There are coordination issues for the group of military retirees under age 65
who have access to TRICARE and are also employed and who have access to their
employers’ health insurance plan. One-fourth of retirees do not have access to
private employer insurance. For these individuals, TRICARE is clearly their
main and only health coverage, and there are no issues of coordination. However,
estimates from a 2006 survey of military retirees suggest that even though 65 percent
of retirees under the age of 65, and 58 percent of their dependents, are eligible for
insurance from the retiree’s employer, only 40 percent elect private coverage for
themselves, while 29 percent elect dependent coverage. This suggests that the
majority (60 percent) of retirees who are eligible for private insurance through their
employer are instead using TRICARE as a primary payer. For these individuals, DoD
pays all medical costs, even though they are employed and have access to employer
health benefits.
Congress designed TRICARE to be a second payer, and most retirees use it this way.
However, TRICARE cannot act as a second payer if it is not aware of the retirees’
employer insurance, and retirees may choose to use whichever coverage is most
advantageous for a particular episode of medical care, which could result in lessthan-
optimal health care. Still other retirees are eligible for medical insurance
through a private employer, but voluntarily choose to drop that coverage or not
access it when available and use TRICARE. The number of retirees in this group
is substantial.
The Task Force believes that steps should be taken to better coordinate health
insurance for those under-65 retirees with both TRICARE and private employer
insurance. For these individuals, the goal is to ensure that the retiree relies on only
one insurance plan, and hence one set of providers, with TRICARE acting as no
more than a second payer. Better coordination could help hold down the growth in
DoD medical costs while also improving health care.
