It has been over a year since the United States Department of Veterans Affairs (VA) was criticized for the long waiting times for veterans seeking care. Since that time, the controversy over the health care provided veterans has increased the interest in how VA benefits and Medicare work together for veterans age 65 and older. The fact is, they are separate programs and do not work together. This does not mean a veteran cannot enroll in both and receive benefits under both programs. It does mean that when they need health care they must decide to receive treatment under one program or the other.
Healthcare Provided to Veterans and their Families. There are several health care programs run by different agencies of the Federal government. In the recent controversy it has been the VA health care benefits that have come under criticism. The Veterans Health Administration (VHA) is a part of the United States Department of Veterans Affairs. The focus of this article is the program run by the VHA. As long as a veteran separated from the service under any condition other than dishonorable, he or she may be eligible for coverage. To be eligible, the veteran must meet certain minimum duty requirements. Some veterans may be eligible for enhanced benefits (such as former POWs, Purple Heart recipients, service connected disability of 10% or more, low income, etc.). Go to www.va.gov/HEALTHBENEFITS/apply/veterans.asp for additional information.
Other healthcare programs are available for active and retired military personnel and their dependents. This includes TRICARE which is not the focus of this article. TRICARE is run by the United States Department of Defense Military Health System which is distinct from the VHA.
The Choice: VA Benefits or Medicare. Nothing prohibits veterans who are eligible for both VA health benefits and Medicare to enroll in both. In fact, the VA recommends that all veterans who have VA health coverage also enroll in Medicare Part A (hospitalization) and Part B (doctor and durable medical equipment bills). This is because by being in both, the veteran’s coverage is much broader — the veteran will have the choice to elect coverage for care under either Medicare or his or her VA benefit. Note that VA health care is not considered a health insurance plan. That is why, for example, the loss of VA coverage does not make someone eligible for the Medicare Special Enrollment Period (SEP). The SEP is available only when an individual loses employer provided coverage and needs to enroll in Medicare. Eligibility for the SEP means that the penalty for late enrollment — meaning enrolling outside the Initial Enrollment Period at age 65 — will not apply. This may come as a surprise to a veteran who losses his or her VA coverage and enrolls in Medicare only to find out the late penalty applies.
If a veteran opts to receive care under Medicare, his VA benefits will not pay for the care. If a veteran opts to receive care under the VA benefit, her Medicare coverage will not pay for the care. Under some circumstances, the VA, while it cannot bill Medicare for the services it provides the veteran, it may bill the veteran’s Medicare Supplement program for services otherwise covered by Medicare (for more information, see http://www.va.gov/healthbenefits/cost/insurance.asp). On the other hand, Medicare will pay for any non-authorized services that are otherwise covered by Medicare. In order to pay for these benefits, the care must be delivered at a facility that accepts Medicare coverage.
By signing up for Medicare Part B when first eligible, the veteran will not be subject to the 10% late enrollment fee. The 10% late enrollment fee applies to each 12 month period the veteran delays enrollment. This applies whether or not, the veteran is eligible for VA benefits during the period of delay. The results are similar if the veteran decides to drop Medicare Part B for any reason.
The VA encourages veterans to enroll and remain in Medicare due to the delay in reinstatement should the veteran decide to reenroll and the application of the penalty:
“If you cancel your Medicare Part B Coverage, you need to know that you cannot be reinstated until January of the following year, AND you may be penalized for reinstatement. For these reasons, VA encourages you to keep your private health insurance.” (http://www.va.gov/healthbenefits/cost/insurance.asp)
Benefits vary depending on a number of factors. For example, coverage will vary based on whether or not the veteran has any service related injuries. Veterans with service related injuries will have priority over those veterans who do not. Those veterans with the highest priority will be less susceptible to Federal budget cuts. Those veterans having the lowest priority may lose coverage altogether due to budget cuts.
The VA provides warns veterans that:
“There is no guarantee that in subsequent years Congress will appropriate sufficient funds for VA to provide care for all enrollment Priority Groups. This could happen if you are enrolled in one of the lower Priority Groups. This would leave you with no health care coverage.” http://www.va.gov/healthbenefits/cost/insurance.asp)
Given the uncertainty of VA coverage, enrolling in Medicare can ensure health care coverage should VA benefits be cut or eliminated.
Medicare Part D covers prescription drug benefits. In many cases, VA prescription drug coverage is better and less expensive than Part D. Unlike the Part B late enrollment penalty, the Part D late enrollment penalty will not apply if you opt to be covered under the VA program and only later elect to take Part D. That is because the VA prescription drug program is considered creditable — equal to or better than Medicare Part D.
There are advantages to enrolling in both the VA prescription drug plan and Part D. You can use the VA’s mail order drug program; you can use your Part D card at retail pharmacy. If the VA does not cover some medications you require, Part D may. Prescriptions you receive from a non-VA doctor can be filled using your Part D plan.
Advisors owe it to their clients who are veterans of U.S. military service to help them review their available options for health care. Veterans should consider enrolling in Medicare even if they are eligible for VA benefits.
Jim is a CPA and is president of MedicareAware a company that works with clients on understanding, planning and enrolling in Medicare. He is the author of The CPA’s Guide to Financing Retirement Healthcare (3rd Edition 2015) published by the American Institute of Certified Public Accountants. He can be reached at email@example.com or 630-776-3767.