LEGISLATION ENABLING MILITARY RETIREES TO OPT OUT OF TRICARE WOULD DECREAS GOVERNMENT REVENUE BY $97 MILLION OVER NEXT DECADE - July 22, 2016
TRICARE Bill Would Decrease Government Revenue By $97 Million Over Next Decade
By Kellie Lunney, Government Executive
Legislation that would allow military retirees to opt out of TRICARE and contribute to a tax-advantaged employer-sponsored health savings account would decrease government revenues by $97 million over the next decade, according to a new estimate.
The change in revenue would stem partly from the impact on Social Security payroll taxes for those who decide to put their TRICARE coverage on hold and opt into an HSA for a time, said the Joint Committee on Taxation and the Congressional Budget Office. The estimate concluded that the effects on direct spending and appropriations would be insignificant between 2017 and 2026. “Enacting the bill would not increase net direct spending or on-budget deficits by more than $5 billion in any of the four consecutive 10-year periods beginning in 2027,” the committee and CBO said.
Under current law, TRICARE enrollees cannot contribute to HSAs, which the bill’s supporters have said could result in current and former service members losing out on an important benefit available to other non-TRICARE employees. “For many, the problem occurs after having retired as they begin employment outside of the military,” said a summary of the legislation from Reps. Chris Stewart, R-Utah, and Tulsi Gabbard, D-Hawaii, sponsors of the Veterans TRICARE Choice Act. “These individuals then become eligible for health insurance coverage through their employer.” HSA contributions from employers aren’t subject to income and wage taxes, and accountholders aren’t taxed on HSA balance earnings.