House Ways & Means Committee Issues Report on Veterans TRICARE Choice Act
Excerpts of the report follow:
I. SUMMARY AND BACKGROUND
A. Purpose and Summary
The bill, H.R. 5458, as reported from the
B. Background and Need for Legislation
Those who enroll in qualified high-deductible health plans ("HDHP") are permitted to open an HSA. These accounts allow for pre-tax contributions, tax-free investment earnings, and tax-free distributions for future qualified medical expenses.
TRICARE is the primary program by which the military health system provides active and retired members of the armed forces and their families with medical coverage. An individual who is covered by an HDHP for a month and also covered under TRICARE for the month is not eligible to make HSA contributions for the month.
According to a 2015 census conducted by
C. Legislative History
Background
H.R. 5458 was introduced on
Committee action
Committee hearings
The policy issues surrounding access to consumer-directed health care accounts, like HSAs, have been discussed at two Ways and Means hearings during the 114th
Full Committee Hearing on the Tax Treatment of Health Care (
Subcommittee on Health Member
II. EXPLANATION OF THE BILL
A. Coordination Between TRICARE Program and Eligibility To Make Contributions to Health Savings Accounts (Sec. 2 of the Bill and Sec. 223 of the Code)
PRESENT LAW
Health savings accounts
An individual with a high deductible health plan and no other health plan (other than a plan that provides certain permitted insurance or permitted coverage) is generally eligible to make deductible contributions to a health savings account ("HSA"), subject to certain limits (an "eligible individual"). HSA contributions made on behalf of an eligible individual by an employer are excludible from income and wages for employment tax purposes. Eligibility for HSA contributions is generally determined monthly, based on the individual's status and health plan coverage as of the first day of the month.
An individual with other coverage in addition to a high deductible health plan is still eligible to make HSA contributions if such other coverage is permitted insurance or permitted coverage. Permitted insurance is: (1) insurance if substantially all of the coverage provided under such insurance relates to (a) liabilities incurred under worker's compensation law, (b) tort liabilities, (c) liabilities relating to ownership or use of property (e.g., auto insurance), or (d) such other similar liabilities as the Secretary of the
TRICARE program
110 U.S.C. chapter 55.
REASONS FOR CHANGE
The Committee continues to believe that high deductible health plans and the related HSAs will help reduce health care costs. In some cases, an individual covered by a high deductible health plan may become covered by TRICARE automatically, ending his or her eligibility to make HSA contributions. The individual may prefer to decline TRICARE coverage in order to continue to make HSA contributions; however, declining TRICARE coverage is not an option under present law. The Committee wishes to provide individuals with that option.
EXPLANATION OF PROVISION
HSA eligibility
Under the provision, for any period with respect to which an individual has made an election of TRICARE ineligibility, as described below, TRICARE coverage is disregarded in determining whether the individual is eligible to make HSA contributions for the period.
TRICARE program
The provision amends the provisions of the TRICARE program to allow a TRICARE-eligible individual to elect to be ineligible to enroll in and receive benefits under the TRICARE program (referred to herein as an "election of TRICARE ineligibility"). For this purpose, a TRICARE-eligible individual is an individual who is eligible to be a covered beneficiary entitled to health care benefits under the TRICARE program (determined without regard to an election of TRICARE ineligibility) and is not serving on active duty. An election of TRICARE ineligibility is in effect for the period beginning on the date of the election and ending on the date the individual makes an election to be eligible to enroll in the TRICARE program, as described below.
If a TRICARE-eligible individual makes an election of TRICARE ineligibility, the individual may later elect to be eligible to enroll in the TRICARE program, but only during a special enrollment period. A special enrollment period is defined as the period in which a beneficiary under the Federal Employees Health Benefits program2 may enroll in or change plans by reason of a qualifying event or during an open enrollment season. The Secretary of Defense is directed to ensure that a TRICARE-eligible individual who makes an election of TRICARE ineligibility may later efficiently enroll in the TRICARE program, including by maintaining the individual, as appropriate, in the TRICARE enrollment system in inactive status.
2Provisions governing the Federal Employees Health Benefits program are contained in 5 U.S.C. chapter 89 and provide special enrollment periods in the case of certain events, such as marriage or the birth of a child. The provision allows the Secretary of Defense to include additional events, including events relating to a member of the armed forces being ordered to active duty.
The Secretary of Defense is directed also to ensure that a TRICARE-eligible individual who makes an election of TRICARE ineligibility is maintained on the Defense Enrollment Eligibility Reporting System (or a successor system), regardless of whether the individual is eligible for the TRICARE program during the period of the election.
Under the provision, the Secretary of Defense is required to provide certain information to the Commissioner of Internal Revenue (the "Commissioner") and to a TRICARE-eligible individual seeking to make an election of TRICARE ineligibility. Specifically, not later than 90 days after an election of TRICARE ineligibility, there must be provided to the Commissioner the name of the TRICARE-eligible individual who makes the election and any other information that the Commissioner may require with respect to the individual for purposes of determining the individual's eligibility for an HSA. There must be provided to each TRICARE-eligible individual seeking to make an election of TRICARE ineligibility information regarding (1) HSAs in connection with coverage under a high deductible health plan, including a comparison of HSAs and the health care benefits the individual is eligible to receive under the TRICARE program, and (2) changing an election of TRICARE ineligibility later in order to be eligible to enroll in the TRICARE program, as described above.
