Attachment E - Glossary of Pay Rules.pdf

Attachment E - Glossary of Pay Rules

There is no succinct, consolidated source that captures all pay and leave rules and other entitlements for all active duty Commissioned Officers and for all retirees, annuitants, and former spouses. This information will have to be obtained during the requirements gathering stage (leading to the Requirements Document deliverable) primarily by interviewing subject matter experts and possibly reviewing the legacy COBOL code.

However, some required sources regarding pay and allowances of the uniformed services are:

1. Title 37 United States Code - http://www4.law.comell.edu/uscode/37/

2. Interpretation of Title 10 and Title 37 can be found in the Department of

Defense Financial Management Manual, Volumes 7A, 7B and 7C:

a. Volume 7A describes active duty pay and allowances -http://www.dod.mil/comptroller/fmr/07a/index.html

b. Volume 7B describes retiree and annuitant pay-http://www.dod.mil/comptroller/fmr/07b/index .html

c. Volume 7C describes several miscellaneous pay issues not contained in Volumes 7A and 7B -http://www.dod.mil/comptroller/fmr/07c/index.html

Basic Pay

Basic Pay is subject to Federal income tax, Social Security (FICA), in most cases, State income tax. The rate of Basic Pay received is based on the officer's temporary grade and the Base Pay Entry Date (BPED) printed on the officer's call-to-active-duty personnel order. The BPED date is usually the call-to-active-duty date; however, it may be adjusted for prior service in other Uniformed Services. The second date that is important is the Training and Experience Date (TED). This date appears on your call-to-active-duty personnel order and reflects your creditable training and experience related to your health specialty and determines your rank and eligibility for promotion. Your initial rate of Basic Pay is determined by your BPED and your rank. Subsequent increases in basic pay result from length of service, promotion to the next higher rank, and legislative pay increases.

Special Pay

Special pays are paid to several professional disciplines in the Corps based on category.

Officers must be called to duty for a minimum period of 1 year. These special pays are paid either on a monthly basis or on an annual contractual basis. All special pays are considered as taxable income. Rates of monthly special pays are determined by the years of creditable service, while most contract pay rates are determined according to specialty.

Recent changes in legislation have increased the maximum allowable rates for certain special pays and bonuses for health care professionals as well as created a consolidation of pay authorities. This consolidation authorizes the expansion of special pay eligibility to all professional categories and creates four general categories of special pay. The payroll system must be able to support the current special pay system, and the transition to the new consolidated pay authorities.

In the upcoming year, the Compensation Branch will be working closely with the Department of Defense to determine new Uniformed Services special pay and bonus rates with existing and consolidated pay authorities.

The following provides an overview of existing special pays:

Veterinary and optometry officers are eligible to receive monthly special pay. Special pays for medical officers include Retention Special Pay (RSP), Variable Special Pay (VSP), Board Certified Pay (BCP), Incentive Special Pay (ISP), and Multiyear Retention Bonus (MRB).

Note: Included in this issue of the Commissioned Corps Bulletin is an article titled Changes Announced for Medical Officers Special Pays - Dental officers are eligible for VSP, BCP, MRB, and Additional Special Pay (ASP) as well as an accession bonus.

Engineering and scientist officers may be eligible to receive Engineering and Scientific Career Continuation Pay (ESCCP). Nurse Special Pay (NSP) includes a special pay for nurse anesthetists as well as an accession bonus. Pharmacist officers receive VSP and may be eligible for an accession bonus upon call-to- duty. Non-physician BCP may be authorized for certain officers, as defined below.

VARIABLE SPECIAL PAY (VSP) is a monthly pay based on the pharmacy, medical, or dental officer's years of creditable service. The creditable service entry date (CSED) reflects the officer's years of active duty as a pharmacy, medical, or dental officer in any of the Uniformed Services. For medical and dental officers, CSED also includes the years spent participating in an accredited medical or dental internship/residency while not on active duty in a Uniformed Service. VSP rates range annually for medical, pharmacy and dental officers based on length of creditable service.

