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Pentagon Seeks Tricare Fee Increases for Military Retirees

Doctor with an elderly patient.

Current retirees and all troops who later enter the military retirement system would face higher Tricare fees under the Pentagon's new budget proposal.

The plan, released Tuesday, would usher those already in the Tricare system into the fee structure passed by Congress last year by removing a "grandfathering" clause included in the 2017 National Defense Authorization Act (NDAA). That law currently only impacts those who enter the force after January 2018.

The proposed Tricare changes do not impact elderly Tricare for Life users. All of the proposed changes must first be approved by Congress before they become law -- a process that could take months or longer -- and some lawmakers have already described the president's budget request as "dead on arrival" on Capitol Hill.

Currently, retiree families must pay an annual Tricare Standard enrollment of $150 for individual and $300 for families or $282.60 for individuals and $565.20 for Tricare Prime. Fees under the 2017 NDAA are $450 for individuals and $900 for families on Tricare Select and $350 for individuals and $700 for families under Tricare Prime.

The 2017 NDAA, signed into law in December, focused for current troops and retirees primarily on program title changes from "Tricare Standard" and "Tricare Extra" to "Tricare Select," back end management and limited expansions for current retirees and troops.

But under that legislation, those new to the military in 2018 see new cost structures once they hit retirement, including annual enrollment fees of at least $900 per family for the new "Tricare Select" option and $700 for Tricare Prime.

The new budget proposal expands those retiree health care fee increases to everyone, regardless of when they entered the military.

Under the plan, Prime enrollment costs for retiree families would increase by almost $150 per year, while the fee for the "Select" plan, similar to the current "Standard" option, would triple. The annual catastrophic cap -- the most users pay out of pocket for covered services -- would also increase from $3,000 to $3,500 for retirees.

Exempted from the changes under the proposal are medical retirees and the family members of those who died while on active duty.

The budget proposal also includes a 2.1 percent pay increase for military troops in fiscal 2018 -- the same as was recently approved by Congress for the current year -- and overall Defense spending of $603 billion.

The new Tricare fees and catastrophic caps would also be subject to annual increases, budget documents state, which would be tied to the National Health Expenditures per capita rate, which is compiled by government's Centers for Medicare and Medicaid Services. That office projects a 5.9 percent increase for 2018 to 2019, according to forecast documents.

Pentagon officials said currently serving troops need to be included in the system changes for cost savings, simplicity and equity. By grandfathering current troops into the old system while creating a new cost structure, Congress slashed the amount the Pentagon was looking to save through the new system.

"What that did is, in effect, pretty much wipe out any of the near term savings and create what we think is a two-tiered system," said John Roth, the Pentagon's acting comptroller. "So we're going to ask congress if they would consider eliminating the grandfathering."

Budget documents cite growing healthcare costs as the reason for the changes.

"While health care costs have doubled or tripled over this time frame, a family's out-of-pocket expenses, including enrollment fees, deductibles and cost shares, have grown by only 30 to 40 percent," the budget proposal says.

-- Amy Bushatz can be reached at amy.bushatz@military.com. Follow her on Twitter at @amybushatz.