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United States General Accounting Office: 
GAO: 

Report to Congressional Committees: 

September 2002: 

Defense Health Care: 

Most Reservists Have Civilian Health Coverage but More Assistance Is 
Needed When TRICARE Is Used: 

GAO-02-829: 

Contents: 

Letter: 

Results in Brief: 

Background: 

Percentage of Reservists with Coverage Is Similar to That Found in the 
General Population: 

Most Mobilized Reservists Maintain Civilian Coverage; Dropping It May 
Result in TRICARE Problems: 

Alternative Coverage Options Presented in 2002 NDAA Vary Widely in 
Cost: 

Conclusions: 

Recommendations for Executive Action: 

Agency Comments: 

Appendix I: Scope and Methodology: 

Appendix II: CBO’s Assumptions for Cost Estimates: 

Options for Continuous Coverage under TRICARE (Shown in Table 2): 

Options for Continuous Coverage under FEHBP (Shown in Table 3): 

Options during Mobilizations (Shown in Table 4): 

Option following Mobilizations (Shown in Table 4): 

Appendix III: Comments from the Department of Defense: 

Appendix IV: GAO Contacts and Staff Acknowledgments: 

Tables: 

Table 1: Health Care Benefits Available for Dependents of Mobilized 
Reservists by TRICARE Plan Option: 

Table 2: Costs to DOD of Providing Continuous Coverage under TRICARE: 

Table 3: Costs to DOD of Providing Continuous Coverage under FEHBP: 

Table 4: Costs to DOD of Providing Coverage during/following 
Mobilizations: 

Figure: 

Figure 1: Types of Health Care Coverage of Reservists Other than Active 
Duty Coverage: 

Abbreviations: 

CBO: Congressional Budget Office: 

DOD: Department of Defense: 

DEERS: Defense Enrollment Eligibility Reporting System: 

FEHBP: Federal Employees Health Benefits Program: 

MTF: military treatment facility: 

NDAA: National Defense Authorization Act: 

SSCRA: Soldiers’ and Sailors’ Civil Relief Act of 1940: 

TMA: TRICARE Management Activity: 

TPR: TRICARE Prime Remote: 

USERRA: Uniformed Services Employment and Reemployment Rights Act of 
1994: 

[End of section] 

United States General Accounting Office: 
Washington, DC 20548: 

September 6, 2002: 

Congressional Committees: 

To expand the capabilities of our nation’s active duty forces, the
Department of Defense (DOD) relies on the 1.2 million men and women of
the Reserve and National Guard. [Footnote 1] Currently, reserve 
components constitute nearly half our total armed forces. Reservists 
mobilized [Footnote 2] under federal authorities are covered by 
TRICARE, DOD's health care system. [Footnote 3] Also, their dependents, 
which include spouses, children, and others who qualify, are eligible 
for TRICARE benefits. While DOD requires reservists to use TRICARE for 
their own health care, using TRICARE is an option for their dependents. 
During mobilizations some reservists may choose to save the cost of 
premiums by dropping civilian insurance for their dependents and 
relying on TRICARE, which has no associated premium. However, doing so 
means that dependents must learn the benefits and requirements of a new 
health plan. It also means that they may be unable to use the same 
civilian providers if these providers do not participate in TRICARE 
networks or accept TRICARE patients. To minimize potential disruptions 
resulting from dropping and resuming civilian coverage, military 
advocates have recommended that DOD provide a health benefit to 
reservists and their dependents when reservists are not on active duty. 

The National Defense Authorization Act (2002 NDAA) for Fiscal Year 2002 
[Footnote 4] directed that we study the health care benefits of reserve 
component members and dependents and the effect mobilization may have 
on these benefits. We (1) identified the health care coverage 
reservists have when not on active duty, (2) determined the extent to 
which mobilizations cause disruptions in coverage for reservists and 
their dependents, and (3) assessed the costs of various options 
specified in the 2002 NDAA, including providing reservists and their 
dependents health care through TRICARE, the Federal Employees Health 
Benefits Program (FEHBP), or civilian coverage. 

