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.