FAQs on Health Care for Military Families

We have received a lot of questions from military families about how the new health-care reform law will affect them. The Tricare program for members of the military, their families and military retirees is governed by separate laws, so health-care reform doesn't change its coverage or costs. Still, there is some confusion about how the new law affects military personnel. Here are answers to some key questions:

Is there a chance that military families and veterans will have to pay a penalty for not having the right kind of coverage?

No. The health-care-reform law specifies that all U.S. citizens and legal residents must have health insurance by 2014 or else pay a penalty that starts at $95, or 1% of income (whichever is more), and rises to $695, or 2.5% of income, in 2016. To avoid the penalty, you must have employer-sponsored or individual health coverage. Medicare, Medicaid, the Children's Health Insurance Program (CHIP), Tricare for Life (Medicare-supplement coverage for military retirees) and the veterans' health-care program are also listed as qualifying coverages. But the law doesn't mention Tricare.

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Despite assurances by the secretary of Health and Human Services that Tricare does qualify, Congress wanted to clear up any confusion and passed the Tricare Affirmation Act, which was signed into law on April 26 and specifies that Tricare counts as qualifying coverage.

Does the new law allow adult children of military personnel to remain on their parents' policies?

No, not yet. Even though private health plans must let children up to age 26 stay on their parents' policy starting in the plan year after September 23, 2010 (generally that means starting January 1, 2011), that law doesn't automatically apply to Tricare.Currently, dependent children may remain on their parents' Tricare policy until age 21, or age 23 for full-time students who rely on their parents for more than 50% of their support. But Congress is working on extending the age that children can stay on their parents' policy. The Tricare Dependent Coverage Extension Act has been introduced in both the Senate and the House, and it may become part of the 2011 Defense Authorization Act (the annual military budget) later this year. The law would extend dependent coverage until age 26 and allow the program to charge an extra monthly premium for the new coverage.

Will military health plans be considered "Cadillac" health-insurance plans subject to a 40% tax?

No. Tricare and the veterans' health-care program are not subject to the provision of the health-care-reform law that would impose a 40% tax on insurers for the portion of high-value health-insurance plans worth more than $10,200 for individuals or $27,500 for families.