To determine the coverage reservists have when not on active duty and 
the extent to which mobilizations cause disruptions in coverage, we 
obtained preliminary analyses of responses to health care related 
questions from DOD’s 2000 Survey of Reserve Component Personnel. 
[Footnote 5] We also used a questionnaire to obtain information from 
360 mobilized reservists on the type of civilian health care coverage 
they and their dependents had and the extent to which mobilizations 
caused disruptions in coverage. Included in these contacts were 286 
reservists from three judgmentally selected reserve component units of 
at least 50 reservists—representing the Army, Navy, and Air Force—that, 
at the time of our audit, were currently mobilized or had recently 
completed a mobilization. [Footnote 6] We also contacted by telephone 
74 reservists (or knowledgeable dependents) from a randomly selected 
sample of 100 reservists, from about 100,000 who had been mobilized 
since July 2000. We interviewed officials and representatives from the 
Office of the Assistant Secretary of Defense for Reserve Affairs, the 
Office of the Assistant Secretary of Defense for Health Affairs, the 
TRICARE Management Activity (TMA), reservist advocacy groups, and 
others. We also reviewed our prior work on reservists and military 
health care. For costs of the different 2002 NDAA options for providing 
coverage to reservists and their dependents, we relied on estimates 
made by the Congressional Budget Office (CBO). [Footnote 7] (For more 
on our scope and methodology, see app. I.) We conducted our work from
November 2001 through July 2002 in accordance with generally accepted
government auditing standards. 

Results in Brief: 

Nearly 80 percent of reservists had health care coverage when they were
not on active duty, according to DOD’s survey. This rate is similar to 
that of comparable groups within the overall U.S. population. Reservists
obtained coverage through a variety of sources, and some reservists had
more than one source of coverage. The most frequently cited sources of
coverage were civilian employer health plans (75 percent of reservists)
and spouses’ employer health plans (28 percent of reservists). 
Reservists with dependents were more likely to have health care 
coverage than those without dependents. 

Few dependents of mobilized reservists experienced disruptions in their
health coverage—primarily because most maintained civilian health
coverage while reservists were mobilized, according to DOD’s survey. Of
reservists with civilian coverage, about 90 percent maintained it.
Reservists we interviewed often told us that they maintained this 
coverage to better ensure continuity of health benefits and care for 
their dependents. While most of the reservists we interviewed continued 
to receive assistance from their employers for their premiums, out-of-
pocket costs for a few were increased because they not only continued 
to pay their employee contribution but also paid the employer 
contribution. Reservists who dropped civilian insurance and whose 
dependents used TRICARE reported difficulties moving into the 
system—finding a TRICARE provider, establishing eligibility, 
understanding TRICARE benefits, and obtaining assistance when questions 
or problems arose. While full-time active duty beneficiaries have 
reported similar difficulties, problems can be magnified for 
reservists’ families. For example, 70 percent of reservists live and 
work in areas distant from military treatment facilities (MTF). Like 
the 5 percent of active duty families in these locations, mobilized 
reservists’ families cannot take advantage of the assistance and array 
of services found near MTFs. However, we found that when education and 
administrative assistance were targeted to mobilized reservists and 
their dependents, reported problems with TRICARE were reduced, even in 
situations where dependents did not live near MTFs. 

