Health Care: Information on Coverage Choices for Servicemembers, Former Servicemembers, and Dependents
Released: 2014-12-12T00:00:00

Letter

Background

Individuals within the population of servicemembers and former servicemembers are generally designated by their military status. Dependents are generally designated by the military status of their sponsor—the uniformed servicemember or retiree with which the spouse or dependent child is associated. Servicemembers, which include individuals who are currently serving on active duty in the U.S. military and members of the military’s Selected Reserve, and their dependents, accounted for a small proportion of the total population—about 4.3 million of the 53 million total—in fiscal year 2013. Former servicemembers, which include individuals who either retired from active duty or the Selected Reserve, or left active duty military service for reasons other than retirement, and their dependents, accounted for the remainder of this population. Generally speaking, individuals who served on active duty for a certain period of time, usually a minimum of 20 years, may choose to retire from military service. Additionally, individuals with service connected injuries or illnesses may be retired from the military for medical reasons. Former servicemembers who retired from military service accounted for about 5.3 million of this population. All servicemembers who retire from active duty military status or the Selected Reserve are considered to be veterans, according to DOD officials. Individuals who served on active duty for less than 20 years, were not medically retired, and did not choose to re-enlist are generally not eligible to retire from the military. Former servicemembers who left military service for reasons other than retirement—who are also considered to be veterans— generally join the civilian workforce after leaving the military. Former servicemembers who left the military for reasons other than retirement and their dependents accounted for the majority—about 43.7 million of the 53 million total—of this population (see fig. 1).

DOD primarily provides health coverage through TRICARE, a health care program that combines the resources available at military treatment facilities with private health care providers and, for certain types of care, VA medical centers. TRICARE health plans offer standard health benefits packages nationwide for eligible individuals. Generally speaking, TRICARE consists of three main health plan options: TRICARE Prime, a managed care option; TRICARE Standard, a fee-for-service option; and TRICARE Extra, a preferred provider option. DOD also offers TRICARE for Life, a Medicare supplemental coverage option for TRICARE beneficiaries that are covered by Medicare; TRICARE Reserve Select and TRICARE Retired Reserve, coverage options available to certain current or retired reservists and their dependents; and TRICARE Young Adult, a program that provides services for dependent children up to age 26.

VA, through the Veteran’s Health Administration, operates an integrated health care delivery system. VA’s health care system provides services at its medical centers, outpatient clinics, and residential facilities located nationwide. When necessary, VA also pays for services provided by private providers. VA provides a standard health care benefits package nationally to veterans enrolled in VA health care.provides health care for certain individuals through programs such as the Civilian Health and Medical Program of the Department of Veterans Affairs and the Spina Bifida Program.

Medicare

Medicare consists of four parts—Parts A, B, C (also known as Medicare Advantage), and D. Medicare Part A covers hospital, certain other inpatient stays, and hospice care services. Medicare Part B covers hospital outpatient, physician, and other medical services. Instead of choosing to receive Part A and B services through Original Medicare, Medicare beneficiaries generally also have the option of obtaining coverage for Medicare services from private health plans that participate in Medicare Advantage—also known as Part C. Individuals who select coverage through Medicare Advantage receive their Medicare Part A and Part B coverage from a Medicare Advantage plan. These plans cover all Medicare medical services, except hospice, and may cover additional services, but may charge different out-of-pocket costs than Original Medicare and these plans may have different requirements for how individuals get services, such as requiring a referral to see a specialist. All Medicare beneficiaries may purchase coverage for outpatient prescription drugs through Part D, either as a stand-alone benefit or as part of a Medicare Advantage plan.

Medicaid

Medicaid is a joint federal-state health program where each state designs and operates its own program, in accordance with federal parameters. As a result, there is variation between states. For example, while states must cover certain populations, such as low-income children, they also have the option to cover additional ones, such as low-income adults without children. Additionally, states’ Medicaid programs must cover a set of mandatory services, including services provided by physicians and inpatient and outpatient hospital services. States may elect to cover additional, optional benefits and services, such as clinic services or hospice, resulting in variation across the states.

Exchange-Purchased Coverage

PPACA required states to establish health insurance exchanges, or marketplaces, where eligible individuals can compare and select among health plans offered by participating private issuers of health care coverage. In states electing not to establish and operate such an exchange, PPACA requires the federal government to establish and operate an exchange in the state. Individuals purchasing insurance through the exchanges may also qualify for income-based federal subsidies to reduce the cost of that coverage.

