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EMPLOYER-PAID TRICARE PLANS TO END -- Tens
of thousands of working retirees will see their
health
costs rise from a law Congress enacted last
year.
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http://www.military.com
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Employer-Paid TRICARE Plans to End
Retiree Costs to Rise as Employer-Paid TRICARE Plans End
by Tom Philpott
Phil Peterson, a retired Navy chief petty officer working for a major
defense contractor in Greenville, S.C., got word last week that his
company’s TRICARE supplemental insurance plan, which covers all costs
not picked up by Peterson’s TRICARE Standard benefit, must end by Jan.
1.
Peterson is among tens of thousands of working retirees who will see
their health costs rise from a law Congress enacted last year that
prohibits companies as well as state and local governments from offering
health plans or other incentives to encourage military retirees who work
for them to drop employer-provided health plans and use their TRICARE
benefits instead.
Peterson, 53, dropped his company’s group health insurance four years
ago when it began offering a free supplement to TRICARE Standard, the
military’s traditional fee-for service health insurance. Peterson saw
family out-of-pocket medical costs fall to zero that year.
“It turned out to be a very good thing because I didn’t have to worry
about deductibles or co-payments for office visits, prescriptions or
anything else,” Peterson said. “It’s not right now that somebody up in
Washington is telling me, ‘We don’t want you to use it so we can save
money.’ ”
Employers who offer a TRICARE supplement have saved themselves a lot of
money, says the Congressional Budget Office. Wrap-around insurance to
TRICARE Standard might cost a company just over $1200 a year. But if a
military retiree on the payroll can be enticed to use TRICARE instead of
the company’s group health plan, the company avoids a cost of up $5500 a
year.
CBO, citing DoD survey results, estimated that 50,000 people a year were
“being diverted from employer-sponsored plan to TRICARE.” Outlawing
employer-paid supplements, CBO predicted, will save $119 million in 2008
and $700 million through 2011.
Lee Grieve, a retired Air Force master sergeant in Fort Walton Beach,
Fla., said his company, Jacobs Technology, began offering a TRICARE
supplement only last year. Though Congress has banned such offers and
raised his costs, Grieve said, it won’t stop him from using TRICARE
Standard.
“The intent is to reduce the cost to TRICARE by making me use my
company-provided benefit,” said Grieve, who is 49 and has heart disease.
“What Congress has failed to see is [that TRICARE] is cheaper than my
Blue Cross alternative, even if I have to pay my own supplement.”
The decision he now faces, Grieve said, is whether to buy the supplement
himself “or take my chances with co-pays.”
Congress last year rejected the Bush administration’s call to raise
TRICARE fees and co-payments for retirees under age 65 and their
families. But then Defense officials lobbied hard for a fiscal
consolation prize: an end to employer-paid TRICARE supplements. Donald
Rumsfeld, who was still defense secretary, called Senate and House
leaders, including Sen. John Warner (R-Va.), then chairman of the Senate
Armed Services Committee, to urge adoption of the provision, a committee
source recalled. Rumsfeld showed lawmakers a health plan menu from a
major defense contractor that included an offer of a few thousand
dollars in cash to any retiree who would rely on TRICARE rather than the
corporate health plan.
Language was added to the fiscal 2007 defense authorization act to
extend to TRICARE a rule adopted years ago to dampen Medicare costs. It
prohibits employers from offering a financial or other incentive to
encourage retiree beneficiaries to decline employer health insurance and
use TRICARE instead. Employers who violate the ban face a $5000 fine per
employee starting Jan. 1. Companies with fewer than 20 employees are
exempt.
Retired Air Force Capt. William “Bernie” Herpin Jr., in Colorado
Springs, got a letter from his employer, Lockheed Martin Corp.,
explaining that the company-paid TRICARE supplement will end. For a
retiree who wants to pay it for himself and spouse, the cost is $111 a
month. Herpin said a co-worker under the corporate plan pays $47 a week
in premiums, and a $300 annual deductible plus routine co-pays.
“It sounds like they are punishing retirees financially to get us…to
take the [group health] option. That doesn’t sound right,” said Herpin.
Though he earned TRICARE, he said, “they don’t want me to use it if I
have something else.”
A dozen states also have been offering TRICARE supplements to military
retirees on their payrolls. Those incentives too must end.
An armed services committee staff member said he is skeptical of
projected cost savings from ending employer-paid supplements are
accurate.
“I’ve never believed this was going to save the government any money
because, even if you take away the supplements, TRICARE is still more
comprehensive and cheaper than any employer’s policy,” he said.
Another skeptic is Ed Singer, executive vice president for Association
and Society Insurance Company in Rockville, Md. ASI administers TRICARE
supplements, through companies and state governments, to more than
50,000 beneficiaries. It hopes to keep most of these beneficiaries by
allowing them to buy coverage direct from ASI. Singer said some
employers are in a “kind of panic” to disassociate themselves from the
supplements, in part because DoD has not issued implementing guidance.
“DoD is making it very difficult to have this [coverage] continue
seamlessly,” Singer said.
He predicts the ban on company-paid supplements will drive more retirees
into TRICARE Prime, the military’s managed care plan. But Prime
enrollees, he said, cost taxpayers 25 percent more than Standard users.
No official at the TRICARE Management Activity in Falls Church, Va., was
made available to discuss the ban on employer-paid supplements.
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Larry Scott --
