TRICARE costs stay largely unchanged in 2027, though some premiums jump

For most service members and their families, military health insurance costs will hold steady in 2027, although some copays and annual out-of-pocket limits will edge higher.

The Defense Department announced next year’s TRICARE rates before the program’s open enrollment window, giving beneficiaries a chance to keep their current coverage or move to another plan that fits their needs better.

While the two main options, Prime and Select, are set for little change, some unsubsidized plans will see double-digit premium increases, raising concerns among military family advocates that the higher monthly bills could push people out of coverage or strain household budgets.

“Each TRICARE plan has distinct features that beneficiaries should consider,” Valerie Palmer, a TRICARE management and program analyst at the Defense Health Agency, said in a release. “Your preferred providers, expected health care costs and rules around referrals or pre-authorizations may all play a role in choosing a plan.”

TRICARE Prime

Backed by government subsidies, TRICARE is generally more affordable and less susceptible to sudden price swings than coverage offered by private employers, Affordable Care Act marketplaces or commercial insurers. The program covers about 9.4 million service members, retirees and their families worldwide.

Active-duty service members are automatically enrolled in TRICARE Prime, regardless of rank, and pay neither monthly premiums nor fees for the care they receive. Their dependents also do not pay an enrollment fee and, in most cases, do not owe a premium to keep their coverage.

Prime will continue to offer premium-free coverage in exchange for using a designated provider to coordinate care and issue specialist referrals. Family members of active-duty troops who joined before 2018, known as Group A, must pay the first $1,000 of medical expenses before coverage takes over. For those who joined in 2018 or later, or Group B, the cap is $1,372.

When patients follow the plan’s rules, such as using in-network providers and getting referrals when needed, there are no copays. Additional charges also apply when prescriptions are filled outside a military pharmacy.

TRICARE Select

TRICARE Select gives enrollees more freedom to see providers without referrals, but at a higher cost. Active-duty troops and their families do not pay to enroll, but they must meet an annual deductible of between $50 and $411, depending on rank and years of service, before the Defense Department begins paying for care.

Some of the newest military families will see deductible increases of less than 4%, depending on the sponsor’s grade, if they choose TRICARE Select. Deductibles will stay the same for dependents of troops who entered service before 2018.

Select members also have to pay copays until they reach their annual limit. As with Prime, that ceiling is $1,000 for Group A families and $1,372 for Group B families. Patients pay a flat copay for each visit to an in-network provider, or 20% of the total cost when using non-network providers. Those fees will rise slightly next year, by a few dollars per visit depending on the service.

Reasons for concern

Premiums for the Young Adult Prime plan are set to climb by more than 12% to nearly $900 a month, or about $10,700 a year, for dependents ages 21 to 26. Premiums for the Retired Reserve family plan will reach nearly $1,700 a month, or about $20,400 a year, which is almost 10% higher than before.

A DHA spokesperson said TYA Prime has a “relatively small” membership that uses care frequently, which drives premiums higher because they must cover the government’s cost for those services. As of September, nearly 1,300 young adults were enrolled in Prime, compared with more than 27,600 in Select.

Military family advocates have urged Congress to help subsidize TRICARE’s premium-based plans, saying the burden falls especially hard on people in their early 20s who are less likely to have the income or savings to absorb steep insurance costs.

Humana Military and TriWest Healthcare Alliance are in their third year of managing the systems that keep the insurance program running. The companies won two managed care support contracts worth a combined $136 billion in 2022, but the rollout got off to a troubled start, with complaints including lost referrals and unpaid medical bills.

Lawmakers have also recently raised questions about whether pharmacy benefit manager Express Scripts is steering more patients toward mail-order medications rather than in-person pickup to increase its own revenue. The Defense Department has said giving Express Scripts more flexibility over the pharmacy process has helped reduce costs.

The Defense Health Agency said pharmacy costs will remain unchanged next year under every plan.