Eligibility for DOD and VA Coverage Is Primarily Based on Military Status, and Eligibility for Medicare, Medicaid, and Exchange- Purchased Coverage Is Based on Age, Income, or Other Factors

Servicemembers’, former servicemembers’, and their dependents’ eligibility for coverage through DOD and VA is primarily based on military status. However, these individuals’ eligibility for Medicare, Medicaid, and to purchase coverage through an exchange is based on age, income, or other factors.

Eligibility for DOD and VA Coverage Is Based Primarily on Military Status

Eligibility for DOD health care coverage, TRICARE, is primarily based on military status—whether or not individuals are on active duty, assigned to a designated reserve component, or retired from the military. Similarly, dependents’ eligibility is largely determined by the military status of their sponsor. According to DOD officials, the vast majority of those who are eligible for TRICARE are statutorily entitled to this coverage. Certain individuals who are statutorily entitled to coverage must enroll in TRICARE Prime, while others may choose the TRICARE plan through which they wish to receive coverage. Specifically, servicemembers must enroll in TRICARE Prime. Former servicemembers who retired from military service and their dependents who are under the age of 65, eligible spouses of servicemembers and former servicemembers, and eligible children of servicemembers and former servicemembers who are under the age of 21 may choose either enrolling in TRICARE Prime or receiving coverage through TRICARE Standard or Extra. Individuals who choose coverage through TRICARE Standard or Extra do not go through an enrollment process. All former servicemembers who retired from military service and their dependents who are aged 65 and older are entitled to coverage through TRICARE for Life.

Certain dependents of servicemembers and former servicemembers who retired from military service, reservists, and retired reservists are not statutorily entitled to TRICARE coverage, but may choose to purchase TRICARE coverage through specified plans, according to DOD officials. Specifically, unmarried dependent children, who lose their entitlement to TRICARE because of their age and are not eligible for coverage through an employer, may choose to purchase TRICARE coverage through the TRICARE Young Adult plan until age 26. Members of the Selected Reserve who are not serving on active duty or do not have other coverage may choose to purchase TRICARE Reserve Select for themselves or their dependents. Retired Reserve members who are younger than age 60 may choose to purchase TRICARE Retired Reserve for themselves and their dependents. Generally speaking, former servicemembers who choose to leave military service for reasons other than retirement are not eligible for TRICARE after their military separation.

Eligibility for VA health care coverage is primarily based on military status, income, and service-connected disabilities. Generally, former servicemembers—both retired and those who left military service for reasons other than retirement—are eligible for VA coverage. VA assigns individuals who have enrolled in VA health care to one of eight priority groups, which are established by law. These groups, which are designed to manage access to services in relation to available resources, define the conditions under which a particular individual is eligible for benefits. Priority is generally determined by the individual’s degree of service- connected or other disability, financial need, or other special status. Priority Group 1, which has the highest priority for enrollment, includes former servicemembers with 50 percent or more service-connected disability or those who VA has determined to be unemployable due to service-connected conditions. Priority Group 8, which has the lowest priority for enrollment, includes individuals with no disability and an income exceeding certain VA income thresholds. Former servicemembers with a low income—individuals with an annual income or net worth that is less than certain VA income thresholds or who are eligible for Medicaid—are placed in a higher priority group than individuals with higher incomes. Additionally, certain servicemembers are also eligible for VA coverage, such as those seeking care in emergency situations or upon referral. Although dependents are generally not eligible for VA coverage, there are certain dependents, caregivers, and survivors of certain former servicemembers who may qualify for VA coverage through the Civilian Health and Medical Program of the Department of Veterans Affairs. For example, the primary family caregiver may be eligible for this coverage if the caregiver is without other health care coverage.