BOARD CERTIFIED PAY (BCP) is a monthly pay based on the medical, dental, or veterinary officer's CSED and board certification. BCP ranges annually for medical, dental and veterinary officers. Officers must provide documentation from the certifying board in support of current active certification to receive this special pay. All time-limited diplomats must submit successful completion of recertification exams to continue receipt of BCP.

NON-PHYSICIAN BOARD CERTIFIED PAY (NBCP) has been implemented by the PHS Commissioned Corps in the same manner as it has been in the other Uniformed Services. The payment of NBCP is authorized for recognized specialties that are above the normal entry level, and to be eligible a recipient must:

1. Be a healthcare provider in a specialty that is authorized to receive NBCP;

2. Have a post-baccalaureate degree in his or her clinical specialty; (MPH or MHA degrees do not substitute for your clinical specialty);

3. Be certified by a professional board in his or her clinical specialty; and

4. Meet the applicable criteria recognized by specialty boards.

Rates of pay range based on years of creditable service. Officers must provide documentation from the certifying board in support of current active certification to receive this special pay. All time-limited diplomats must submit successful completion of recertification exams to continue receipt of NBCP. Officers with prior military must include classification information for all prior active duty time with their request for

NBCP.

Specialties eligible to receive NBCP include: nurse anesthetist, nurse practitioner, nurse midwife, radiological physics, dietetics, occupational therapy, optometry, pharmacy, physical therapy, podiatry, psychology, social work, audiology/speech pathology, and physician assistant.

If you meet the above criteria and are not already receiving NBCP, you must submit a copy of your advanced degree certificate along with documentation of your board certification to the Compensation Branch.

RETENTION SPECIAL PAY (RSP) is an annual payment to medical officers who execute a contract to remain on active duty for a specified term of 1 or more years. The payment is made in a lump sum usually within 90 days of the effective date of the contract. If other bonus pay contracts are negotiated, they will have concurrent dating.

INCENTIVE SPECIAL PAY (ISP) is an annual bonus for medical officers who are board certified or fully trained in a medical specialty. ISP rates authorized by law, range per contract. Effective in 2008, there were changes to the ISP rates. ISP will be split into three payment levels: (1) ISP payable in conjunction with an MRB contract; (2) ISP payable if the officer has an obligation for training or scholarship; and (3) ISP payable for officers who choose to enter into 1 year only contracts when the officer is eligible for MRB. There is a provision to pay ISP for medical officers who execute an ISP contract to stay on active duty for a minimum of 1 year at an isolated hardship site or a hard-to-fill location.

Officers serving at the eligible sites are notified of their eligibility when they are assigned.

The amount for isolated hardship sites ranges based on the category of the site. The payment is made in an annual lump sum.

MULTIYEAR RETENTION BONUS (MRB) is an annual bonus for medical officers who are board certified or fully trained in a medical specialty. MRB rates range depending on the specialty training and the duration of the contract.

Eligibility requirements for ISP and MRB include that a medical officer:

1. Be entitled to receive RSP;

2. Be in pay grade 0-6 (CAPT) or below;

3. Not be participating in Department of Health and Human Services (HHS)-supported long-term training as defined in INSTRUCTION 1, Subchapter CC25.2, Extramural Training, of the Commissioned Corps Personnel Manual (CCPM);

4. Be eligible to remain on active duty for the duration of the contract;

5. Be board certified or fully trained in a recognized medical specialty;

6. Have a current license to practice medicine or osteopathy;

7. Not be serving obligated service as a result of training or scholarship (applies to MRB only); and

8. Enter into a contract to remain on active duty for 2-4 years. (Note that MRB and

RSP contracts must have concurrent dates.)

MULTIYEAR RETENTION BONUS (MRB) for dental officers is an annual bonus for officers who are board certified or fully trained in a dental specialty, and is payable annually depending on the specialty training and the length of the contract. Eligibility criteria are similar to those for medical officers, listed above.

ADDITIONAL SPECIAL PAY (ASP) is an annual lump sum bonus payable to dental officers who execute a contract to remain on active duty for at least 1 year. Amounts range per year depending on the officer's years of creditable service.

