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President Obama calls for TRICARE Fee Increases

posted Jan 23, 2012, 10:07 PM by Dawn Olsen   [ updated Jan 23, 2012, 10:07 PM by Neslo Ventures ]

Courtesy of The Military Wallet 10/04/2011

President Obama recently released a $4.4 trillion deficit-reduction plan, and military benefits were a large part of the proposed cuts. Increases to TRICARE fees were included in the President’s plan, in addition to proposed cuts to military retirement benefits. The proposed increases in TRICARE fees include charging an enrollment fee for TRICARE for Life members, and increasing TRICARE pharmacy co-pays for military beneficiaries.

Proposed TRICARE for Life Enrollment Fees

TRICARE for Life is available to military retirees who are age 65 and older.  They currently do not pay an enrollment fee to participate in TRICARE for Life. Part of President Obama’s deficit-reduction proposal include a $200 annual enrollment fee for military retirees to continue receiving military health care benefits. If approved and voted into law, the increased TRICARE For Life enrollment fees would not begin until Fiscal year 2013. This is expected to generate over $6.7 billion in revenues over the next 10 years.

TRICARE prescription co-pay increases may be coming soon. The Department of Defense (DoD) has also proposed increased co-pays for prescription drugs to help make up for budget shortfalls and help decrease the gap between the enrollment fees and actual costs. These increases have not yet been approved, and would likely be based on a percentage of the government’s cost of the medicines.

TRICARE Prime Enrollment Fee Increases

If you are enrolled in TRICARE Prime, then you will see a small increase in your TRICARE Prime enrollment fees in 2012. Stating on October 1, 2011 (fiscal year 2012), the new annual fees for TRICARE Prime enrollment are $260 and $520 for individual and family plans, an annual increase of $30 for individuals, and $60 for families. The price increases work out to an additional $5 per month for a family enrollment, or an additional $2.50 per month for a single retiree.

These enrollment fees apply to retired uniformed servicemembers, eligible family members, survivors, and eligible former spouses of TRICARE Prime members. Members who are currently enrolled in TRICARE Prime will not have to pay the increased enrollment fees until they renew their enrollment in January 2012. These fee increases are separate from President Obama’s deficit reduction plan and the proposed TRICARE For Life enrollment fee increases.

There may be more price hikes in the future. This proposed price increase may be the first in a series or annual enrollment fee increases for TRICARE Prime members, as there has been discussion to tie the price hikes to the Medicare health care index, which will cause TRICARE Prime membership enrollment to rise as the Medicare health index rises.

Raising TRICARE Fees is a complicated issue

There are pros and cons to raising enrollment fees and prescription medicine co-pays. I see 3 distinct sides of the argument, and I have broken them down as best I can in an objective manner:

  • Raising enrollment fees hurts retirees.
  • Even with the price increases, TRICARE is an excellent deal.
  • TRICARE is unsustainable in its current state.

Let’s take a look at these three points of view in more detail, and as always, we would love to hear your opinion.

Rising TRICARE Enrollment Costs Hurts Retirees

The trouble with raising the prices of retiree health care is that most retirees are on a fixed income, and if there is a freeze on Cost of Living Adjustments (COLA), or a series of small increases in COLA, then even small increases in retiree expenses could have a dramatic affect on a retiree’s standard of living. Perhaps $5 per month won’t have a big affect on most retirees’ quality of life, but when you add that to the inflation we are seeing in other areas and fewer COLA increases, then it may have a detrimental effect.

Even with Price Hikes, TRICARE is a Great Deal

I don’t want to defend the price hikes, but I understand the need for the DoD and government to do something. The cost of health care is rising faster than most people can keep up with, and it is one of the biggest concerns in our nation – not just for military retirees, but for everyone. The new proposed family care plan under TRICARE Prime would cost $520 per year, which is less than many civilian families pay each month for family health care through an employer’s group health insurance plan. It’s a great deal, but unfortunately, the rising cost of health care means something must be done.

TRICARE is Unsustainable in its Current State.

I know many military retirees and their family members will be disappointed to hear about the price increases, but many retirees probably already realize that the rising cost of health care has placed the government in a tough position. The simple fact of the matter is this: TRICARE is unsustainable in its current state, and the DoD will have to spend an increasingly large part of its budget paying for retiree pensions and health care, while sacrificing money that could be spent on weapon systems, training, and troop retention.

The key will be for the DoD to address these TRICARE enrollment fee increases in a way that will won’t dramatically affect military retirees’ budgets. Ideally, the DoD would be able to work with the federal government to find another way to fund TRICARE without resorting to price hikes.

Do You Disagree with the Proposed Price Increases?

At the time of this writing, the TRICARE Prime price increases have been approved and are in effect. however, the proposed TRICARE For Life enrollment fees and prescription medicine co-pays are just proposals, and need to be voted into law before they go into effect. If you feel strongly that these price hikes shouldn’t be passed, then you should contact your Con­gressional representative or favorite military organization and let them know where you stand on this issue.

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