Eligibility for Medicare, Medicaid, and Exchange- Purchased Coverage Is Based on Age, Income, or Other Factors

Eligibility for Medicare is generally based on age or disability. Generally speaking, former servicemembers and their dependents are eligible for coverage through Medicare if they are aged 65 or older. If these individuals are under age 65, they may be eligible for Medicare if they are disabled; have end-stage renal disease; amyotrophic lateral sclerosis, also known as Lou Gehrig’s disease; or a condition resulting from an environmental health hazard. Part A coverage is generally automatic for eligible individuals, but Part B coverage is voluntary, and eligible individuals who elect this coverage must generally pay a monthly premium. Certain individuals must maintain Medicare coverage in order to remain eligible for DOD or VA coverage. Specifically, former servicemembers who retired from the military and their dependents who are eligible for TRICARE for Life and entitled to Medicare Part A must be enrolled in Medicare Part B coverage to maintain their TRICARE benefits. Additionally, dependents and survivors who are covered through the Civilian Health and Medical Program of the Department of Veterans Affairs who are entitled to Medicare Part A must be enrolled in Medicare Part B coverage to maintain their VA benefits.

Medicaid eligibility for all individuals, including servicemembers, former servicemembers, and their dependents, is based on a set of factors that includes income, age, disability, citizenship status, and state residency. Minimum income and other eligibility criteria are established by federal law; although states may opt to cover additional individuals beyond these federal minimums under their Medicaid state plans or under Medicaid demonstrations. Additionally, as a result of PPACA, states have the option to expand eligibility for Medicaid to certain adults whose income does not exceed 133 percent of the federal poverty level. As of September 2014, 28 states had expanded their Medicaid programs to cover these individuals. As a result, adults who reside in a state that has chosen to expand Medicaid and who do not fall into one of the other Medicaid-eligible population groups (e.g., are low-income parents and pregnant, aged, or disabled individuals) may now be eligible for Medicaid, whereas those residing in other states may not be. To further add to this complexity, Medicaid eligibility can affect a former servicemember’s access to health care through VA. Specifically, former servicemembers who are eligible for Medicaid in the state in which they reside may be placed in a higher VA priority group. As a result, a former servicemember residing in a state with broader Medicaid eligibility criteria may receive VA health care at a lower cost than a former servicemember with an identical income that resides in a state with more restrictive Medicaid eligibility criteria. Dependents of servicemembers and former servicemembers are primarily eligible for Medicaid coverage under the same conditions as servicemembers and former servicemembers, providing they are low- income and meet other eligibility criteria.

Individuals, including servicemembers, former servicemembers, and their dependents, may purchase coverage through an exchange if they meet certain criteria established by PPACA. Specifically, to purchase coverage through an exchange, individuals must reside in the state where the exchange is located, must be U.S. citizens or otherwise lawfully present in the United States, and must not be incarcerated. To obtain exchange- purchased coverage, individuals sign up for plans through the exchanges and pay their first monthly premiums.

DOD, VA, Medicare, Medicaid, and the Exchanges Generally Offer Comprehensive Coverage Subject to Certain Limits

DOD, VA, Medicare, Medicaid, and exchange-purchased coverage generally offer comprehensive health care coverage to their respective beneficiaries, which include servicemembers, former servicemembers, and their dependents. However, the key benefits within these programs may vary. DOD, VA, Medicare, Medicaid, or exchange plans may have cost-sharing requirements for their respective beneficiaries, including servicemembers, former servicemembers, and their dependents, but each is subject to certain limits.

DOD, VA, Medicare, Medicaid, and Exchange- Purchased Coverage Generally Offer Comprehensive Health Care Coverage; Key Benefits within Programs May Vary

DOD, VA, Medicare, Medicaid, and health plans offered through the exchanges generally offer comprehensive care to their respective beneficiaries, which include servicemembers, former servicemembers, and their dependents—coverage that includes certain benefit categories such as inpatient hospital services, outpatient medical services, and certain prescription drugs, though some of these benefits may vary. For example, DOD’s TRICARE program offers a variety of plans that generally cover all of these categories of services (see fig. 2). DOD’s TRICARE program may also provide health care to servicemembers and former servicemembers who retired from military service, and their dependents who are living and working in designated overseas locations where other major federal programs may not provide care.

VA offers a standard, nationwide benefits package to former servicemembers—both retired and those who left military service for reasons other than retirement—and certain dependents of these former servicemembers. VA’s benefits package includes a full range of hospital and outpatient services, prescription drugs, and long-term care services provided in individuals’ own homes and in other locations in the community (see fig. 3). VA also provides some services that other major federal programs may not provide, such as long-term nursing home care.

