Proposed 2013 Budget Includes Increases in Medical Costs for Active & Retirees

Mar 23, 2012

Tricare Increase | Operation Ward 57The Obama administration’s proposed defense budget for 2013 calls for military families as well as retirees to pay sharply more for their healthcare.

Republican lawmakers have been vocal in their opposition to proposed fee increases as well as cuts in medical coverage. Republicans on the Senate Budget Committee have raised the issue that federal workers as well as other individuals receiving government-provided health benefits are not facing the same level of increases nor paying premiums based on income, making it seem the government is balancing the nations budget on the backs of its veterans.

As of right now, the proposed 2013 budget calls for annual enrollment fees for retirees in Tricare Prime to rise next year by 30 percent to 78 percent. This will be a rise from the current $460 or $520 families to between $600 and $820, depending upon military retirement income.

Individuals under the age of 65, considered “working-age retirees”, also would pay annual enrollment fees for Tricare Standard and Extra: $70 for an individual and $140 for a family. These would be the first enrollment fees for Standard and Extra in Tricare history. The deductibles for Standard and Extra also would rise by $10 for individuals and $20 for families.

Those retirees that are medicare-eligible will also contribute more to their medical care. The budget calls for annual Tricare for Life enrollment fees of $35 to $115 per individual, depending on retirement income. A retiree and a spouse covered under TFL would each have to pay the enrollment fee.

Tricare for Life beneficiaries currently pay no enrollment fees but are required to enroll in Medicare Part B, which carries premiums of $99.90 a month.

Many military advocacy groups state they understand the budget constraints that are facing the DoD but feel the latest proposals pass the buck unto the beneficiaries needlessly. In response, the DoD states that the increases will save over $13 billion over the next five years. If these savings are not reached, active duty strength will have to be cut by an additional 30,000 to 50,000 men and women in uniform than what is already planned.

One main issue raised, besides the increase in fees, is linking ones fees into their retirement income and the index future increases to the medical inflation rate. These tend to rise faster overall than inflation or the annual cost of living adjustment that occurs in military pay. For example, the most recent Cost of Living adjustment (COLA) was a 3.6 percent increase after a previous year void of an increase while medical inflation ran, on average, 6 to 7 percent during the same time.

Another proposed change would boost pharmacy co-pays on brand-name drugs, a move designed to encourage patients to buy generic versions or fill their prescriptions at military treatment facilities.

Under the proposed plan:

• Co-pays at retail outlets would remain $5 for generics but would more than double next year to $26 for brand names, then go up $2 per year through 2017. Co-pays for drugs not listed on Tricare’s formulary would be decided on a case-by-case basis.

• Generic drugs obtained by mail would remain free for a 90-day supply, but brand names would increase next year to $26 from $9 and rise by $2 a year through 2017. Nonformulary drugs would cost $51, up from $25.

Also, it is proposed that the enrollment fee hikes would not apply to survivors of military members who died on active duty or medically retired troops.


CHART OF PROPOSED TRICARE INCREASES

Tricare Prime
Annual family enrollment fees (individual fees are half of amounts shown):
Retired Pay 2012* 2013 2014 2015 2016** 2017
Tier 1: $0 – $22,589 $460/$520 $600 $680 $760 $850 $893
Tier 2: $22,590 – $45,178 $460/$520 $720 $920 $1,185 $1,450 $1,523
Tier 3: $45,179 & above $460/$520 $820 $1,120 $1,535 $1,950 $2,048
Tricare Standard and Extra
For retirees under age 65:
Annual Enrollment Fees 2012 2013 2014 2015 2016 2017**
Individual $0 $70 $85 $100 $115 $130
Family $0 $140 $170 $200 $230 $250
 
Annual Deductibles
Individual $150 $160 $200 $230 $260 $290
Family $300 $320 $400 $460 $520 $580
Tricare for Life
Annual enrollment fees per individual:
Retired Pay 2012 2013 2014 2015 2016** 2017
Tier 1: $0 – $22,589 $0 $35 $75 $115 $150 $158
Tier 2: $22,590 – $45,178 $0 $75 $150 $225 $300 $317
Tier 3: $45,179 & above $0 $115 $225 $335 $450 $475
Prescription co-pays
Retail – 1-month supply 2012 2013 2014 2015 2016 2017
Generic $5 $5 $6 $7 $8 $9
Brand $12 $26 $28 $30 $32 $34
Nonformulary $25 Co-pays decided on a case-by-case basis
 
Mail-Order – 3 month supply
Generic $0 $0 $0 $0 $0 $9
Brand $9 $26 $28 $30 $32 $34
Nonformulary $25 $51 $54 $58 $62 $66
 
*Enrolled before Oct. 1, 2011/Enrolled from Oct. 1, 2011, to Sept. 30, 2012. ** After these years, increases would be based on annual medical inflation.
SOURCE: DEFENSE DEPARTMENT

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