Financial rights for active personnel

USA Today (Society for the Advancement of Education), August, 2004

Reservists and National Guard families whose loved ones have been activated for duty in Iraq or other distant lands not only face separation but often financial hardship as well. A survey by the Department of Defense for Reserve Affairs found that 31% saw a decrease in income when a husband or wife was called up.

However, families can prevent or minimize difficulties through careful money management and by learning the special financial rights available to them when their child or spouse is summoned for duty, advises the Financial Planning Association, Denver, Colo.

First, if activation has not yet occurred, there are several steps that can be taken to minimize the financial impact of a future call-up.

* Save enough in an emergency fund to cover essential costs such as housing and food for at least six months. Other sources for emergency money include a home equity line of credit or a loan from life insurance cash values.

* Prepare a realistic postactivation budget. It will allow you to better prepare for cuts and motivate you more to build up savings.

* Families of activated personnel are allowed to shop at any nearby military base stores, where goods and services usually are less expensive.

* Determine eligibility for the military health program, TRICARE.

* Move to on-base housing if it is available.

* Reduce debt. Credit-card and other consumer debt can be financially devastating if the family faces a serious decline in income.

* Avoid off-base payday lenders, which can increase family debt.

* Designate someone in advance to manage the household finances and be sure they are up to speed with the figures before leaving. Single-parent families, or those where both spouses are called up, will need to rely on a relative, friend, or outside professional help (such as a bill-paying service or financial planner).

Whether your family already has someone on active duty or may soon, be aware of the many special financial rights that might be available. Activated reservists, National Guard, or deployed regular military generally are covered under the Service Member's Civil Relief Act, which strengthens the original 1940 Soldiers' and Sailors' Civil Relief Act. Key rights include prevention of eviction from rental property when rent is less than $2,400 a month (indexed for inflation); the right to break a housing or auto lease; temporary stays of civil proceedings such as bankruptcy, foreclosure, or divorce; and the ability to cap interest rates at six percent on preexisting loans, such as credit cards and mortgages. However, you must notify the lenders in order to get the cap.

Another key law to become familiar with is the Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA), which provides certain rights to employees who have to leave work because of a call-up. They include:

* Employees must get back the position they held or would have held (such as through seniority) if they had net been called up, though the employer can have some legitimate reasons for not rehiring, such as an elimination of the position.

* This rehire right supersedes the right of any replacement hire.

* The employee's family can continue health coverage under the employer's group plan, though they must pay for the entire cost of the coverage (known as COBRA). They are guaranteed this coverage even if they join the military health program.

* Military time served counts toward vesting for retirement plans, and the employee can make up missed retirement contributions after returning to work.

* The employee is protected against arbitrary firing after returning to work.