Medicare offers nationwide benefits to individuals—including former servicemembers and their dependents—through Part A (standard hospital insurance), Part B (standard medical insurance), and Part D (prescription drug coverage). See figure 4 for examples of the categories of benefits offered through Medicare Parts A, B, and D. Medicare Part A benefits include inpatient hospital services, post hospital skilled nursing facility care, hospice care, and certain home health services. Medicare Part B coverage includes medically necessary outpatient hospital services, physicians’ services, and durable medical equipment—such as walkers and wheelchairs. Part B covers a limited number of outpatient prescription drugs, such as injections administered in a physician’s office. However, outpatient prescription drugs provided to individuals are generally covered through Medicare Part D. Medicare Part C—Medicare Advantage—is Medicare’s private health plan option that offers coverage for all Part A and Part B services, but may charge different amounts and may cover additional services, such as vision, hearing, dental, or health and wellness programs. Additionally, Medicare Advantage plans may also include prescription drug coverage (Medicare Part D). The number of Medicare Advantage plans varies regionally, but nearly all Medicare beneficiaries—including former servicemembers and their dependents who received Medicare benefits—have a Medicare Advantage plan available to them.

State Medicaid programs offer a package of benefits to individuals— including dependents of servicemembers and former servicemembers and their dependents. State Medicaid programs may design their own benefits packages, provided they fall within federal parameters. As a result, Medicaid benefits may vary by state. State Medicaid programs generally must cover certain categories of mandatory benefits, as defined under federal law (see fig. 5). Additionally, states may also cover a range of optional benefits, such as prescription drugs, physical therapy, hospice, State Medicaid programs and preventive and dental services for adults.may also cover benefits that are not covered through other major federal programs, such as long-term services and supports for individuals who have limited ability to care for themselves because of physical, cognitive, or mental disabilities or conditions that are delivered in institutional (e.g., nursing facilities) and community-based (e.g., private homes) settings.

Exchange plans offer benefits to individuals—including servicemembers, former servicemembers, and their dependents—who purchase this coverage. Beginning in 2014, health plans offered through the exchanges are required to cover 10 categories of benefits, referred to as essential health benefits (see fig. 6). For example, these health plans cover certain preventive health services, which include a variety of screenings, such as blood pressure and cholesterol screening, and certain vaccinations.Exchange plans may cover additional health care benefits beyond the essential health benefits, such as health club memberships, hearing aids for children, adult dental services, and infertility treatments.

DOD, VA, Medicare, Medicaid, and Exchange- Purchased Coverage May Have Premiums or Cost- Sharing Subject to Certain Limits

DOD, VA, Medicare, Medicaid, or exchange plans may have premiums or cost-sharing for their respective beneficiaries, including servicemembers, former servicemembers, and their dependents, but the costs for each are subject to certain limits. Cost-sharing includes copayments, coinsurance, or deductibles. DOD’s TRICARE plans may require servicemembers, former servicemembers, and their dependents to pay a premium— referred to as an enrollment fee—or to participate in certain cost-sharing. The amount of the premium or copayment is based on individuals’ military status, which TRICARE plan they use, and where they choose to receive their care. For example, servicemembers and their dependents covered by TRICARE’s Prime plan do not pay an enrollment fee, although former servicemembers who retired from military service and their dependents are required to pay an annual enrollment fee of $273.84 for an individual and $547.68 for a family for fiscal year 2014. Conversely, there are no enrollment fees for TRICARE Standard or Extra. Additionally, former servicemembers who retired from military service, dependents of servicemembers, and dependents of retired servicemembers may have to pay copayments or meet deductibles.

VA’s health care program generally does not require former servicemembers to pay premiums and generally does not require cost- sharing for certain groups of former servicemembers, such as those with certain service-connected disabilities or who are low income. Other former servicemembers, such as those seeking care for non-service- connected disabilities or who have higher incomes, may be required to participate in cost-sharing that is subject to certain limits. The average, annual out-of-pocket costs for those required to participate in cost-sharing was $322 for fiscal year 2013.

VA’s health care programs for eligible dependents of former servicemembers generally require individuals to meet an annual deductible and pay coinsurance for health care services that were not provided at a VA facility. For example, in 2014, dependents of former servicemembers enrolled in the Civilian Health and Medical Program of the Department of Veterans Affairs pay an annual deductible of $50 for outpatient care. After this deductible is paid, VA’s health care program pays for 75 percent of covered health care expenses, and the individual is responsible for the remaining 25 percent of expenses until the catastrophic cap—$3,000 per family per calendar year—is reached.

