TRICARE — Medicare

TRICARE and Medicare

The House and Senate passed the "Medicare Prescription Drug, Improvement, and Modernization Act of 2003." This bill is extensive and complex, and it makes dramatic changes to Medicare. It is important for uniformed services beneficiaries to understand the effect these changes may have on them in the near future and in the years to come.

Nurse pushes an elderly man in a wheelchair.

A preliminary assessment of some of the bill's provisions is presented below. As additional provisions of interest to uniformed services beneficiaries are identified, and as more information becomes available, we will update this site. We intend to work closely with beneficiary representatives to ensure that important information gets the widest possible distribution.

Medicare Prescription Drug Benefits

CRDAMC Pharmacy

For most Americans, the most significant aspect of the new bill is that it introduces an outpatient prescription drug benefit. This does not affect uniformed services beneficiaries―their TRICARE pharmacy benefits will continue as a separate program.

Beneficiaries who desire to participate in the Medicare outpatient prescription plan should enroll when first eligible. If a beneficiary does not enroll when first eligible, and subsequently desires to do so, an annual late penalty would normally be assessed. However, TRICARE pharmacy benefits are considered a creditable prescription plan under the bill, and as such, uniformed services beneficiaries who do not enroll in the Medicare prescription drug benefit when first eligible do not have to pay an annual penalty if they subsequently enroll because they involuntarily lost their eligibility under TRICARE. Individuals could involuntarily lose their TRICARE eligibility when a dependent widow or widower remarries a person who is not a uniformed services member or retiree, or when a dependent and member or retired member divorce, and the dependent spouse does not qualify under the law as an eligible former spouse for TRICARE benefits.

The TRICARE pharmacy benefit provides excellent coverage and wide availability of services through military facilities, retail pharmacies, and mail order. Thus, it is likely that the vast majority of uniformed services beneficiaries will not find it advantageous to enroll in the new Medicare pharmacy benefit. TRICARE and Medicare will need to establish procedures for coordination of benefits for beneficiaries who do decide to sign up for the Medicare benefit.

Part B Premiums

The bill makes three very important changes relating to enrollment in Medicare Part B, the Supplementary Medical Insurance Program. The first two changes affect persons not enrolled, or paying surcharges because they enrolled after they were initially eligible for Part B:

First, uniformed services beneficiaries who would be eligible for TRICARE For Life, but are not enrolled in Medicare Part B, may enroll without penalty during a special enrollment period through December 31, 2004. The special enrollment period will be announced via Medicare on the TRICARE Web site ( and publicized widely.

Second, uniformed services beneficiaries who enrolled in Medicare Part B in 2001, 2002, 2003, or 2004 and are subject to a premium surcharge for late enrollment in Part B can get those surcharges eliminated by demonstrating that they are covered under TRICARE. The elimination of surcharges is effective January 1, 2004, but the Department of Health and Human Services will need to work out procedures to be followed. Procedures will be announced via Medicare on the TRICARE Web site ( and publicized widely.

The third change made by the bill affects all seniors, not just uniformed services beneficiaries. The Part B premium will be tied to income, beginning in 2007. Individuals with incomes above $80,000 will pay more, and couples with incomes above $160,000 will pay more.

Medicare Advantage Program

The bill introduces several enhancements to the current Medicare+Choice program that are expected to increase the availability of private plans offering benefits to Medicare beneficiaries. TRICARE For Life beneficiaries can enroll in Medicare+Choice plans (and TRICARE will reimburse their copayments). More details about Medicare+Choice plans are available on the Medicare Web site: Most people eligible for Medicare use traditional fee-for-service Medicare.

The bill includes provisions for a pilot program beginning in 2010 (the Comparative Cost Adjustment program) that could result in increased Part B premiums for persons in traditional fee-for-service Medicare, if sicker patients gravitate to private plans in the test sites.

Provider Reimbursement Provisions

The bill includes numerous provisions relating to reimbursement of hospitals, physicians, and other service providers. Significantly, physicians will receive a 1.5 percent payment increase in 2004 for 2005, rather than the reduction that was anticipated.

Medicare Part B Deductible

The bill increases the Medicare Part B deductible to $110 in 2005 and indexes it to inflation for subsequent years. This should have minimal impact on uniformed services beneficiaries, since the Medicare deductible is payable by TRICARE.

Medicare Informationoffsite link in new window

page last modified on: 3/27/2017

Privacy and Security Notice | External Link Disclaimer | This is a Department of Defense Computer System | Contact Us

36065 Santa Fe Avenue Fort Hood, Texas 76544-4752 | Phone: (254) 288-8000 | Today is Monday, February 24, 2020

This website contains official Government information