Kiplinger Today


Time to Become a Civilian Again


The Transition Office at your installation will help explain the bureaucratic procedures you must go through, the specific benefits you'll receive and resources available to help.

But you'll also need to make some important personal-finance decisions to replace some of your benefits, adjust your post-military budget and protect your investments for the future. You want to make a smooth and financially sound transition.

To U.S. Military Personnel and Their Families
Savings Strategies for Military Families
Avoiding Scams That Target Military
Be Prepared for Deployment
Home-Buying Tactics for Military Families
Time to Become a Civilian Again
Financial Resources for Military Families

Replace your health insurance. If you stay in the military for at least 20 years, then you qualify for health care in retirement, although you may still want to buy supplemental medical insurance. But if you leave before then, your health-insurance bills can be surprisingly steep. Even if you get a new job that provides health insurance, you'll probably have to pay for part of the premiums yourself, in addition to out-of-pocket expenses you didn't have before, such as deductibles, co-payments and medications.

If you need to buy health insurance on your own, you can lower your premiums by buying a high-deductible policy and pairing it with a health savings account. To qualify for an HSA in 2009, your policy must have a deductible of at least $1,150 for single coverage ($2,300 for family coverage); people with single coverage can make tax-deductible contributions of up to $3,000 in 2009 ($5,950 for family coverage).


The money grows tax-deferred inside the account and you can use the funds tax-free to cover out-of-pocket medical expenses -- including that big deductible on your health plan. Money you don't use remains invested in the account. You can always use the money tax-and penalty-free for medical expenses, or you can use it penalty-free for anything (you'll owe taxes) after age 65.

If you have a preexisting condition that makes it tough to find health coverage on your own, you can sign up for the Continued Health Care Benefit Program for up to 18 months. This is similar to the COBRA benefits available to civilians who leave their jobs. You have 60 days after you leave the military to enroll in CHCBP, which has similar coverage to TRICARE, the health-care system for members of the military and their families. The coverage costs $933 per quarter for individuals or $1,996 per quarter for families. If you're healthy, however, you may well find a better deal on your own. Plus, go to the Department of Veterans Affairs Web site to find out if you are eligible for VA health care.

Find new life insurance. Your Service-members' Group Life Insurance (SGLI) expires 120 days after you leave the military. You have one year and 120 days after discharge to convert your policy to Veterans' Group Life Insurance (VGLI). Again, if you're healthy, you may find a much better deal on your own. But VGLI may be your best bet if you have medical conditions. You can qualify for VGLI without a medical exam if you apply for coverage within 120 days of discharge. Shop around for other coverage at least six months before you leave the military, so you have time to get VGLI coverage if you don't find a better option. For quotes on individual policies, check out and

Make smart decisions about your Thrift Savings Plan. You can keep the money growing tax-deferred in the account even after you leave the military, which can be a good deal because the expenses are so low. Or you can roll it into a new employer's 401(k) or an IRA after you leave the military, which you may prefer if you'd like different investing options.

If you do roll your TSP into another plan, keep track of any TSP contributions that had been made with tax-free combat pay, so you don't end up paying tax on that amount when you withdraw the money in retirement. A portion of each withdrawal will be tax-free to account for the tax-free contributions.


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