Medicare may require beneficiaries—including former servicemembers and their dependents—to pay premiums and other cost-sharing, depending on their income and other factors. For example, Medicare Part A coverage does not generally require payment of premiums, but beneficiaries who did not pay Medicare taxes while working may be required to pay a monthly premium (of up to $426 in 2014). Part A beneficiaries—including former servicemembers and their dependents—may be responsible for a deductible, coinsurance, or a copayment for services. Medicare Parts B and D coverage generally requires individuals to pay a monthly premium. The monthly premium for Medicare Part B in 2014 ranges from $104.90 to $335.70, depending on the beneficiary’s income. Additionally, Medicare Part B generally requires individuals to pay 20 percent of the cost of the medical service received. Medicare Parts A and B have a per service limit on cost-sharing, but no annual limit on these out-of-pocket costs. The costs, including premiums and copayments, for Medicare Part C vary by health plan though there are certain, established cost limits. For example, Medicare Advantage plans are not able to charge more in cost-sharing than Original Medicare for certain services, such as chemotherapy, renal dialysis, and skilled nursing facility care. Specifically, Medicare Advantage plans cannot require beneficiaries to share in the cost of the services beyond what is allowed for Medicare Part B for services, which generally requires beneficiaries to pay 20 percent of the Medicare-approved amount. Additionally, Medicare Advantage plans have a yearly limit, which varies by plan, on an individual’s out-of-pocket costs for medical services. There are no such annual out-of-pocket cost limits in the Original Medicare program.

A beneficiary generally pays no premium for this coverage unless the beneficiary or spouse has worked fewer than 40 quarters in his or her lifetime, but the beneficiary is responsible for required deductibles, coinsurance, and copayment amounts.

Certain servicemembers and former servicemembers and their dependents who have Medicare Parts A and B are also automatically covered by TRICARE for Life. Because TRICARE for Life serves as supplemental coverage that may minimize out-of-pocket expenses, such as copayments and deductibles, these individuals may have lower out-of- pocket expenses than an individual who does not have this additional coverage.

State Medicaid programs may not impose premiums or cost-sharing on certain populations or services. Specifically, states are prohibited from imposing premiums on Medicaid beneficiaries—including dependents of servicemembers and former servicemembers—with incomes below 150 percent of the federal poverty level. Additionally, states may not impose cost sharing on services provided to certain populations, such as children under the age of 18 or pregnant women. Further, states may not charge cost-sharing for certain services, including emergency and family planning services. States can choose to impose premiums or cost- sharing for other Medicaid beneficiaries, but these costs are subject to certain limits. For example, total premiums and cost-sharing amounts cannot exceed 5 percent of a family’s income.

Exchange-purchased coverage provided by participating health insurance issuers may require beneficiaries—including servicemembers, former servicemembers, and their dependents—to pay premiums and cost- sharing, such as deductibles and copayments. Individual premium and cost-sharing amounts depend on the type of plan purchased, and exchange plans are categorized according to the costs expected to be paid by the plan—designated as bronze, silver, gold, or platinum. For example, a bronze plan will typically have lower premiums and higher cost-sharing when services are delivered, while a gold or platinum plan will have higher premiums and lower cost-sharing. Additionally, PPACA established an annual limit on cost-sharing for exchange plan beneficiaries, which in 2014, was $6,350 for self-only coverage and $12,700 for other coverage.

PPACA established two forms of federal subsidies for exchange- purchased coverage—premium tax credits and cost-sharing reductions— which reduce costs of the coverage to individuals who qualify. To qualify for federal subsidies, individuals must be eligible to enroll in an exchange plan, meet income criteria, and not have MEC, including coverage through government-sponsored programs, such as DOD or VA, Medicare, or Medicaid. Individuals who purchase health care coverage through the exchanges may qualify for premium tax credits if they have an income Cost-sharing between 100 and 400 percent of the federal poverty level. reductions, available to individuals with incomes from 100 to 250 percent of the federal poverty limit, are only available to individuals who purchase a silver plan through an exchange. In addition, the amounts of cost- sharing assistance vary by income. For example, in the case of one state plan, individuals with incomes at 150 percent of the federal poverty level and with a silver plan would have their primary care visit copayment reduced from $45 to $3 and their specialty care visit copayment reduced from $65 to $5.

