TRICARE Retiree Reserve Program - Action Alert

TRICARE Retiree Reserve Program

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Today, the TRICARE Management Agency announced the TRICARE Retired Reserve (TRR) program pending implementation, Federal Rules Published for TRICARE Retired Reserve. It appears that there are plans to overcharge gray area retirees from the Reserve Component (RC) with the new TRICARE Retiree Reserve (TRR) health care plan, just as DoD did when TRICARE Reserve Select (TRS) was introduced. Also, the premiums on both TRS and TRR will be going up by 4.5 percent in January 2011!

The announcement on the new program is cause for concern. Along with many others AUSN received an advanced copy about the program that was sent to members of Congress, and announced by TRICARE management. The new TRR fees are:

This announcement is much higher than expected due to the way DoD and TMA viewed the program implementation. Using the same logic as they did when DOD overpriced TRS, DOD apparently looked at this program individually vice a pooling of the group and comparing costs to the open market vice looking at their actual costs. DoD stated, in 2009, the average annual premiums for employer-sponsored health insurance [were] $4,824 for single coverage and $13,375 for family coverage. Employer Health Benefits: 2009 Summary of Findings, The Kaiser Family Foundation and the Health Research & Educational Trust.

DoD Health Affairs' justification is that the gray area retiree population is a higher risk group as it is aged between 38 and 59, when compared to the general serving population of 18 – 44. There appears to be age discrimination here – that may not be allowed by HR 3590. This logic is contrary to the basis of insurance where risks are reduced by having a larger population pool. In 2007, a Government Accountability Office report found that the Pentagon was overcharging for TRS and recommended reductions. It took direct Congressional action to help reduce TRS premiums.

DoD leadership recently stated that DoD was paying too much for health care as well as personnel cost. Many of those gray area retirees are Reserve Components that where recently in TRS or their own health care plans after 20+ years of service – which does maintain RC members at a higher health readiness.

The cost of TRS is set by law at 28 percent of DoD overall TRICARE Standard cost. For individuals the TRS cost is $49.62 and $197.56 for families per month. This means that the individual cost of TRICARE to DoD is $177.22 for individuals and $705.57 for families per month. TRR beneficiaries will be paying nearly 220 percent more of DoD’s cost for individuals, and 130 percent of the cost more for families. This does not pass the logic test at this time! If beneficiaries, who lose access to TRS, were permitted to use the Active Duties Continuing Health Benefit Plan (DoD’s COBRA) they would only be charged premiums of $933 per quarter for individuals and $1,996 per quarter for families and have between 18 to 36 months coverage. Under the COBRA act, organizations are allowed to charge 2 percent over the premium costs to cover administration.

Under current reserve– Operational Reserve- component policy, the contributions of Reserve Component retirees can not be viewed lightly with up to 47% of deployed forces being from Reserve Components. Additionally – gray area retirees are subject to recall. It is obvious that the new TRR program is intended to discourage having people who are retiring from Reserve Component to use the TRR program. This can affect recruiting into the Reserves. Overpricing for the program can make TRICARE Retired Reserve a program doomed to failure. Recently GAO studied access to TRICARE and why less than 10 percent of serving members sign up for TRS. A true continuity of health care demonstrates the lack of strategic vision to implementing health care as a retention incentive.

There is no doubt that the all volunteer force does in fact bring increased expenses for personnel. One of them is DoD health care. As we are moving towards more and more reductions across the defense budget should it be the personnel that take the brunt of the cuts? AUSN says NO! It is the price of an all volunteer force where end strengths are low for the missions.

AUSN members and friends are strongly encouraged to contact their members of Congress with their concerns. Your personal contact on this issue will have immediate affect on members, www.ausn.org Contact Congress Button – and then by entering your zip code at the bottom of the page or use our letter. Or, alternatively – you can use letters we have provided.

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