New TRICARE Fees Could Be Coming to You

February 19, 2016

Last week's legislative update opined the proposed FY17 DoD budget was light on specifics to improve value for beneficiaries - but heavy on across the board TRICARE fee increases

We also promised you more details on how these complicated budget proposals would affect various categories of beneficiaries.

We'll start with TFL, which covers uniformed services beneficiaries age 65 and above, and certain other severely disabled retirees who are eligible for Medicare.

The budget proposes future TFL-eligibles - specifically, those who become Medicare-eligible on or after Jan. 1, 2017 - would have to start paying an annual enrollment fee based on a percentage of the sponsor's retired pay. 

Under this proposal, beneficiaries already enrolled in Medicare on Jan. 1, 2017 would be exempted from the new fee. (You can draw your own conclusions whether that exemption might be reconsidered in the future.) Chapter 61 retirees and survivors of servicemembers who died on active duty also would be exempt from the new fee.

The annual enrollment fee would start at 0.5 percent of gross retired pay in 2017, increasing to 2 percent of retired pay by 2021. In the first year, the fee would be capped at $150 for lower grades and $200 for retired flag and general officers. As the fee increased to 2 percent of retired pay over the next four years, those caps also would increase, reaching $632 and $842 annually in 2021. 

The chart below shows the schedule of increases for the first five years. The fees shown would be for a married couple, both eligible for Medicare. Singles would pay half the rate indicated.

Feb 19 2016 Update Chart 1

MOAA is particularly concerned at this plan to means-test service-earned health care benefits. No other employer means-tests retired employees' health benefits. 

MOAA objects to such means-testing, which would impose successively greater financial penalties for longer and more successful service. 

It is particularly inappropriate to seek to impose additional fees on TFL-eligibles for three other reasons. 

First, this population is already paying the highest fees of any military beneficiaries, as TFL requires enrolling in Medicare Part B and paying the associated premiums, which start at $2,500 per year for a married couple and can run far higher. 

Second, the expressed intent of Congress in enacting TFL was that Medicare Part B premiums would be the only enrollment fee for TFL, acknowledging that Medicare would be paying 80 percent of these beneficiaries' health costs. DoD and Hill leaders at the time opined that a career of service and sacrifice constituted a full, pre-paid premium for TFL coverage of the other 20 percent. 

Third, the Pentagon's costs for TFL have dropped dramatically - from $11 billion in FY11 to an estimated $6.4 billion in FY17, as Defense actuaries now have 15 years of actual experience with the program and can more accurately project program costs. Rather than “spiraling out of control,” DoD health costs for this group are spiraling downward - so why the need to charge them an additional fee?

Retirees under age 65 will also see huge increases under the budget plan, with lots of fee and copay changes. Among the more complex changes are proposed cost-shares for various kinds of provider visits.

TRICARE Prime enrollees would see some increases in fees for seeing civilian network providers. TRICARE Standard beneficiaries would pay flat fees (and would not have a deductible) if they see civilian providers in the network. If they see out-of-network providers, they would still pay 25 percent of TRICARE-allowed charges, but would see their current deductible doubled - from $150/$300 (single/family) to $300/$600. 

The chart below summarizes the various cost-share changes for different types of provider visits.

Feb 19 2016 Update Chart 2

Prime beneficiaries who use out-of-network care without a referral would be subject to steep point-of-service fees: 50 percent of allowable charges after paying a $300/$600 deductible.  

In addition, the DoD plan proposes charging all military retirees under age 65 an annual enrollment fee for participating in either TRICARE Prime or Standard. The Prime enrollment fee would rise to $350/$700 (single/family) vs. the current $283/$565.  

The new enrollment fee for Standard would be even higher - $450/$900 (single/family) - plus the $300/$600 deductible for out-of-network care.

Retiree copays and cost sharing also would apply to survivors (except those whose sponsors died on active duty) and TRICARE Young Adult beneficiaries with a retired sponsor.  

TRICARE Select and TRICARE Retired Reserve beneficiaries would continue their current premium levels, and their deductible and cost-shares would be the same as proposed for TRICARE Standard.  

Care in Military Treatment Facilities (MTF) would continue to be provided at no cost. 

Active duty family members would not see the same drastic increases, unless they use out-of-network providers, in which case they also would incur the $600 family deductible (and high point-of-service charges if they don't have a referral). 

Feb 19 2016 Update Chart 3

Active duty family copays and cost sharing would apply to survivors whose sponsors died on active duty, TRICARE Young Adult beneficiaries with an active duty sponsor, and the Transitional Assistance Management Program.  

All fees, deductibles, and copays for all categories of beneficiaries would be increased annually by a national health care expenditure index, projected to rise over 5 percent annually. See this month's As I See It column for an assessment of the impact this would have over time.  

Needless to say, MOAA believes this wide array of fee increases would impose disproportionate financial penalties on retired military beneficiaries.  

In addition to our concerns about the fees, we want to see more details on how DoD plans to improve beneficiaries' timely access to quality care.

 

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