The 5-year cost (2003 through 2007) of the coverage options delineated 
in the 2002 NDAA range from about $89 million, for expanding the 
transition benefit following mobilizations, to about $19.7 billion, for 
continuous coverage under FEBHP with no premium, as estimated by CBO. 
Providing continuous TRICARE coverage for reservists and their 
dependents during the entire enlistment period—regardless of 
reservists’ mobilization status—with benefits similar to those for 
active duty personnel is estimated to cost DOD about $10.4 billion. 
Providing insurance through FEHBP would be more expensive to DOD 
because the premium would be based on the existing FEHBP pool—an older 
population using more health care services than would be expected to be 
used by reservists and their dependents. While CBO estimates the cost 
of providing health care for reservists and their dependents under 
FEHBP to be about $10.9 billion, similar to the cost of providing the 
TRICARE benefit, it estimates DOD’s health insurance premium costs for 
FEHBP to be about $19.7 billion. Costs could be reduced if reservists 
paid a portion of the premium. Providing alternative coverage only 
during periods of mobilization would be less costly. For example, CBO 
estimates that paying reservists’ entire civilian health insurance 
premiums while they were mobilized would cost about $1.8 billion. 

Because problems could be reduced through improved education about
TRICARE’s benefits and better assistance while navigating the TRICARE
system, we are recommending that DOD ensure that reservists receive
information throughout their careers about TRICARE benefits and that
during mobilizations DOD provide TRICARE administrative and customer
service assistance targeted to the needs of reservists and their 
dependents. In commenting on a draft of this report, DOD concurred with 
our recommendations. 

Background: 

Reserve components participate in military conflicts and peacekeeping
missions in areas such as Bosnia, Kosovo, and southwest Asia, and assist
in homeland security. From fiscal year 1996 through fiscal year 2001, an
average of about 11,000, or 1 percent, of the roughly 900,000 reservists
were mobilized each year. [Footnote 8] The length of mobilizations can 
be as long as 2 years [Footnote 9] with the mean length of 
mobilizations for the 6-year period we reviewed being 117 days. 
[Footnote 10] As of April 2002, about 80,000, or 8 percent, of 
reservists had been mobilized for 1 year for operations related to
September 11, 2001. [Footnote 11] At the same time, additional reserve 
personnel continued to be deployed throughout the world on various 
peacekeeping and humanitarian missions. 

The rights of mobilized personnel of the reserve components are 
protected under the Soldiers’ and Sailors’ Civil Relief Act of 1940 
(SSCRA), [Footnote 12] as amended, and by the Uniformed Services 
Employment and Reemployment Rights Act of 1994 (USERRA), [Footnote 13] 
as amended. Included in these acts are protections related to health 
care coverage. For example, SSCRA provides protections for reservists 
who have individual health coverage. Specifically, for individually 
covered reservists returning from active duty, SSCRA requires private 
insurance companies to reinstate coverage at the premium rate they 
would have been paying had they never left. [Footnote 14] Under SSCRA, 
the insurance company cannot refuse to cover most preexisting 
conditions. [Footnote 15] During military service, USERRA protects 
reservists’ employer-provided health benefits. Specifically, for 
absences of 30 days or less (training periods typically last 2 weeks or 
less), health benefits continue as if the employee had not been absent. 
For absences of 31 days or more, coverage stops unless (1) the employee 
elects to pay for the coverage, including the employer contributions, 
[Footnote 16] or (2) the employer voluntarily agrees to continue 
coverage. [Footnote 17] Under USERRA, employers must reinstate 
reservists’ health coverage the day they apply to be reinstated in
their civilian positions—even if the employers cannot put the employees
back to work immediately. 

Reservists mobilized under federal authorities are covered by TRICARE,
DOD's health care system. If they are ordered to active duty for 31 
days or more, reservists are enrolled in Prime, TRICARE’s managed care 
option, and—like other active duty personnel—are required to receive 
care through TRICARE, either through 1 of 580 MTFs worldwide, or through
TRICARE’s network of civilian providers. [Footnote 18] When reservists’ 
mobilization orders are for 31 to 178 days, their dependents are 
eligible for the Standard and Extra options—TRICARE’s fee-for-service 
and preferred provider options, respectively. Once eligible for 
TRICARE, reservists and their dependents also become eligible for 
prescription drug benefits. [Footnote 19] When reservists’ orders are 
for 179 days or more, dependents are eligible for health care under 
Prime. Under TRICARE, active duty personnel, including mobilized 
reservists, do not pay premiums for their health care coverage; 
however, depending on the option chosen, they may be responsible for 
copayments, deductibles, and enrollment requirements for their 
dependents. (For an overview of these benefits, see table 1.) 

