Frequently Asked Questions Regarding Proposed Changes to TRICARE In the Budget Request for Fiscal Year 2015

Please click on a question below to display the answer.  Please click here to read the statement from US Family Health Plan Alliance Chief Executive Officer Henry J. “Jim” Schweiter, and David Howes, President and Chief Executive Officer of Martin’s Point Health Care and chairman of the Alliance Board of Directors, regarding the recently released fiscal year 2015 defense budget request, as it relates to military health care.

What are the changes to TRICARE being proposed to Congress by the Department of Defense (DoD)?

DoD is proposing to consolidate the various TRICARE options—TRICARE Prime, Extra, Standard, and other TRICARE Plans—into one consolidated plan, and to increase several beneficiary costs. Key changes would include:

  • Increased Cost Shares: Cost shares will depend on beneficiary category (excluding active duty) and care setting. Cost shares would be the lowest in MTFs, higher in the network, and highest out of network.
  • Increased Participation Fee (i.e., Enrollment Fee): Retirees (not medically retired), their families, and survivors of retirees (except survivors of those who died on active duty) would pay an increased annual participation fee or forfeit coverage for the plan year.
  • Open Season Enrollment: Participants proposed consolidated plan would be required to enroll for a 1-year period of coverage or lose the opportunity for TRICARE coverage.
  • Elimination of Referrals: Beneficiaries would no longer need to obtain authorizations when seeking civilian care; but costs to the beneficiary would be determined by the network status of the provider(s) they see.
  • Deductibles: The proposed combined TRICARE plan would feature deductibles that would need to be met by the beneficiary before cost-sharing takes effect. Currently, TRICARE Standard and TRICARE Extra feature deductibles, but TRICARE Prime and US Family Health Plan do not.
  • Catastrophic Cap:  The Catastrophic Cap, which is the annual, per-family limit on out-of-pocket expenses, would increase slightly from the current amount. However, the participation/enrollment fee would no longer count towards the cap.
  • Increase co-pays for pharmaceuticals: The proposed changes to beneficiaries’ pharmacy costs would be phased-in over a 10-year period, with some costs more than doubling over that period of time.

Have these proposed changes been made law?

No. Congress would first need to approve these proposed changes before they could take effect.

Is Congress likely to go along with DoD’s proposed changes?

No one has a crystal ball, but conventional wisdom suggests that it is unlikely Congress would adopt these changes during an election year. Nevertheless, you may wish to contact your elected representatives to understand their position on the proposal and to convey any concerns you may have.

Why is DoD proposing to consolidate the existing TRICARE plans into one plan?

DoD has stated that consolidating the existing plans would simplify TRICARE and save money.  However, we believe that beneficiaries should have a choice and should be able to select a plan that best meets their individual needs, rather than a one-size-fits-all plan.

How would these proposed changes affect US Family Health Plan?

At this point it is unclear how these proposed changes—if enacted—might affect US Family Health Plan, as very few specifics have been provided.  The US Family Health Plan was created in 1993 by congressional statute, and was moved under the TRICARE umbrella in 1997.

Why is DoD proposing to increase costs for TRICARE beneficiaries?

We believe the DoD is trying to reduce their cost to provide the TRICARE benefit.  However, we believe that these costs should not simply be shifted on to beneficiaries.  Furthermore, by eliminating the requirement for coordination of referrals to specialists by a primary care provider, the proposed consolidated plan would have beneficiaries navigating the health system on their own, and would likely lead to a lack of coordination of services among providers and higher health care costs in the long run.

Are these changes being proposed because of the Affordable Care Act (“Obamacare”)?

No. TRICARE is governed by a separate set of statutes, and is not directly affected by the Affordable Care Act.

What are the proposed changes to the enrollment fees?

The proposal specifies an enrollment fee increase for January 1, 2016. The enrollment fee would increase each year after that tied to that year’s cost of living increase:

Currently, TRICARE beneficiaries enrolled in Part B pay no enrollment fee. The Administration’s proposal would implement an enrollment fee for these beneficiaries beginning in fiscal year 2015. This fee would be a percentage of the sponsor’s retirement pay:

What are the proposed changes to beneficiary outpatient cost-shares in the FY2015 budget request?

These proposed outpatient cost-shares would take effect January 1, 2016:

What are the proposed changes to beneficiary inpatient cost-shares in the FY2015 budget request?

These proposed inpatient cost-shares would take effect January 1, 2016:

What are the proposed changes to pharmacy co-pays in the FY2015 budget request?

The following proposed pharmacy changes in the FY 2015 budget would take effect January 1, 2015 and be phased-in over a 10-year period:

What are the proposed deductibles?

The following proposed deductibles would take effect January 1, 2016:

General Deductible (out-of-network care)

  • E1-E4 active duty family – $150 individual/$300 family
  • E5 and others – $300 individual/$600 family

What are the proposed changes to the catastrophic cap?

The catastrophic cap is the maximum a family would pay out-of-pocket in a given year. The current catastrophic cap is $1,000 per year, per family for active duty families, and $3,000 per year, per family for retirees and their families.  Currently, all out-of-pocket costs are applied to the catastrophic cap, including the enrollment fee.  The Administration proposal would increase slightly the catastrophic cap as of January 1, 2016; however, the enrollment fee would no longer be applied to the catastrophic cap.

Catastrophic Cap (per fiscal year) – Active Duty Family

  • $1,500 network/$2,500 combined
  • $3,000 networks/$5,000 combined