It is a severe understatement to suggest that TRICARE is simply a “health plan.” TRICARE is a comprehensive health care provider that combines the military medical system with a nexus of civilian health care suppliers to create comprehensive medical care for active duty, reserve, retirees, and their families. It is important to understand your options within this vast and expansive system and how the options fit into your overall financial situation. However, it is also important to not become overwhelmed with the vast amount of information that is provided in regards to the TRICARE system.
When it comes to the TRICARE organization there are numerous choices for medical care. In fact, TRICARE hosts 11 different medical plans within their benefit system. The two programs that make up the bulk of the TRICARE system are the benefit options of Prime and Standard/Extra. These options are available to all TRICARE eligible beneficiaries and can serve either as a stand-alone program or can be used in conjunction with other health care plans.
TRICARE Prime – This health plan is the quintessential health care plan. When most people think about health care, the TRICARE Prime option would be considered the norm. TRICARE Prime is an HMO or Health Maintenance Organization where you have a Primary Care Manager (PCM). These health professionals take care of your normal health, check-ups, colds, poison ivy, etc. When your PCM can no longer handle your care, such as cases of back pain or chronic migraines, they refer you to a specialist. You pay a “co-pay” (usually around $12) to the PCM at each visit and that is the extent of your normal out-of-pocket expenses.
Active Duty personnel and their family members who utilize TRICARE Prime pay nothing out of pocket beyond normal co-pay’s. Retirees and others that are not active duty have a monthly enrollment fee of $46.32 per month ($555.84 per year). When you participate in TRICARE Prime, you must utilize civilian doctors who are part of the TRICARE Network or visit a military treatment facility.
TRICARE Standard/Extra – This health plan is considered a “fee-for-service” plan, meaning you only pay for what you use, unlike TRICARE Prime where there are monthly enrollment fees. TRICARE Standard is available for all TRICARE eligible beneficiaries and no additional enrollment or fee is required to be part of the plan. The TRICARE Standard/Extra plan works very much like a Preferred Provider Organization (PPO) where the insurer prefers certain groups of health care professionals and discounts are applied for using these providers. Referrals are not required like TRICARE Prime; participants in the Standard/Extra plan can visit any specialist without prior “authorization.”
The large catch in using Standard/Extra is that these plans are “cost-share” plans. Meaning that instead of a co-pay, the participant shares in the cost of care. Annual deductibles must be met before TRICARE will begin to pay. Depending on the status of Active Duty or retired, individuals can expect to pay between $50-$150 before TRICARE begins to cover medical expenses. The cost share after the deductible is met is generally 15% of the total cost for Active Duty and their families; for retirees the cost share is generally 20%. There is a “catastrophic cap” of $1,000 per year for Active Duty and $3,000 for retirees. Meaning that no matter what happens the catastrophic cap is the maximum a family will pay in one year for covered services.
The advantage of the TRICARE system is the comprehensive selection of many different benefits that can be utilized depending on the service member’s financial situation. In 2011 83% of all active duty and their family members were enrolled in TRICARE Prime, yet only 45% of retirees and their family members were enrolled. General life situations dictate how we use health care. Active duty personnel and their families do not have to pay extra to be part of TRICARE Prime and it makes since to take full advantage of the earned benefit. Retirees consequently do have to pay and may be able to receive health care from other sources such as an employer or Medicare.
No matter what your specific financial and medical situation, it is important to understand the health care options you have. Health care costs are a significant part of financial and retirement planning. Consider that a healthy individual retiring at 65 and expecting to live to 90 may spend upwards of $380,000 in health care costs. Health care is an important factor to plan for now, and in retirement. TRICARE benefits will be an essential part of that conversation.
Capt. Jonathon E. Rowles, USMC (Ret.)
Disclaimer: (have to do it) – This blog should not be considered financial, investment, legal or tax advice. Consult your licensed financial professional, tax advisor or legal counsel. This blog is for educational purposes only.