In addition, not later than 60 days after the end of each fiscal year, the Secretary of Defense is required to submit to the congressional defense committees a report on elections of TRICARE ineligibility and subsequent elections to be eligible to enroll in the TRICARE program, which includes (1) the number of TRICARE-eligible individuals, as of the date of the submission of the report, who are ineligible to enroll in and receive any benefits under the TRICARE program pursuant to an election of TRICARE ineligibility, and (2) the number of TRICARE-eligible individuals who made an election of TRICARE ineligibility and, as of the date of the submission of the report, are enrolled in the TRICARE program pursuant to a later election to be eligible to enroll in the TRICARE program.
EFFECTIVE DATE
The provision applies to months beginning after
III. VOTES OF THE COMMITTEE
In compliance with clause 3(b) of rule XIII of the Rules of the
The bill, H.R. 5458, as amended, was ordered favorably reported to the
IV. BUDGET EFFECTS OF THE BILL
A. Committee Estimate of Budgetary Effects
In compliance with clause 3(d) of rule XIII of the Rules of the
The bill, as reported, is estimated to have the following effect on Federal fiscal year budget receipts for the period 2017-2026:
FISCAL YEARS
[Millions of dollars]
To view the table, click this link: https://www.congress.gov/congressional-report/114th-congress/house-report/809/1?r=5
Pursuant to clause 8 of rule XIII of the Rules of the
B.
In compliance with clause 3(c)(2) of rule XIII of the Rules of the
C. Cost Estimate Prepared by the
In compliance with clause 3(c)(3) of rule XIII of the Rules of the
Hon.
Chairman,
Dear Mr. Chairman: The
If you wish further details on this estimate, we will be pleased to provide them. The CBO staff contact is
Sincerely,
Enclosure.
H.R. 5458--Veterans TRICARE Choice Act of 2016
H.R. 5458 would allow certain individuals who are automatically eligible for TRICARE, which is the health benefits program of the
The staff of the
The Statutory Pay-As-You Go Act of 2010 establishes budget- reporting and enforcement procedures for legislation affecting revenues and direct spending. The estimated net increase in the federal deficit is shown in the following table. Only on-budget changes to revenues or outlays are subject to pay-as-you-go procedures.
JCT and CHO estimate that enacting the bill would not increase net direct spending or on-budget deficits by more than
JCT has determined that the bill contains no intergovernmental or private-sector mandates as defined in the Unfunded Mandates Reform Act.
The CBO staff contact for this estimate is
CBO ESTIMATE OF PAY-AS-YOU-GO EFFECTS FOR HR 5458, AS ORDERED REPORTED BY THE HOUSE COMMITTEE ON WAYS AND MEANS ON
To view the table, click this link: https://www.congress.gov/congressional-report/114th-congress/house-report/809/1?r=5.
Source:Staff of the
V. OTHER MATTERS TO BE DISCUSSED UNDER THE RULES OF THE HOUSE
A. Committee Oversight Findings and Recommendations
With respect to clause 3(c)(1) of rule XIII of the Rules of the
B. Statement of General Performance Goals and Objectives
With respect to clause 3(c)(4) of rule XIII of the Rules of the
C. Information Relating to Unfunded Mandates
This information is provided in accordance with section 423 of the Unfunded Mandates Reform Act of 1995 (Pub. L. No. 104- 4).
The Committee has determined that the bill does not contain Federal mandates on the private sector. The Committee has determined that the bill does not impose a Federal intergovernmental mandate on State, local, or tribal governments.
D. Applicability of House Rule XXI 5(b)
Rule XXI 5(b) of the Rules of the
E. Tax Complexity Analysis
Section 4022(b) of the Internal Revenue Service Restructuring and Reform Act of 1998 ("
Pursuant to clause 3(h)(1) of rule XIII of the Rules of the
F. Congressional Earmarks, Limited Tax Benefits, and Limited Tariff Benefits
With respect to clause 9 of rule XXI of the Rules of the
G. Duplication of Federal Programs
In compliance with Sec. 3(g)(2) of
H. Disclosure of Directed Rule Makings
In compliance with Sec. 3(i) of
A. Text of Existing Law Amended or Repealed by the Bill, as Reported
In compliance with clause 3(e)(1)(A) of rule XIII of the Rules of the
Changes in Existing Law Made by the Bill, as Reported
In compliance with clause 3(e)(1)(A) of rule XIII of the Rules of the
VII. ADDITIONAL VIEWS
Many veterans, after completing their service to the country, enter the civilian workforce and may receive health coverage though this private employer. Some employers choose to offer health savings accounts (HSAs) coupled with a high deductible health plan. For veterans also receiving coverage though Tricare, this can cause a problem. Contributions to a health savings account may only be made while the account owner is enrolled in a high deductible health plan. Further, the account owner may not be eligible for coverage that is not a high deductible health plan. Under present law, eligibility for Tricare coverage disqualifies a retiree from HSA eligibility because the Tricare program is not a high deductible health plan. While there is a difference of opinion in the committee on tax-preferred health accounts, the legislation recognizes that some veterans may have that coverage, and could run afoul of current law because of enrollment in Tricare. This is an issue that we should fix.
H.R. 5458 would provide that military retirees may disclaim their eligibility for the Tricare Program--the military's retiree medical insurance program. This would allow a retiree who is enrolled in a high deductible health plan to receive or make HSA contributions. Under the bill, retirees would be permitted to revoke their disclaimer upon a change of status event and enroll in Tricare coverage--such as if they terminate employment with a civilian employer who offers the high deductible health plan.
The
Ranking Member.
The full text of the report is found at: https://www.congress.gov/congressional-report/114th-congress/house-report/809/1?r=5.
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