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Overall Description of Deadline: John Warner National Defense Authorization Act for Fiscal Year 2007 directed the Secretary of Defense to report to the House and Senate Armed Services committees on the treatment of cafeteria plans and non-TRICARE exclusive employer-provided incentives under the Department's implementation of section 707 of the Act regarding employer-sponsored group health care plans.

Statement of Need: Section 707 of the 2007 National Defense Authorization Act, directed the Department of Defense to establish section 1097c for addition to Chapter 55 of title 10, Untied States Code. Section 1097c will act to prohibit employers from offering incentives to TRICARE-eligible employees not to enroll, or to terminate enrollment, in an employer-offered Group Health Plan (GHP). Many employers, including state and local governments, have begun to offer their employees who are TRICARE eligible a TRICARE Supplement as an incentive not to enroll in the employer’s primary GHP. These actions shift thousands of dollars of annual health costs per employee to the Defense Department, draining resources from higher national security priorities. This is what 10 U.S.C. 1097c is designed to stop.

Summary of the Legal Basis: The National Defense Authorization Act (NDAA) for Fiscal Year 2007, directed the Secretary of Defense to report to the House and Senate Armed Services committees on the treatment of cafeteria plans and non-TRICARE exclusive employer-provided incentives under the Department’s implementation of section 707 of the Act regarding employer sponsored group health care plans. As enacted, section 707 added to title 10, United States Code, section 1097c, which extends to TRICARE the same prohibition on offering financial or other incentives not to enroll in a Group Health Plan (GHP) that currently applies to Medicare under section 1862(b)(3)(C) of the Social Security Act (42 U.S.C. 1395y(b)(3)(C)).

Alternatives: This rule complies with a Congressional mandate. No other alternatives were developed.

Anticipated Costs and Benefits: There are no additional or anticipated Government cost associated with prohibiting employers from offering incentives to TRICARE-eligible employees not to enroll in an employer-offered GHP. There are no additional or anticipated cost for current beneficiaries enrolled in TRICARE. Any additional cost associated with this rule will be borne entirely by the employers who are currently offering such incentives and placing their current health cost on the Defense Department.

Risks: There is no anticipated risk accompanying this action.