NURSE SPECIAL PAY is an annual contract special pay for nurse anesthetists. At the discretion of the Agency/Operating Division/Program to which they are assigned, qualified nurse officers may sign a contract to remain on active duty for 1 year and may be paid a lump sum amount depending on their obligation to the Service.

Eligibility requirements include that a nurse officer must:

1. Be a Certified Registered Nurse Anesthetist (CRNA), and submit proof of current certification;

2. Be on active duty under a call or order to duty for not less than 1 year;

3. Have a current and unrestricted State license as a registered professional nurse; and

4. Sign an agreement to remain on active duty for 1 year.

Any questions regarding the nurse special pay should be directed to your Agency/Operating Division/Program Commissioned Corps Liaison or the Compensation Branch.

ACCESSION BONUSES are authorized for registered nurses, pharmacists, and dentists who accept a commission as an officer. Officers must sign a contract within 60 days of their call-to-active-duty, and agree to remain on active duty for a period of not less than 4 years. The amount of the accession bonus differs for nurses, pharmacists and dentists.

To be eligible for the accession bonus, the officer must:

1. Have a current and unrestricted license as a registered professional nurse, pharmacist, or dentist;

2. Meet the commissioning standards for their respective category;

3. Not have received financial assistance from HHS or a Uniformed Service;

4. Not be serving obligated service pursuant to participation in an HHS-supported scholarship or training program;

5. Be willing to accept a commission as an officer and remain on active duty for a period not less than 4 years; and

6. Not have been on extended active duty in any Uniformed Service during the previous 12 months for nurse officers, and previous 24 months for dental and pharmacy officers.

ENGINEERING AND SCIENTIFIC CAREER CONTINUATION PAY (ESCCP) is a special pay for engineer or scientist officers who are assigned to positions designated as critical shortage positions. The maximum pay authorized per year. For engineers, the positions deemed as critical shortage positions are the locations designated as isolated hardship duty sites. Scientist officers occupying billets in which the civil service equivalent would be eligible for special pay are deemed critical shortage positions. Other eligibility criteria are:

1. Not be receiving any other accession or career continuation bonus or annual bonus authorized by 37 U.S.C. 302;

2. Not be serving obligated service pursuant to participation in an HHS-supported scholarship or training program;

3. Be below pay grade 0-6 (CAPT);

4. Hold an earned degree in engineering or science from an accredited college or university;

5. Be a member of the engineer or scientist categories or meet the standards for appointment to the scientist category;

6. Have completed 3 but less than 11 years of active duty with a Uniformed Service of which at least 3 years is duty as an engineer or scientist officer, or served on active duty for 3 but less than 11 years after meeting requirements for eligibility;

7. Be serving in an engineering or scientific specialty that is specified as a critical shortage specialty;

8. Not have been called to active duty as an inter-service transfer or served on active duty in another Uniformed Service within the last 12 months;

9. Not be participating in HHS-supported long-term training as defined in INSTRUCTION 1, Subchapter CC25.2, Extramural Training, of the CCPM; and

10. Execute a written agreement to remain on active duty for at least 1 year in the critical shortage position.

All special pay contract bonuses are available online at the DCP Web site http://dcP.psc.aov under >Services and >Official Forms. Specific guidelines determine the effective date of all contract pays, so it is important for officers to be familiar with the requirements in order not to jeopardize their eligibility. Questions on special pay eligibility can be addressed with Agency/Operating Division/Program Commissioned Corps Liaisons or the Compensation Branch.

Deductions

Deductions from pay include taxes, both State and Federal, and Social Security (FICA).

Officers must submit Form W-4, Employee's Withholding Allowance Certificate, to the Compensation Branch to determine the rate of withholding of Federal income tax.

Officers claim withholding allowances based on their marital status, number of dependents, and other adjustments to income. Worksheets are provided with Form W-4.

Note: The mandatory withholding rate for annual bonus payments is 25 percent.

STATE INCOME TAXES are withheld based on the officer's State of legal residence.