Table 1: Health Care Benefits Available for Dependents of Mobilized 
Reservists by TRICARE Plan Option: 

Eligibility requirements: 
Standard (fee-for-service): Reservist must be mobilized 31 days or 
more; 
Extra (preferred provider): Reservist must be mobilized 31 days or 
more; 
Prime (managed care): Reservist must be mobilized for 179 days or more; 
dependents must enroll to be eligible for Prime. 

Yearly deductible: 
Standard (fee-for-service): $50-$300; 
Extra (preferred provider): $50-$300; 
Prime (managed care): None. 

Copayment: 
Standard (fee-for-service): 20%; 
Extra (preferred provider): 15%; 
Prime (managed care): None. 

Providers: 
Standard (fee-for-service): Non-network providers who will accept 
TRICARE rates; 
Extra (preferred provider): Network providers; 
Prime (managed care): Network providers. 

Source: TRICARE Management Activity as of June 2002. 

[End of table] 

Mobilized reservists are eligible for dental care through the military 
health care system. However, like active duty dependents, mobilized 
reservists’ dependents are only eligible for dental care if they 
participate in DOD’s voluntary dental insurance program, which requires 
enrollment and has monthly premiums. 

Because mobilized reservists’ dependents could be liable for two health 
coverage deductibles in 1 year—their civilian insurers’ deductible 
prior to mobilization and the TRICARE Standard or Extra deductible once
mobilized—DOD has used authorities included in the National Defense
Authorization Acts for 2000 and 2001 to provide financial assistance
through several demonstration programs. [Footnote 20] For example, the 
Reserves Component Family Member Demonstration Project—available for 
those currently mobilized under DOD’s Operation Noble Eagle and 
Operation Enduring Freedom—eliminates the TRICARE deductible and the
requirement that dependents obtain statements that inpatient care is not
available in an MTF before obtaining nonemergency treatment from a
civilian hospital. In addition, DOD may pay non-network physicians up to
15 percent more than the TRICARE rate for treating dependents of 
mobilized reservists—a cost that otherwise would be borne by dependents
if physicians required this additional payment. [Footnote 21] 

Until recently, DOD had administered a transitional benefit program that
provided demobilized reservists and their dependents 30 days of 
additional TRICARE coverage as they returned to their civilian health 
care. The 2002 NDAA extended the transitional period during which 
reservists may receive TRICARE coverage from 30 days to 60--120 days, 
depending on the length of active duty service. This change more 
closely reflects the 90 days that USERRA provides reservists to apply 
for civilian reemployment when they are mobilized for more than 181 
days, and the change will provide health care coverage if they elect to 
delay return to their employment subsequent to demobilization. However, 
the 2002 NDAA did not provide any transitional benefit for dependents. 
[Footnote 22] 

Percentage of Reservists with Coverage Is Similar to That Found in the
General Population: 

Overall, the percentage of reservists with health care coverage when 
they are not mobilized is similar to that found in the general 
population—and, like the general population, most reservists have 
coverage through their employers. According to DOD’s 2000 Survey of 
Reserve Component Personnel, nearly 80 percent of reservists reported 
having health care coverage. In the general population, 81 percent of 
18 to 65 year olds have health care coverage. Officers and senior 
enlisted personnel were more likely than junior enlisted personnel to 
have coverage. [Footnote 23] Only 60 percent of junior enlisted 
personnel, about 90 percent of whom are under age 35, had 
coverage—lower than the similarly aged group in the general population. 
[Footnote 24] Of reservists with dependents, about 86 percent reported 
having coverage. Of reservists without dependents, about 63 percent 
reported having coverage. 

More than three-quarters of reservists were provided health care 
coverage by their civilian employers’ health plans or their spouses’ 
health plans. (See fig. 1.) Some reservists were covered by more than 
one health plan. 

