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.