Officers notify the Compensation Branch of their State of legal residence by completing form DD-2058, State of Legal Residence Certificate, and if appropriate, State taxes are withheld. State tax laws vary so you should contact your State tax service for assistance.

SOCIAL SECURITY (FICA) will continue to be deducted from each officer's pay at the rate of 7.65 percent. Effective January 1, 2009, the maximum amount for which the full rate of 7.65 percent will be deducted has increased to $109,800. The Social Security deduction is comprised of two parts. The Old Age Survivors' and Disability Insurance (OASDI) rate is 6.2 percent. The Hospital Insurance (HI) rate is 1.45 percent. Both OASDI and HI are deducted on the first $109,800 of earnings. At that point, OASDI deductions are discontinued. The HI portion has no maximum salary cutoff, so it continues to be applicable to earnings above the OASDI cutoff. In other words, the Social Security deduction will be 7.65 percent on the first $109,800 of wages and 1.45 percent thereafter. Officers earning more than $109,800 will see a change in the net take-home pay when that amount has been reached.

SERVICEMEMBER'S GROUP LIFE INSURANCE (SGLI) premiums will automatically be deducted to provide a maximum of $400,000 of life insurance on the officer unless a lesser amount or no insurance is elected. New calls to duty are automatically covered for $400,000 unless they decline or elect reduced coverage.

Effective August 1, 2006, SGLI premium rates were set to $0.07 per $1,000 of coverage, making the monthly premium $28.00 for maximum coverage. The premium for Traumatic Injury Protection coverage (TSGLI), which is mandatory and added automatically to the SGLI deduction, is $1.00 per month.

Using form SGLV-8286, Service member's Group Life Insurance Election and Certificate, officers may (1) decline coverage, or (2) elect a reduced level of insurance in a multiple of $10,000. To specify an election or decline the insurance, the officer must submit form SGLV8286 on or before his or her first day of active duty.

November 1, 2001 marked the beginning of SGLI family coverage which extends coverage to spouses and children of active-duty officers with SGLI. Spouse coverage is automatic unless reduced or no coverage is requested using form SGLV-8286A, Family Coverage Election (SGLI) Premiums for spouse coverage are based on the age of the spouse. Child coverage in the amount of $10,000 per child is free and cannot be declined or reduced.

Detailed information on all SGLI programs is available online at the VA Web site http: /lwww.insurance.va.Qov/sQIiSite/default.htm. Election forms are also available online at http:/lwww.insurance.va.qov/sqIiSite/forms/forms.htm or from the Compensation Branch.

The Thrift Savings Plan (TSP) is intended to be a supplement to existing Uniformed Services retirement plans, not a replacement. For calendar year 2010, officers may deposit 100 percent of Basic Pay, along with 100 percent of special pay and bonuses up to a combined ceiling of $16,500 per year. Officers wishing to change the amount of basic pay deposited into their TSP account must submit a revised Form TSP-U-1, A TSP Election Form, to the Compensation Branch during the next open season. Congress recently authorized an additional >catch-up= contribution for members over age 50. The new legislation will allow participants age 50 and older to make $5,500 of additional contributions in 2010, and increasing amounts thereafter. Use Form TSP-U-1-C to make >catch-up contributions. Additional details on the TSP are available on the TSP Web site Chttp://www.tsp.gov. (Please be sure you are viewing the Uniformed Services section of that Web site). Information specific to PHS officers can be found on the DCP Web site http://dcp.psc.gov.

Allowances

Allowances are generally non-taxable income and include Basic Allowance for Subsistence (BAS), Basic Allowance for Housing (BAH), Overseas Housing Allowance (OHA), Cost of Living Allowance (COLA), Dislocation Allowance (DLA), and Move-In Housing Allowance (MIHA). Continental U.S. Cost of Living Allowance (CCOLA) is a taxable allowance.

BASIC ALLOWANCE FOR SUBSISTENCE (BAS) is a monthly allowance payable to all officers.

BASIC ALLOWANCE FOR HOUSING (BAH) rates are determined by the officer's duty location, grade, and dependency status. These rates are paid based on the duty location zip code, not home address.

