David E. Williams

Hiring Veterans, Active Duty Military: Health Insurance Considerations

There are many reasons for hiring veterans and active duty military personnel. Not least among these is that active duty and retired military service members are known to be highly skilled, disciplined and well educated. It also turns out that providing health benefits to members of the military and their families is cost-effective and relatively stress-free for human resource departments.

Hiring Active Duty Service Members

If your employee happens to be a member of the active duty military, health insurance benefits are easy. The U.S. Department of Defense provides health insurance in the form of TRICARE, the health insurer to the military. All active duty service members and their families must be covered by TRICARE; they can’t be covered by your group health plan. All TRICARE plans meet or exceed the minimum essential coverage requirements under the Affordable Care Act. Neither active duty service members nor their employers are responsible for any out-of-pocket expenses.

Some employers of active duty service members choose to pay the TRICARE premium. As employee benefits go, these are relatively inexpensive. Full-year family coverage for the most common active duty plan, TRICARE Prime, will cost $217.51 per month as of January 1, 2017. There is no “business rate” for TRICARE premiums.

Hiring Veterans

If you’re hiring veterans, the health benefit arrangement can be similar. Retired service members and their families are also eligible for TRICARE Prime, complete with the low monthly premium. However, most retired military choose to accept employer benefits as their primary insurance, with TRICARE as their supplementary insurance.

If your company offers a qualified Section 125 “cafeteria plan”, TRICARE supplemental insurance is a good fit. Hiring veterans will become even more advantageous for you and your military service member hire. In a cafeteria plan, your employee can opt to trade a portion of taxable income for a tax-free benefit. For example, if your veteran employee opts to divert $200 per month into a flexible spending account (FSA) for medical expenses, the IRS doesn’t consider the $200 as income, thus reducing the veteran’s income tax burden. Businesses enjoy savings on participating employees through reduced taxes from worker’s compensation programs and the Federal Insurance Contributions Act (FICA). The greater the number of employees who participate in a cafeteria plan, the larger the tax savings to the employer. For this reason, many employers chose to incentivize participation by, for example, contributing to each employee’s FSA.

Corporate TRICARE supplement plans are available for several categories of former military personnel, including military retirees, their spouses and unmarried, eligible dependent children. These plans are administered by a third-party company that will work with your human resources or benefits administrator to make the benefits process as easy as possible for your veteran employees.

There are several reasons why your veteran hire may want to consider a TRICARE supplement plan. The enrollment is guaranteed and is offered on a pre-tax basis, and TRICARE pays all employee costs, including co-payments and prescription fees.

The experience and training that the military provides translate well into the business world. For some companies, the appearance of an honorable discharge on a resume is enough evidence that the candidate deserves at least a second look. If more than this is needed to persuade you to hire a veteran, consider the advantages to your business afforded by your prospective hire’s health benefits.

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