deaths. The "equal" DIC payments do not reflect the greater economic harm faced by these "older" active duty widows, whose DIC payments are as little as 10% of their husband’s base pay before death.

The Reform Act provides a supplement of $191 for widows who were married to 100% service-connected disabled veterans for eight or more years. We believe these widows deserve the supplement, but unfortunately, the young widows who brought up their young children by themselves, and the "older" active duty widows, who lost the greatest amount of household income and the expectation of the retirement benefit, also suffered just as much, or more, financial hardship. And, with respect to junior enlisted and company grade officers’ active-duty widows: How do you explain that a loss of 50 years or more of a husband’s life is worth less than if he had instead been merely disabled, and lived for another "several decades after separation from service." You cannot explain the inequity of the DIC Reform Act.

We believe widows of all categories deserve the supplement, and it shouldn’t be reserved merely for the widows who had husbands around "for several decades" to lobby for them. We are asking that these Committees again look at the DIC program and try to achieve equity among DIC recipients.

SUPPORT FOR FLAG PROTECTION AMENDMENT

Gold Star Wives would like to also mention that we passed a resolution to support protecting the U.S. flag from physical desecration. We are grateful to the House for voting for it already.

We urge the Senate to vote in favor of SJR-14, the Flag Protection Amendment when it comes up as expected on March 28, 2000. Forty-nine states have petitioned the Congress for this right. We have heard over and over from members of Congress how important it is to listen to the voice of the people. We ask you to let the people decide. Pass SJR-14.

CONCLUSION

Thank you for inviting Gold Star Wives to present our legislative agenda to your Committees, and thank you again for reinstating the remaining VA benefits to reinstated DIC widows returning to the rolls after a remarriage ended. In summary, we respectfully request your Committees to support the following:

-extend CHAMPVA to include Medicare-eligible DIC recipients;

-work with your colleagues in the respective Armed Services Committees to revamp the SBP program with respect to DIC widows, and to allow DIC widows who paid into the SBP program the option to purchase SBP coverage without government contribution or DIC offset;

-permit widows to retain their DIC upon remarriage after the age of 55;

-increase the amount and flexibility of the education benefit, and extend the delimitation date to 20 years;

-eliminate requirement that a veteran/widow submit a well-grounded claim    (H.R.   3193);

-establish burial criteria for Arlington National Cemetery (H.R. 70);

-grant full COLA to all DIC recipients;

-correct inequitable two-tiered DIC structure;

-support Flag Protection Amendment.                                                   

CURRICULUM VITAE

Margaret Murphy Peterson is the unremarried widow of Cpt. James W. Peterson, U.S. Army (E.O.D.), who was killed in Vietnam in 1971. Their son, OS2 Eric J. Peterson is making the U.S. Navy his career, and his wife is also in the Navy on active duty. Ms. Peterson has been a member of Gold Star Wives of America, Inc., since 1991. She is a lifetime member, serves on its Board of Directors, and holds the position of National Legislative Director. She is also a member of the Department of Veterans Affairs National Cemetery Administration’s Advisory Committee.

Ms. Peterson used her VA educational benefits for all four years of college and her first year of law school. She obtained her Juris Doctor from Syracuse University College of Law, and her Master of Public Administration degree from Syracuse University’s Maxwell School. She is now the Confidential Law Clerk to a New York State Supreme Court Justice in upstate New York.

DISCLOSURE STATEMENT

Neither Ms. Peterson nor Gold Star Wives of America, Inc., has received any federal grant or contract during the current or previous two fiscal years relative to the subject matter of the testimony.