Impact of Health Reform on Military Health Coverage

I read your Keeping Adult Children Insured column about how the health-care-reform law will require insurance companies to let adult children stay on their parents’ health-insurance policies until age 26. Does that include adult children of military personnel?

No, not yet. Even though private health-care plans must let children up to age 26 stay on their parents’ policies starting in the plan year after September 23, 2010 (generally that means starting January 1, 2011), the law doesn’t automatically apply to Tricare, which provides health coverage for members of the military, their families and military retirees.

Currently, dependent children may remain on their parents’ Tricare policies until age 21, or age 23 for full-time students who rely on their parents for more than 50% of their support. But Congress is working on extending the age that children can stay on their parents’ policies. The Tricare Dependent Coverage Extension Act, which was introduced in both the Senate and the House, would extend dependent coverage until age 26 and allow the program to charge an extra monthly premium for the new coverage. This provision was included in the 2011 Defense Authorization Act (the annual military budget), which the House has passed but the Senate has not yet voted on.

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Will military health-insurance plans be considered “Cadillac” plans subject to a 40% tax?

No. Tricare and the veterans’ health-care program are not subject to the provision of the law that would impose a 40% tax on insurers for the portion of high-value health-insurance plans worth more than $10,200 for individuals or $27,500 for families.

See A Tax on Health Benefits for more information on the tax rules for private Cadillac health-insurance plans. See Military Health Coverage and Health Reform for more about health-care reform and military families.

As the "Ask Kim" columnist for Kiplinger's Personal Finance, Lankford receives hundreds of personal finance questions from readers every month. She is the author of Rescue Your Financial Life (McGraw-Hill, 2003), The Insurance Maze: How You Can Save Money on Insurance -- and Still Get the Coverage You Need (Kaplan, 2006), Kiplinger's Ask Kim for Money Smart Solutions (Kaplan, 2007) and The Kiplinger/BBB Personal Finance Guide for Military Families. She is frequently featured as a financial expert on television and radio, including NBC's Today Show, CNN, CNBC and National Public Radio.