1.0 Policy
1.1 By law,
employers are prohibited from offering financial or other incentives
to certain TRICARE-eligible employees to not enroll in employer-offered
GHPs. The TRICARE prohibition applies in the same manner as employers
are currently prohibited from offering incentives to Medicare-eligible
employees under section 1862(b)(3)(C) of the Social Security Act
(42 United States Code (USC) 1395y(b)(3)(C)). Many employers, including
state and local Governments, have begun to offer their employees
who are TRICARE-eligible a TRICARE supplement as an incentive not
to enroll in the employer’s primary GHP. The purpose of the prohibition
on incentives not to enroll in employer-sponsored GHPs is to prevent employers
from shifting their responsibility for their employees onto the
federal taxpayers.
1.2 For this prohibition, a TRICARE-eligible
employee is a person who is eligible for TRICARE coverage under
10 USC Section 1086. This essentially applies to retirees and their
family members and does not include dependents of active duty personnel.
1.3 The term
“group health plan” means a plan (including a self-insured plan)
of, or contributed to by, an employer (including a self-employed
person) or employee organization to provide health care (directly
or otherwise) to the employees, former employees, the employer,
others associated or formerly associated with the employer in a
business relationship, or their families.
1.4 In general, employers must
offer the same health insurance benefits under the same conditions to
TRICARE eligibles that other employees receive. Certain common employer
benefit programs do not constitute improper incentives under the
law.
1.4.1 An employer-funded benefit offered through
an employer’s cafeteria plan would not be considered an improper
incentive, as long as it is not a TRICARE exclusive benefit. (The
cafeteria plan must comply with Section 125 of the Internal Revenue
Code.) Employers who offer all similarly situated employees without
regard to TRICARE eligibility a choice between health insurance
and cash payment equivalents are not considered in violation of
the prohibition. Therefore, if a TRICARE beneficiary elects a cash
payment option as a benefit offered via the employer’s cafeteria
plan, then this is not a violation of these provisions.
1.4.2 Health
Reimbursement Arrangements (HRAs) are employer sponsored plans that
are generally are classified as GHPs. Only employers can make contributions
to HRAs. If the HRA is available to and can be used by all similarly
situated employees (not limited to TRICARE beneficiaries), it does
not violate this provision. Further, cash payments or other bona
fide fringe benefits may properly be offered under the McNamara
O’Hara Service Contract Act (SCA) and otherwise in lieu of health
care coverage as long as the employer does not consider TRICARE
eligibility when formulating the cash payment or fringe benefits
options.
1.4.3 In general, the law prohibits employer-endorsed
TRICARE supplemental plans as an option for health coverage under
an employer-sponsored GHP to TRICARE-eligible beneficiaries. A TRICARE supplemental
plan cannot be offered as part of a cafeteria plan because the employer,
by endorsing this type of plan, effectively offers an improper incentive
targeted only at TRICARE beneficiaries for not enrolling in the
employer’s main health plan option or options.
1.4.4 These provisions
do not impact TRICARE supplemental plans that are not offered by
an employer but are sold by an insurer and/or beneficiary association
working in conjunction with an insurer. Such non-employer-sponsored
TRICARE supplemental plans continue to be expressly excluded as
double coverage under TRICARE (see the TRICARE Reimbursement Manual
(TRM)
Chapter 4, Section 4). TRICARE is the primary
payer and the TRICARE supplemental plan is the secondary payer.
1.4.5 The prohibition
on employer incentives does not include TRICARE supplemental plans when
it is properly documented that the employer does not provide any
payment for the benefit nor receive any direct or indirect consideration
or compensation for offering the benefit; the employer’s only involvement
is providing the administrative support for the benefits under the
cafeteria plan, and the participation of the employee in the plan
is completely voluntary.
1.4.6 The regulation requires documentation
certifying the requirements for a non-contributory TRICARE supplemental
plan is met in cases in which an employer provides that option,
and that the certification will be provided upon request to the
Department of Defense (DoD). In cases in which a question arises
about a TRICARE supplemental plan offered by an employer, this documentation
will provide a simple means to resolve that it was offered within
the authorized exception to the general rule against TRICARE-exclusive
benefits.
1.5 Enforcement of this prohibition
is afforded through civil monetary penalties not to exceed $5,000
for each violation, investigative authorities of the Department
of Defense Inspector General (DoDIG), recourse under the Debt Collection
Improvement Act, and any other authority provided by law.
2.0 Definitions
2.1 Employer.
Includes any State or unit of local Government and any employer
that employs at least 20 employees.
2.2 TRICARE-Eligible Employee.
For the purpose of the relationship between TRICARE and employer-sponsored
GHPs, it means a covered beneficiary under 10 USC Section 1086,
essentially military retirees and their eligible family members.
2.3 Similarly
Situated. Employees sharing common attributes, such as part-time
employees, or other bona fide employment-based classifications consistent
with the employer’s usual business practice, but not including TRICARE
eligibility as a permissible classification.
2.4 Cafeteria
Plan. As defined by the Internal Revenue Code, 26 USC 125(d), is
a written plan under which all participants are employees and the
participants may choose among two or more benefits consisting of
cash and qualified benefits.