When leaving the military, you will need to replace military benefit services with comparable civilian programs: health insurance, term or whole life insurance, and retirement plans.
Before they were famous, many truly influential men and women started by serving their country in the US military or grew up in military families.

Military to Civilian: A Smooth Transition

You have just completed your service with the U.S. military and now it's time to return to civilian life...what to do first?

When leaving the military, you will need to replace military benefit services with comparable civilian programs: health insurance, term or whole life insurance, and retirement plans. Take account of your personal finances now and start preparing to adjust your programs, insurance policies and your budget in ways that will build savings and security and carry you into your post-military future.


If you have served in the military less than 20 years and no longer have access to military health care, the cost of civilian medical insurance can send shock waves through your financial plans. Even if you get a new job that provides health insurance, you may have to contribute to your medical premiums, deductibles, co-payments and prescription plans.


If you need to get health insurance on your own, choosing a policy that has a higher deductible, paired with a health savings account (HSA), can lower your premiums. To qualify for a Health Savings Account, your policy must have a deductible of at least $1,150 for single-payer coverage and $2,300 for family coverage. Your tax-deductible contributions can be made, tax-deferred, in your HSA. The money saved in your HSA can be used to support medical expenses that might otherwise weigh heavily on your budget.


If you have a preexisting medical condition that makes it tough to find health care insurance on your own, the 18-month Continued Health Care Benefit Program (CHCBP) is available for service members in this situation, up to 60 days after leaving the military.

Continued Health Care Benefit Program is best explained as the civilian version of TRICARE, the stellar health-care program for military members and military families. Continued Health Care Benefit Program coverage costs $933 per quarter for individuals or $1,996 for families. You may also be eligible for health care benefits from the Department of Veterans Affairs.


When transitioning to civilian life, state income taxes can be another new expense to adjust to. You may have been serving military duty in a tax-free residency state, but when you settle down after the military, check into the income tax requirements of your newly chosen home base...before you decide to permanently settle in.

Remember also that you'll no longer have access to BAH (Basic Allowance for Housing) to support your housing costs, once you leave the military. Account for those lost BAH benefits when negotiating your civilian salary, and calculate the salary you'll need to afford your current mortgage without the help of BAH, or to take on a new mortgage if your plan is to buy a house after military separation.


Family Servicemembers' Group Life Insurance expires 120 days after departure from the military. You have one year and 120 days after military separation to convert your policy to Veterans' Group Life Insurance (VGLI) without a medical exam. If you're healthy, it may be beneficial to find life insurance outside the military, while VGLI may be your best life insurance if you have pre-existing medical conditions.


Your Thrift Savings Plan can continue to grow tax-deferred, even after you leave the military. Or you can transfer your Thrift Savings Plan it into your new employer's 401(k) or into your IRA. One guideline is to budget your retirement by withdrawing only 4% of your savings in the first year, then adding 3% to your withdrawals each year to account for inflation.


As a new civilian, you can apply your military attitude to developing and maintaining a budget for your new lifestyle, but beware of unexpected costs that could lead you into debt. To prevent financial strain and potential credit loss, always keep an easily accessible fund with at least 6 months of living expenses available. A cash fund like this cushions you against a potential job loss, a situation military service members don't have to worry about.


As you begin your transition to civilian life, there are a thousand changes and challenges, demands and decisions, all of which you don't have to face alone. Your local Transition Office can guide you through the separation procedures, while highlighting your options for benefits and financial options after the military

The Community Service office on your military base and the Army Career and Alumni Program both offer valuable resources to help with your transition from the military and with your job search. Stop in for their free counseling while you are still in the military.


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