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Home > Resources > News & Information > Regulatory Updates > DOD Releases Proposed Rule on the Relationship Between TRICARE and Group Health Plans

DOD Releases Proposed Rule on the Relationship Between TRICARE and Group Health Plans

The U.S. Department of Defense (DOD) has released a proposed rule dealing with the relationship between TRICARE and employer-sponsored group health plans. This law prohibits employers from offering incentives to TRICARE-eligible employees to not enroll, or to terminate enrollment, in an employer-offered group health plan (GHP) that is or would be primary to TRICARE. Cafeteria plans under section 125 of the Internal Revenue Code will be permissible so long as the plan treats all employees the same and does not illegally take TRICARE eligibility into account. Section 707 of the John Warner National Defense Authorization Act for Fiscal Year 2007 (Pub. L. 109–364) added Code Section 1097c to Title 10. Section 1097c prohibits employers from offering financial or other incentives to certain TRICARE eligible employees (essentially retirees and their family members) to not enroll in an employer-offered GHP 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 U.S.C. 1395y(b)(3)(C)). Many employers, including state and local governments, have begun to offer their employees who are TRICARE eligible a TRICARE supplemental insurance as an incentive not to enroll in the employer’s primary GHP. TRICARE, as is Medicare, is a secondary payer to employer-provided health insurance. In all instances where a TRICARE beneficiary is employed by a public or private entity and elects to participate in a GHP, reimbursements for TRICARE claims will be paid as a secondary payer to the TRICARE beneficiary’s employer-sponsored GHP. TRICARE is not responsible for paying first as it relates to reimbursements for a TRICARE beneficiary’s health care and the coordination of benefits with employer-sponsored GHPs. An identified employer- sponsored health insurance plan will be the primary payer and TRICARE will be the secondary payer. Written comments will be accepted through May 27.

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