With many government organizations and private companies shifting to High Deductible Health Plans (HDHPs) as their major form of health insurance (versus the more familiar Preferred Provider Organization (PPO)), it is not surprising MOAA gets questions from members about how HDHPs might work with TRICARE. Many HDHPs include an option to sign up for a health savings account (HSA), a tax-exempt trust or custodial account set up with a qualified HSA trustee, such as an insurance company, to pay or reimburse incurred medical expenses.
To be eligible for an HSA, you must be covered under an HDHP and have no other health coverage (except what is permitted under Other Health Coverage, as defined by the IRS). You cannot be enrolled in Medicare, and you cannot be claimed as a dependent on another individual’s previous year’s tax return. Because TRICARE is not an HDHP and does not meet the required criteria for Other Health Insurance, servicemembers cannot establish HSA accounts while covered under TRICARE — even if they have an HDHP with a non-military employer.
The draw of an HSA is that it provides a tax break on funds in the account. However, HSAs are designed so an individual usually has to put their own money in the account. This moves health care costs away from the government and onto servicemembers. Additionally, the services HSAs pay for already are covered by TRICARE.
Flexible spending accounts (FSAs) can be a good option for many servicemembers, as they offer a tax break on medical services not covered by TRICARE. MOAA has supported policies allowing active duty members to pay TRS, TRICARE Dental, and TRICARE supplement premiums with pre-tax dollars and allowing military retirees pay FEHBP, TRDP, and TRICARE supplement premiums with pre-tax dollars. This would provide a tax break on dollars they are already spending on health care.
If a servicemember or retiree currently is enrolled in both an HDHP and TRICARE and is still worried about out-of-pocket costs, they can sign up for a TRICARE supplemental policy to assist with any offset. TRICARE supplements are available through various military organizations, including MOAA. You can visit MOAA’s Insurance Page to find out more about our supplemental TRICARE insurance programs.
This article was originally published in June of 2017, it has been reviewed for accuracy and updated.
Katie Lathrop is the Digital Content Specialist at MOAA and the daughter of a currently serving Army Officer. Follow her on twitter @Katie.F.Lathrop.