Federal subsidies for exchange-purchased coverage may be available to certain former servicemembers and certain dependents of servicemembers and former servicemembers who are not covered by DOD or VA health care, if they meet applicable income and other Most servicemembers and former servicemembers and requirements.their dependents have MEC and therefore are ineligible for premium tax credits and cost-sharing reductions, regardless of their income.Therefore, in order to qualify for federal subsidies, these individuals would first need to cancel their government-sponsored coverage. This is an option for certain individuals, but not for others. Specifically, former servicemembers and their dependents who have the option to enroll in VA coverage and certain TRICARE beneficiaries who are not statutorily entitled to TRICARE coverage—such as certain reservists and dependents eligible for TRICARE Young Adult—may choose not to enroll or may cancel their existing VA or TRICARE coverage. However, the majority of servicemembers and former servicemembers who retired from military service and their dependents are statutorily entitled to TRICARE coverage and, therefore, do not have the option to disenroll from TRICARE in order to potentially qualify for federal subsidies.

DOD and VA Provide Information on Eligibility for Exchange-Purchased Coverage, but DOD Provides Limited Information on Qualifying for Federal Subsidies

Both DOD and VA provide information to servicemembers, former servicemembers, and their dependents on how DOD and VA coverage is affected by PPACA requirements, as well as information on eligibility for exchange-purchased coverage. DOD and VA disseminate this information using a variety of mechanisms, including dedicated websites (e.g., www.tricare.mil/aca and www.va.gov/health/aca) and program materials available on their websites (e.g., fact sheets). The information provided generally focuses on PPACA’s impact on their programs. For example, as of September 2014, both DOD and VA provided the following information through their websites:

DOD and VA health care are considered MEC, with certain exceptions.and their dependents who have coverage through DOD or VA do not need to take additional steps or obtain other coverage to satisfy PPACA’s requirement that individuals have MEC in order to avoid paying a tax penalty.

As a result, servicemembers, former servicemembers,

PPACA does not change servicemembers’, former servicemembers’, and their dependents’ existing TRICARE and VA benefits or individuals’ out-of-pocket costs for benefits offered through TRICARE or VA’s health care program.

Additionally, both DOD’s and VA’s websites provide information to servicemembers, former servicemembers, and their dependents on how eligible individuals may get health care coverage through their respective programs, if they are not currently covered. For example, DOD’s website provides a link to update its eligibility database and VA provides links to its application process. Further, agencies’ websites or program materials suggest individuals who either do not have, or are ineligible for, coverage through their programs consider purchasing coverage from an exchange.

VA’s website also provides information to former servicemembers and their dependents on qualifying for federal subsidies on exchange- purchased coverage. Specifically, VA provides information on its website that informs its users that VA coverage meets the standard for MEC under PPACA and, as a result, individuals covered by VA do not qualify for federal subsidies on exchange-purchased coverage. VA’s website also provides information on how former servicemembers and their dependents who are enrolled in VA coverage may cancel this coverage, if they so choose. This type of information may be useful for former servicemembers and their dependents to compare the costs and other factors associated with VA coverage with the costs of exchange plans. For example, in some circumstances, former servicemembers and their dependents who do not live near a VA medical center may wish to consider whether federal subsidies may make exchange-purchased coverage affordable and whether that coverage may enable them to receive care closer to home.

However, unlike VA’s website, DOD’s website does not provide information on circumstances under which servicemembers or former servicememembers who retired from military service, or their dependents might qualify for federal subsidies, which could be useful in understanding their health care choices. Specifically, DOD’s website does not inform servicemembers and former servicemembers that retired from military service that they and their dependents are statutorily entitled to TRICARE coverage and, as a result, they may not opt out of this coverage in order to potentially qualify for federal subsidies. Nor does DOD’s website inform those individuals who may opt in to TRICARE coverage—including reservists, retired reservists, and dependent children under the age of 26 eligible for the young adult program—that they may choose not to enroll or cancel their TRICARE coverage in order to potentially qualify for federal subsidies. Not providing such information is inconsistent with federal internal control standards.

