Committee votes to increase fees

The House Armed Services Committee has endorsed key portions of the Obama administration’s plan to begin to raise out-of-pocket costs modestly for some TRICARE beneficiaries, particularly working-age retirees.

The committee voted early Thursday to allow the first bump in TRICARE Prime enrollment fees in more than 15 years. Retirees not yet eligible for Medicare would see a $30-a-year fee increase, to $260, for individual coverage and a $60 hike, to $520, for family coverage.

The committee’s bill also would allow these fees for retirees to be adjusted each year to keep pace with inflation. While the Department of Defense wanted the fees indexed to medical inflation nationwide, the committee language would cap any increase to the percentage rise in retired pay made through by the annual COLA or cost-of-living adjustment.

Rep. Howard P. “Buck” McKeon, R-Calif., the new committee chairman, called it a “sensible” approach to TRICARE fees. The committee’s final version of the defense authorization bill for fiscal 2012 also would allow co-pays to rise, by $2 or $3, on prescriptions filled in the TRICARE network of retail pharmacies, a move to encourage greater use of TRICARE mail order.

But the bill also would express “the sense of Congress” that career members and their families make “extraordinary sacrifices to protect freedom for all Americans and that those sacrifices constitute prepayment for health care during retirement.” This language has been long sought by military retiree associations to discourage any future Congress from raising health care costs dramatically for military retirees.

Another surprise in the final mark of the bill is a provision to ease the “widow’s tax” — or SBP/DIC offset — for 57,000 surviving military spouses.

Surviving spouses of service members who die on active duty, or in retirement as a result of a service-connected injury or ailment, are eligible for tax-free Dependency and Indemnity Compensation (DIC) from the Department of Veterans Affairs. But those also covered by the premium-paid Survivor Benefit Plan see their SBP benefit reduced, dollar for dollar, by DIC, nearly $1,200 a month. They have argued for years that the offset is unfair.

Congress so far hasn’t found the money, roughly $6 billion over the first 10 years, to eliminate the SBP-DIC offset entirely. Instead, starting in 2007, it authorized a Special Survivor Indemnity Allowance (SSIA) to ease the sting. SSIA now pays $70 a month. It was to rise annually by $10 until it reached $100 in 2014, and then would go away.

Congress later voted to beef up and extend SSIA out to 2017. This year’s House defense bill would raise SSIA even more and extend its life out to Oct. 1, 2021. Under the revised incremental growth plan, SSIA would be raised to $163 by fiscal 2013, $200 in 2014, $215 in 2015, $282 in 2016 and $314 for fiscal 2017.

For fiscal 2018, SSIA would fall to only $9 and then climb gradually back to $27 by fiscal 2021. But these amounts merely are placeholders in the budget, a hopeful sign from the committee that Congress will continue to reduce the SBP-DIC offset in this way as money can be found.

Medicare-eligible retirees using USFHP facilities have not had to enroll in Medicare Part B. But starting Oct. 1, 2012, any USFHP enrollee who reaches age 65 and becomes eligible for Medicare would be bumped from the program. Like aging TRICARE Prime enrollees, they would have to enroll in Medicare Part B and rely on TRICARE for Life as a supplemental plan to Medicare. Medicare-eligible retirees already using USFHP doctors would be grandfathered from this change.