Health insurance options for military veterans

As you prepare to leave the military, there's much to consider for yourself and your family. Chief among them is health insurance.

For many departing service members, it's an abrupt transition. That's because under TRICARE, the military health insurance for active-duty members and their families, health care is free. If you get sick or injured, you go to the doctor on base and TRICARE covers your health care. Words like deductible, copay and premium likely mean very little to you.

Understanding these terms can make or break your budget when you're a civilian. About two years before you retire or separate, it's time to start transition planning.

How to think about post-military health insurance

If you've never had to budget for health care, the cost of insurance can come as a shock. According to Federal Reserve studies, more than 37% of Americans couldn't fully cover a $400 emergency expense with cash or its equivalent. Among those, 13% wouldn’t be able to pay for the expense at all.

If that sounds like you, go ahead and add a line item to your budget for health care. Don't wait until your transition is complete — start now. As military members prepare for transition into civilian life, I recommend saving now for emergencies, including money to help pay for health care.

Before you shop around for health insurance, ask yourself these three questions:

1. What are my health care needs?

A single person in good health has different needs from a married person with young children, for example. Children tend to require more frequent medical attention, while a young adult may see a doctor less often. Also consider any pre-existing health conditions that Veterans Affairs (VA) disability might cover.

2. Which health care plan do I qualify for?

There are different requirements for each health care plan. Looking at all the options for which you qualify helps you make an informed choice.

3. Which health care plan makes the most financial sense?

Weigh plan costs and compare upfront costs and deductibles but don’t focus on cost alone. Instead, start by looking at your needs and make sure the plan you choose offers enough coverage.

What about veterans benefits?

The Veterans Health Administration, part of VA, is a care provider where you may be able to receive medical services. The VA isn't an insurance provider. When it comes to your planning, see how getting care from the VA can help your financial situation Opens in a New Window.‍ ‍ ^{See note 1}

VA medical care is prioritized based on several factors, such as your military service history, disability rating and income level. If you have a service-related disability that requires ongoing treatment, consider getting that care from the VA. It may be free or more affordable than going through a non-VA doctor or facility.

Receiving care from the VA doesn't mean you're limited to getting care from their doctors. Keep in mind that if you get care from non-VA doctors, you'll likely be using your health insurance and will need to plan for those costs.

Learning the terms for post-military health insurance costs

As you're learning new health care language, get familiar with the following terms, all of which describe costs you'll be responsible for.

• Premiums: This is the amount you'll pay for your insurance each month.
• Deductibles: This is the amount you pay before your insurance kicks in. After you pay your deductible, your insurance takes over. Let's say you have a $2,000 deductible and a procedure that costs $10,000. You would be on the hook for $2,000 and insurance would pay $8,000. After you meet your deductible, you usually only pay for things like coinsurance or copays.
• Copays and coinsurance: You pay these costs at the point of service, like a $20 copay for a doctor's visit.
• Out-of-pocket maximum: This is the most you'll pay in a single policy year, aside from your premiums and any uncovered expenses.

Retiring versus separating: Why it matters

If you're separating from the military, you won't be eligible for TRICARE. You'll be purchasing health care as a civilian. For more information on how to get started, read our article, 5 steps for shopping for health insurance that's right for you.

If you're retiring from the military, you'll be eligible for TRICARE. The advice is pretty simple in this case. If you have access to providers that accept TRICARE, enroll in TRICARE. Why? Expenses are low, premiums are low, and deductibles are low.

Any provider that accepts Medicare should also accept TRICARE. Contact any providers you plan to see and make sure they accept it. Rural areas may have a smaller number of doctors. You may have to travel some distance to get to a doctor that accepts TRICARE.

If you don't have TRICARE providers in your area and don't want to travel, you'll need to get health insurance through your employer, a private exchange like USAA or through the federal marketplace at www.healthcare.gov Opens in a New Window.‍ ‍ ^{See note 1}

You and your family have some temporary options when you transition off your military health insurance. TRICARE offers several temporary health plans, including:

• Continued Health Care Benefit Program Opens in a New Window.‍ ‍ ^{See note 1} CHCBP is a premium-based plan that provides coverage for 18 to 36 months when you lose eligibility for TRICARE.
• Extended Care Health Option Opens in a New Window.‍ ‍ ^{See note 1} ECHO helps qualified beneficiaries with special needs.
• Transitional Assistance Management Program Opens in a New Window.‍ ‍ ^{See note 1} TAMP provides transitional health care benefits after regular TRICARE benefits end.

For more information on each of these options, visit tricare.mil Opens in a New Window.‍ ‍ ^{See note 1}

Most importantly, start planning now for your post-military health insurance. Consider meeting with the trained professionals at your post or base who can help with the transition. They are valuable resources who can help you make the best decision for your needs.

Employer-provided health insurance

About half of Americans get their health insurance through their employer. When you're applying for jobs as a civilian, remember that all employer-provided health care plans aren't the same. During the interview process, be sure to ask about health care benefits. Keep that information in mind when you're making a final decision about where you want to work.

Let's say Employer A is offering a better salary than Employer B. Also, Employer B has a health insurance plan that covers more medical service costs with a lower deductible. When you consider all the financial factors, the best employer isn't so cut and dry.

Your employer-offered benefits could also include other plans, such as disability, dental and vision insurance. Consider your total benefits and what they mean to your take-home pay.

Ready to act?

Even if your military retirement or separation feels far off, it's not too early to research plans that are available through the health care marketplace Opens in a New Window.‍ ‍ ^{See note 1}

Or visit usaa.com/healthsolutions.