DOD officials stated that their focus has been on ensuring that servicemembers, former servicemembers who retired from military service, and their dependents understand that TRICARE coverage meets the standard for MEC and is not adversely affected by the enactment of PPACA. DOD officials also stated that to avoid confusion, they direct servicemembers and their dependents who are no longer eligible for TRICARE, such as those who have separated from military service or young adults over the age of 26, to obtain information on other coverage options from the healthcare.gov website. However, healthcare.gov does not inform servicemembers, former servicemembers that retired from military service, and their dependents who may qualify for federal subsidies that these subsidies are not available to individuals who have coverage through TRICARE. As a result, these individuals may not have complete information to make choices on the form of coverage that best meets their individual financial and health care needs. DOD officials acknowledged that changes could be made to DOD’s program materials in order to clarify that when servicemembers, former servicemembers who retired from military service, and their dependents are eligible for TRICARE, they do not qualify for federal subsidies on exchange- purchased coverage.

More Than 27 Million Servicemembers, Former Servicemembers, and Their Dependents Had Coverage through Federal Programs in 2012

More than 27 million servicemembers, former servicemembers, and their dependents reported that they had health care coverage through DOD, VA, Medicare, Medicaid, or a combination of these in 2012, according to data we reviewed from the ACS. Of these, about 20 million reported they had coverage through a single program and 7 million reported they had coverage through a combination of two or more of these programs. Additionally, about 22 million servicemembers, former servicemembers, and their dependents reported that they did not have coverage through any of these federal programs in 2012. Of these, about 18 million reported they had coverage through another source, such as employer- sponsored coverage, and 4 million reported they were uninsured.

We found that the number of servicemembers, former servicemembers, and their dependents covered by DOD, VA, Medicare, and Medicaid varies by program (see fig. 7). The number of individuals with coverage through each of these programs includes those who have coverage through a single program and those covered through that program and one or more other federal programs. For example, an individual with coverage through DOD and Medicare is counted in the DOD count and the Medicare count. As a result, the total number of those with coverage across all four programs is greater than the 27 million total unique servicemembers, former servicemembers, and their dependents who reported that they had health care coverage through these programs.

ACS survey respondents reported coverage through DOD’s TRICARE and VA health care programs. About 7.7 million servicemembers, former servicemembers who retired from military service, and their dependents reported that they had health care coverage through DOD’s TRICARE program in 2012, according to data we reviewed from the ACS. About 6.4 million former servicemembers and their dependents reported that they had health care coverage through VA according to the 2012 ACS data.

ACS survey respondents also reported coverage through Medicare and Medicaid. About 16 million servicemembers, former servicemembers, and their dependents reported that they had coverage through Medicare in 2012, according to the ACS data we reviewed. Former servicemembers may be 65 years of age or older, as may be their spouses, and therefore would qualify for Medicare. In fiscal year 2012, there were approximately 2.0 million individuals aged 65 and older who were covered through DOD’s health care program and 3.6 million who were covered through VA’s health care program. Additionally, servicemembers, former servicemembers, and their dependents may qualify for Medicare due to disability or illness. About 5.3 million servicemembers, former servicemembers, or their dependents reported that they had health care coverage through Medicaid according to the 2012 ACS data we reviewed. These 5.3 million individuals may include former servicemembers with low incomes, or dependents of servicemembers or former servicemembers with special-needs children.

About 7 million servicemembers, former servicemembers, and their dependents had health care coverage through two or more programs in 2012. Of these, most—nearly 6 million—had coverage through two programs; far fewer were covered by three or four programs (see table 1).

According to the ACS data we reviewed, approximately 2.4 million former servicemembers and their dependents were covered by VA and Medicare. Generally, those covered through both VA and Original Medicare may choose which form of coverage they would like to use for a particular episode of care. For example, former servicemembers may elect to use their VA coverage to obtain regular preventive care visits at a nearby VA community-based outpatient clinic and their Medicare coverage to obtain certain specialty services, such as surgery, from a non-VA community-based provider. In general, if an individual chooses to receive care from a VA provider, VA pays in full if the care is for a service- connected disability and, for a non-service-connected disability, may assess any copayments that an individual may owe through VA rules. Conversely, if the individual chooses a Medicare participating provider, Medicare would cover the cost of the services and assess any cost- sharing charges owed through the Original Medicare program rules.