Figure 1: Types of Health Care Coverage of Reservists Other than Active 
Duty Coverage: 

[See PDF for image] 

This figure is a vertical bar graph depicting the following data: 

Coverage type: Civilian employer; 
Percentage of reservists: 75%. 

Coverage type: Spouse's health plan; 
Percentage of reservists: 28%. 

Coverage type: VA; 
Percentage of reservists: 17%. 

Coverage type: Other[A]; 
Percentage of reservists: 17%. 

Coverage type: Spouse/family member active duty/retired; 
Percentage of reservists: 6%. 

Coverage type: School; 
Percentage of reservists: 3%. 

Note: Percentages total more than 100 because survey respondents were 
allowed to choose as many options of coverage as applied. 

[A] The survey did not define the “other” category. 

Source: DOD’s 2000 Survey of Reserve Component Personnel. 

[End of figure] 

Most Mobilized Reservists Maintain Civilian Coverage; Dropping It May 
Result in TRICARE Problems: 

Most reservists maintained their civilian coverage when mobilized.
Reservists generally maintained this coverage to better ensure 
continuity of health benefits and care for their dependents, sometimes 
at an additional cost. However, some reservists who dropped their 
civilian insurance to use TRICARE reported that their dependents had 
problems finding providers, establishing eligibility, understanding 
TRICARE’s benefits, and obtaining assistance when questions or problems 
arose. We found that such problems could be ameliorated through 
additional education and assistance targeted to reservists and their 
dependents. 

Few Mobilized Reservists’ Dependents Experience Disruptions Because Most
Reservists Maintain Civilian Coverage, Some at Additional Cost: 

Because most reservists maintained their civilian coverage when 
mobilized, few dependents experienced disruptions in coverage. 
According to DOD’s 2000 survey, about 87 percent of reservists who had
been mobilized at least once reported having civilian insurance at the 
time they were mobilized. The remaining 13 percent did not have civilian
coverage. Of those who had civilian coverage, about 90 percent
maintained it while mobilized. 

According to DOD officials and reservists we interviewed, many 
reservists maintained their civilian coverage to avoid disruptions 
associated with a change to TRICARE and to ensure that their dependents 
could continue seeing their current providers—who may not accept TRICARE
reimbursements, either as network providers or under the Standard
option. Preserving provider relationships was especially important to
reservists whose dependents with special needs had specialists familiar
with their care or to dependents who had long-standing relationships 
with civilian providers. 

Reservists we contacted reported varying financial arrangements for
covering the costs of their civilian premiums while they were 
mobilized. [Footnote 25] USERRA does not require employers to continue 
paying their share of health insurance premiums when mobilizations 
extend beyond 30 days. However, employers continued to pay at least 
their portion of health insurance premiums beyond this 30-day period 
for about 80 percent of the reservists we contacted who maintained 
their employer-sponsored coverage. Sometimes, these employers paid all 
costs, both their own and the employee portion, while in other 
instances reservists continued to pay the employee portion of the 
premium. The remaining reservists paid the total insurance premium 
while mobilized. In the general population in 2001, the average 
employer-sponsored premium for a family plan was $588 per month with 
the employee generally paying about 26 percent of this premium. 
[Footnote 26] 

Mobilized Reservists Who Dropped Their Civilian Insurance Sometimes
Experienced Problems with TRICARE: 

Mobilized reservists who used TRICARE reported a variety of problems
that they and their dependents experienced when they tried to access the
system. [Footnote 27] However, when DOD provided information and 
assistance targeted toward the situations reservists and their 
dependents face, these types of problems were more likely to be 
averted. 

Reservists Reported Problems Moving into System: 

The most common problems that reservists reported were difficulties they
and their dependents had moving into the system—finding TRICARE
providers, establishing eligibility, understanding TRICARE’s benefits, 
and obtaining assistance when questions or problems arose. While similar
problems have been reported by other active duty personnel, reservists
and their dependents are more likely to experience such problems
because they often live in areas distant from MTFs, and their active 
duty service is brief and episodic. 

