Tricare to allow civilian employers of military retirees to offer cafeteria insurance plans

Tricare is allowing civilian employers of military retirees to offer a cafeteria-style supplemental health insurance plan so that "workers who elect to use their Tricare Standard benefit can buy coverage conveniently and with pre-taxed dollars," The Colorado Springs Gazette reports. A former law prohibited employers from "enticing retirees to use Tricare instead of employer-paid insurance."

Employers cannot offer cash incentives for military retirees to leave their employer-based insurance and use only Tricare for their health coverage, and they can't subsidize a Tricare supplemental insurance plan. A change allows military families to buy a cafeteria plan supplemental policy through an employer with pre-tax income, as long as the beneficiaries pay for the full cost of the plan. "This lowers out-of-pocket costs of a Tricare supplement by about 27 percent. ... Congress acted three years ago to prohibit employers from offering incentives to Tricare-eligible employees to try to turn around a costly trend. More and more companies, as well as state and local governments, were encouraging their military retirees to use Tricare rather than employer-paid health plans. In effect, they were shifting their own health care costs onto federal taxpayers, defense officials complained." The move could save taxpayers $64 million a year, the Congressional Budget Office predicts (Philpott, 6/27).

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This article was reprinted from khn.org with permission from the Henry J. Kaiser Family Foundation. Kaiser Health News, an editorially independent news service, is a program of the Kaiser Family Foundation, a nonpartisan health care policy research organization unaffiliated with Kaiser Permanente.