Is it time to rethink your TRICARE Young Adult Coverage?

Many military families will likely be shocked at the TRICARE Young Adult (TYA) premium increases for 2016. While this may seem like a further erosion of the TRICARE benefit, there is a legitimate explanation for the higher premiums (more on that later). Regardless of the reason for the increase, it may make sense for some military families to explore other coverage options for their TYA family members.

TRICARE Young Adult Premium Details
The Department of Defense (DoD) recently announced TYA premiums for calendar year 2016. Both Prime and Standard options will see significant premium increases, up 47.1 percent and 26.0 percent respectively.

The monthly premium for TYA Prime will go up to $306 in 2016, an increase of $98, and the annual premium will increase $1,176 to $3,672. For the TYA Standard coverage, the monthly premium for 2016 will be $228, an increase of $47 a month, while the annual premium will increase by $564 for a total of $2,736.

Rethinking Health Care Coverage for Young Adults
Given the higher premiums, military families may want to reconsider health care coverage options for their adult children, including:

• Switching from TYA Prime to Standard. The TYA Prime annual premium will cost $936 more than TYA Standard next year. Some families may determine that Standard – with higher cost shares but lower premiums – makes more sense for their adult children. As you do your research, keep in mind that TRICARE’s annual catastrophic cap for Active Duty and TRICARE Reserve Select families is $1000; for all others, it is $3,000.

• Enrolling in a parent’s civilian health insurance plan, if available. • Purchasing coverage through the college or university, if enrolled.

• Purchasing a plan through the health insurance marketplace. Depending on income and residence, lower cost plans may be available through the marketplace. Additionally, young adults might qualify for a tax credit to help lower the cost of premiums.

TYA Premium Increase Rationale
You are probably wondering why TYA premiums will go up so significantly next year.

The law that created TRICARE Young Adult required the program be cost neutral – which means, the premiums charged have to cover the actual costs of the program. Until now, the premiums were set based on cost estimates developed using claims data from similarly aged young adults still entitled to premium free TRICARE coverage. This is the first year TRICARE has had enough data from TYA beneficiaries to examine actual costs. Beneficiary data revealed TYA enrollees use their benefit more frequently than their counterparts who are entitled to premium free TRICARE coverage. After reviewing claims data for TYA beneficiaries, TRICARE increased the premiums to cover the actual costs.

The premium increases are effective January 1, 2016. Military families with TYA beneficiaries may want to consider other health care option during their employer or marketplace open enrollment season.

Originally published November 6, 2015 by National Military Family Association
Reprinted with permission