WASHINGTON, Jan. 2011 – Though Defense Secretary Robert M. Gates seeks modest premium increases for working-age military retirees who use the TRICARE Prime health plan, the benefit will remain free to service members, defense officials emphasized today.

Gates unveiled sweeping cost-cutting initiatives yesterday, including a recommendation to increase TRICARE Prime premiums for working-age retirees in fiscal 2012, the first increase in the plan’s 15-year history.

“For some time, I've spoken about the department's unaffordable health costs, and in particular the benefits provided to working-age retirees under the TRICARE program,” the secretary told reporters.

“Many of these beneficiaries are employed full-time while receiving their full pensions, and often forego their employers' health plan to remain with TRICARE,” he said. “This should not come as a surprise, given that the current TRICARE enrollment fee was set in 1995 at $460 a year for the basic family plan, and has not been raised since.”

Gates noted the dramatic increase in insurance premiums during that period for private-sector and other government employees. Federal workers pay roughly $5,000 a year for a comparable health insurance program, he said.

“Accordingly, with the fiscal year 2012 budget, we will propose reforms in the area of military health care to better manage medical cost growth and better align the department with the rest of the country,” Gates said. “These will include initiatives to become more efficient, as well as modest increases to TRICARE fees for … working-age retirees, with fees indexed to adjust for medical inflation.”

These initiatives could save the department as much as $7 billion over the next five years, he said.

Military retirees automatically are enrolled in one of two TRICARE plans, program spokesman Austin Camacho explained. Retirees who join TRICARE Prime, the system’s managed-care option that covers active-duty members, pay an annual enrollment fee of $230 per year for an individual or $460 for a family. Those in TRICARE Standard, a fee-for-service plan, pay no enrollment fee or premium. Instead, they pay a yearly deductible of $150 per person or $300 per family, as well as co-payments or cost shares for inpatient and outpatient care and medications, up to a $3,000 annual cap on out-of-pocket expenses.

Military retirees aren’t required to report whether they have jobs that offer insurance plans, Camacho said, noting that having other insurance does not take them off the TRICARE rolls. Rather, he explained, TRICARE becomes the “second payer” for health care, picking up co-payments and deductibles from the primary insurance plan.

Meanwhile, the senior TRICARE officer told American Forces Press Service the system is poised to support Gates’ new efficiency measures and already is making progress as it strives to provide the best health care at the best cost.

“All of these things help us work together to help us achieve the secretary’s goals, and we are already starting to make progress,” Navy Rear Adm. (Dr.) Christine S. Hunter said. “We need to be very aware that there is a pressure [to improve efficiency and control costs] and the resources are not infinite. But we are all part of the solution.”