Of the 360 reservists with recent mobilization experience that we
contacted, about 38 percent reported some kind of problem with
TRICARE. One problem, constituting about a quarter of the reported
problems, was finding a TRICARE provider. Mobilized reservists and their
dependents can have more difficulty finding TRICARE providers because
many do not live in areas where the network is robust. Compared to 5
percent of active duty personnel, about 70 percent of reservists live 
and work more than 50 miles (or an hour’s drive) from an MTF—areas DOD
has designated as remote. Because DOD’s civilian contractors are
generally not required to establish TRICARE civilian networks in these
areas, a network of providers may not exist. Where networks do exist,
provider choice may be limited. [Footnote 28] TRICARE Prime Remote 
(TPR) and TPR for Active Duty Family Members were established to help 
improve access to care in remote areas for active duty and mobilized 
reservists and their dependents. However, dependent eligibility is 
statutorily based on residing with a service member who both lives and 
works in a remote area. [Footnote 29] As a result, because mobilized 
reservists are most often assigned to work in a location near an MTF or 
deployed overseas, few dependents of reservists who are mobilized for 
179 days or more are eligible for these programs. 

About 17 percent of reported problems involved documenting and
establishing eligibility. For example, reservists had problems with DOD
not providing identification cards acknowledging that they and their
dependents were TRICARE beneficiaries. They also had difficulties with
the accuracy of information in the Defense Enrollment Eligibility
Reporting System (DEERS), [Footnote 30] DOD’s database that maintains 
benefit eligibility status. In order to ensure TRICARE eligibility, any 
status changes must be reported to DEERS, and according to a DOD 
civilian contractor, the services do not always send these changes to 
DEERS promptly. 

Reservists reported a variety of situations in which DEERS inaccuracies
created problems. DEERS did not reflect that some reservists were on
active duty; therefore, they and their dependents appeared to be 
ineligible for services and were denied care or medications. Further, 
in instances in which DEERS failed to reflect Prime enrollment for a 
dependent, claims were paid under Extra, resulting in charges for 
copayments that should not have been required. Also, mobilized 
reservists married to active duty personnel reported problems ensuring 
that DEERS accurately reflected their mobilized status so that they 
were eligible for active duty, rather than dependent, benefits and 
access privileges. Active duty families also have problems with DEERS, 
but, according to a TRICARE adviser at one site we visited, DEERS 
problems are accentuated for reservists because they move in and out of 
the system. However, determining the extent of such DEERS problems was 
beyond the scope of our work. 

Finally, about 40 percent of the problems reservists reported related to
understanding TRICARE’s benefits and obtaining assistance when
questions or problems arose. According to DOD officials, mobilized
reservists have greater difficulty understanding and navigating TRICARE
than other active duty personnel. First, reservists have less incentive 
to become familiar with TRICARE because mobilizations are for a limited
period [Footnote 31] and because TRICARE only becomes important to them 
and their dependents if they are mobilized. [Footnote 32] Further, when 
first mobilized, reservists must accomplish many tasks in a compressed 
period. For example, they must prepare for an extended absence from 
home, make arrangements to be away from their civilian employment, 
obtain military physical examinations, and ensure that their families 
are registered in DEERS. DOD officials told us that learning about 
TRICARE may be a low priority for reservists when they are mobilizing. 

Targeted Education and Assistance Have Helped Minimize Some Reservists’ 
and Dependents’ TRICARE Problems: 

According to interviews with reservists and support personnel at sites 
we visited, problems with TRICARE could be reduced if education and
administrative assistance were available and information was targeted to
the needs of reservists. In addition, when beneficiaries, especially
reservists’ dependents, were provided assistance with using the TRICARE
system—identifying contact points and understanding TRICARE benefits
and how to use them—they generally were able to obtain appropriate,
timely health care through TRICARE. 