According to the ACS data we reviewed, approximately 1.3 million former servicemembers and their dependents are covered by both Medicare and Medicaid. This type of coverage may occur when former servicemembers and their dependents, who are not covered through DOD or VA, meet the requirements for coverage through both Medicare and Medicaid. For these individuals, Medicare generally covers most of the cost of services, and Medicaid may cover some or all of the cost-sharing. Additionally, Medicaid may cover certain services that Medicare does not. For example, a former servicemember who is 65 years of age or older who requires long-term nursing home care may receive coverage of this service through his or her state Medicaid program, as that service is not covered through Medicare.

According to the ACS data we reviewed, approximately 1.2 million servicemembers, former servicemembers, and their dependents are covered by both TRICARE and Medicare, and which program provides the benefits depends on where the individuals receive the services. While these individuals are eligible to receive care directly from a military treatment facility, DOD rules allow these individuals to receive care only if space is available. When an individual uses this option, DOD generally covers the full cost of that episode of care. However, if these individuals choose to receive care from a Medicare participating provider, Medicare generally is the primary payer, with TRICARE paying the out-of-pocket expenses for services it covers that are owed by the individuals, such as any copayments or deductibles.

Conclusions

Servicemembers, former servicemembers, and their dependents may face complex choices in considering which forms of coverage best meet their health care needs and financial situations given that DOD, VA, Medicare, Medicaid, and the exchanges offer a range of benefits and cost-sharing requirements depending on individuals’ eligibility for these programs. In 2014, the initiation of exchange-purchased coverage, and the expansion of Medicaid in states choosing to participate, added to the choices and complexity these individuals face in making choices for health care coverage. Moreover, changes in servicemembers’, former servicemembers’, and their dependents’ military status, age, disabilities, and other factors over time can result in the need to reconsider complex choices in coverage through different federal programs.

For servicemembers and former servicemembers to make well-informed decisions for themselves and their dependents, it is important that federal agencies provide complete information about individuals’ health care coverage choices, including the range of benefits offered, and the potential cost-sharing associated with each program. In particular, servicemembers, former servicemembers, and their dependents need complete information on the complex health care coverage choices offered by DOD, VA, and the recently implemented exchanges in order to select the coverage that best meets their needs. This includes information on how they may qualify for federal subsidies that may reduce the cost of exchange-purchased coverage. While DOD and VA both provide information on their eligibility for coverage through the exchanges, only VA provides information on how individuals may qualify for federal subsidies. Consequently, certain servicemembers, former servicemembers, and their dependents may not have adequate information to compare costs efficiently and choose the coverage that best meets their health care needs and their available financial resources.

Recommendation for Executive Action

To help ensure that servicemembers, former servicemembers, and their dependents have complete information for considering their choices for their health care coverage, we recommend that the Secretary of Defense disseminate information on how DOD health care coverage may affect servicemembers’, former servicemembers’, and their dependents’ ability to qualify for federal subsidies that reduce the costs of exchange- purchased coverage.

Agency Comments

We provided a draft of this report to DOD, VA and HHS for comment. In its written comments—reproduced in appendix I—DOD concurred with our recommendation. DOD stated that it will continue to assess and implement strategies that strengthen the dissemination of information on how TRICARE eligibility affects its beneficiaries’ ability to qualify for subsidies on exchange-purchased coverage. In its written comments— reproduced in appendix II—VA generally agreed with our conclusions. VA also provided technical comments that were incorporated, as appropriate. HHS had no comments.

We are sending copies of this report to the Secretary of the Department of Defense, the Secretary of the Department of Health and Human Services, the Secretary of the Department of Veterans Affairs, the Administrator of CMS, and the appropriate congressional committees. In addition, the report will be available at no charge on the GAO website at http://www.gao.gov.

If you or your staffs have any questions about this report, please contact me at (202) 512-7114 or at iritanik@gao.gov. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff who made key contributions to this report are listed in appendix III.

Appendix I: Department of Defense Comments

Appendix II: Department of Veterans Affairs Comments

Appendix III: GAO Contact and Staff Acknowledgments

GAO Contact

Staff Acknowledgments

In addition to the named above, key contributors to this report were James C. Musselwhite, Jr., Assistant Director; Kathryn Black; Sarah Harvey; Laurie Pachter; Vikki Porter; and Hemi Tewarson.

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