Current rates can be viewed at http://www.dtic.mil/perdiem/bahform.html. Officers receiving BAH at the with-dependent rate must recertify annually the status of each dependent to continue receiving the with-dependent rate.

BAH Rate Protection

In most cases, officers will have their BAH rate protected. Each year, when the BAH rates change, the rate paid will be the greater of the new rate or the rate in effect the day previous to the new rates. This protects officers in areas where rents have decreased, thus causing a decrease in the published BAH rate. This rate protection does not apply in the following three circumstances, each of which involves a change in status that could lead to a reduction in BAH:

1. Permanent change of station (PCS) will result in different rates of BAH based on an Officer's new duty station. There is no rate protection when changing duty stations.

2. If an Officer is demoted, the BAH will revert to the current published rate appropriate to the Officer's new grade. Promotions will not lower the housing allowance.

3. If there is a change in dependency status, the Officer's rate of BAH will be determined by their new dependency status and the current published rate of BAH for the officer's grade and duty station.

OVERSEAS HOUSING ALLOWANCE (OHA) - Officers stationed overseas, other than Alaska and Hawaii, who live on the local economy are eligible to receive OHA. The monthly OHA amount is based on comparing the officer's rent, up to a rental ceiling for the duty station, plus the utility/recurring maintenance allowance. If a member owns quarters, the rent will be determined by dividing the purchase price by 120 to determine the monthly rental rate.

COST OF LIVING ALLOWANCE (COLA) is authorized to officers assigned to overseas areas to enable the officer to maintain approximately the same standard of living as in the Continental United States (CONUS). The rate established is based on the officer's grade, base pay entry date, and the actual number of dependents residing in his or her household.

CONTINENTAL UNITED STATES COST OF LIVING ALLOWANCE (CCOLA)

is a taxable allowance paid to officers assigned to designated high-cost areas within CONUS. The CGOLA rates vary depending upon the officer's rank and dependency status. Current rates can be found at http://www.dtic.mil/perdiem/ccform.html.

DISLOCATION ALLOWANCE (DLA) - An officer is eligible to receive a DLA if he or she relocates his or her household as a result of a Permanent Change of Station (PCS). DLA is a non-taxable allowance that is meant to partially reimburse the officer for expenses incurred in closing out his or her household and establishing a new household. The amount of DLA authorized can be found in the Joint Federal Travel Regulations (JFTR) Table U5G-

1. Note: The Compensation Branch does not process DLA. The procedure for requesting DLA is similar to requests for travel and travel reimbursement, and is processed through the Agency/OPDIV/Program.

U.S. SAVINGS BONDS - Many officers find that purchasing U.S. Savings Bonds from their salary is a convenient and reliable way to systematically save money. Properly executed U.S.

Savings Bonds purchase/change request forms received by the Compensation Branch by the 10th of each month will be implemented with that month's payroll. Commissioned officers must use form SB-2362 for Series I Bonds and for Series EE Bonds. The maximum number of Bonds that can be purchased by payroll deduction continues to be three (I and EE combined).

Series EE Bonds are purchased for half their face value and may not be cashed for 6 months from the date of issue. The minimum EE Bond denomination is $100. Series I Bonds are purchased for their full face value. The minimum Series I Bond denomination is $50.

It is important to note that U.S. Savings Bonds will only be mailed to the officer's payroll address, which is the same as that used for monthly earnings statements. It is generally recommended that your payroll address be your home address rather than your business address, in order to safeguard privacy. U.S. Savings Bonds information is also available on the following Web site www.publicdebttreas.aov/sav/sav.htm.

Payday

For active-duty officers, payday is usually the first day of the month. If the first day of the month is not a workday, officers may expect to receive their pay on the previous workday.

The exception is the December payday, which is paid on the last workday of the month. The Compensation Branch must be notified in writing of changes no later than the 10th of the month in order for the changes to be processed in the current month. Allow 90 days for the processing of special pay contracts.

For retired officers, former spouses, and annuitants, payday is usually the first day of the month.

If the first day of the month is not a workday, retired officers, former spouses, and annuitants may expect to receive their pay on the first workday following the first day of the month.