Feb 15 2012
On February 13th, the President released details of their proposed budget for Fiscal Year 2013. As we have expected and feared, the budget put forth for consideration by Congress includes significant increases in healthcare costs to military personnel of nearly every segment of the population. The only exceptions are medically retired servicemembers and survivors of members who died on active duty.
While the increases have been predicted given the budget cutting political atmosphere seen over the past few years, MOAA feels that DoD and the Administration are too quick to pass the burden off to retirees when there are areas of operations that could be made more efficient without hurting the beneficiaries. In December, MOAA proposed 16 ways to make the military health care program less costly that would negate the need to pass the costs to retirees. You can see that list here.
It is important to understand that the increases in fees are, at this point, just a proposal. Congress will have the opportunity to stop their implementation, in the same way that they did in 2007 when we saw the last effort from DoD to change retiree health care costs. In March, MOAA will testify to Congress in the hopes that they can negate the proposed changes with a Budget Resolution. That is why the next two months will be so critical to stave off the increases, and why MOAA will need everyone’s help in contacting their Senators and Representatives. If Congress fails to act, the changes to the pricing structure would go into effect on October 1st, 2012.
There are three tiers that determine just how much the increases will be and they are based on annual retired pay amounts. Tier 1 is anyone earning up to $22,589. Tier 2 includes income between $22,590 and $45,178. Tier 3 is for anyone earning $45,179 annually. These figures are just based on military retired pay, not other income.
Let’s examine the proposed changes in segments. First is TRICARE Prime:
Please note that those annual fees are based on a family rate; for singles just divide it by half. Also important to note, the fee increases from FY2018 onward, the increases will be based not on COLA but on health cost inflation, a figure that varies but is usually in the ballpark of 6-7%, which would outpace COLA in most years.
Here are the proposed changes to the TRICARE Standard annual fee (all of the notes above for TRICARE Prime apply to Standard as well):
The budget proposal also includes the addition of something MOAA has been fighting to ensure never comes to pass – an annual enrollment fee for TRICARE for Life. In addition to the normal Medicare Part B premium, retirees would be asked to pay TFL premiums at the following levels:
It is important to note that the fees listed above are for INDIVIDUAL plans, so you would need to double the amount for spouse coverage. As with the other fee increases, the rates past 2017 would be tied to the health cost inflation rate, which would in all probability outgrow COLA increases.
In addition to the annual enrollment fee changes, there are modest increases proposed for pharmacy copays. The biggest change is that Non-Formulary drugs will only have limited availability at the retail level. As you can see from the differences in the pricing between retail and mail order generic rates and non-formulary availability, DoD is focusing on increasing the use of the TRICARE Mail Order Pharmacy.
Again, these changes are just at the proposal stage, and we have the opportunity to keep them from becoming a reality by launching an orchestrated, energetic messaging campaign directed towards Congress. MOAA understands that the DoD budget must play a role in helping to solve the nation’s budget crisis and that military personnel will play a role in that sacrifice. But we believe these increases are not the best way to go forward and we are asking everyone to help get that message across.
Please use MOAA’s messaging system to contact Congress by going here. And stay on top of all the developments by subscribing to MOAA’s Legislative Update.
For another look at the impact of the proposed changes with full yearly cost estimates for different groups, please see these two documents:
Impact of FY 2013 DoD Budgetfee (incl Rx) proposals (E7-O4)
Impact of FY 2013 DoD Budgetfee (incl Rx) proposals (O-5)
(please note that the TFL figures in both of these estimates are based on retiree plus spouse, as opposed to the figures listed in the article above)