At one site we visited, assistance had been lacking or inadequate, and
reservists were experiencing numerous difficulties with TRICARE. Here,
1,100 personnel, who were mobilized beginning in late September 2001
under Operation Noble Eagle and Operation Enduring Freedom, initially
had no on-base MTF or TRICARE assistance. As a result, when questions
arose, these mobilized reservists and their dependents sometimes
obtained and passed along inaccurate information. In other instances 
they contacted TRICARE’s civilian contractor directly, sometimes 
waiting for over an hour on hold trying to obtain information. In 
November 2001, two administrative personnel were assigned, including a 
health benefits expert, and at the time of our visit in February 2002, 
progress was being made to resolve reservists’ and their dependents’ 
health care questions. However, because this assistance was initially 
delayed, two staff members were insufficient to address the volume of 
misinformation and problems that existed on site. Beneficiaries told us 
they were still confused about TRICARE regulations at the time we 
visited. Some mobilized reservists still did not understand that they 
had to select a TRICARE primary care manager and were continuing to use 
their non-network providers, even though regulations require active 
duty personnel to participate in Prime. Likewise, their dependents were 
continuing to have problems, such as determining whether they could 
continue to see their civilian providers under TRICARE. 

At another site we visited, which had an MTF and better on-base
assistance, we observed that reservists and their dependents generally
were not experiencing problems with TRICARE. In this location DOD had
a mobilization team on site to help explain the benefits and had a 
staff on base to offer assistance when needed. To help ensure that 
reservists and dependents understood the various TRICARE options, the 
mobilization team presented general information on TRICARE and tailored 
benefits discussions to beneficiaries’ specific circumstances. For 
example, the mobilization team tailored TRICARE information depending 
on whether reservists’ dependents lived in areas with established 
networks or in areas where TRICARE networks were minimal or 
nonexistent. For the latter, the mobilization team discussed how 
TRICARE’s Standard option could permit dependents to continue 
relationships with civilian physicians by paying copayments similar to 
those required by many civilian insurers. The mobilization team members 
also referred reservists to TRICARE offices, Internet Web links, and 
toll-free information lines, and provided backup telephone numbers, 
including their own, to handle additional questions. 

Alternative Coverage Options Presented in 2002 NDAA Vary Widely in 
Cost: 

The 2002 NDAA directed us to evaluate several health coverage options
through TRICARE, FEHBP, or civilian insurance as possible mechanisms
for ensuring continuity in benefits for reservists and their dependents.
Some of the options would provide coverage on a continuous basis during
the entire enlistment period, regardless of reservists’ mobilization 
status, while others would provide additional or alternative coverage 
only during or following periods of mobilization. Cost estimates for 
these options, which were provided by CBO, [Footnote 33] range from a 
low of about $89 million to a high of about $19.7 billion over a 5-year 
period. (See app. II for estimate assumptions.) 

For 2003 through 2007, the estimated cost to DOD for providing 
reservists and their dependents continuous health care coverage, 
regardless of reservists’ mobilization status, would range from about 
$4 billion to $19.7 billion for the 5-year period, depending on how the 
benefit was provided. CBO estimates that providing the benefit through 
TRICARE with no premium for reservists would cost DOD about $10.4 
billion. (See table 2.) DOD’s cost would be reduced to about $7 billion 
if reservists paid a premium similar to that paid by active duty 
retirees under age 65 [Footnote 34] or to about $4 billion if 
reservists paid a premium share similar to that paid by federal 
employees for FEHBP. [Footnote 35] 

Table 2: Costs to DOD of Providing Continuous Coverage under TRICARE: 

Benefit option: TRICARE (no premium); 
Option description: No premium for reservists; 
Cost for 2006[A] (in billions): $2.8; 
Total cost for 2003-2007 (in billions): $10.4. 

Benefit option: TRICARE with cost-share similar to under age 65 active 
duty retirees; 
Option description: All reservists pay an annual premium of $230 for
individual coverage or $460 for family coverage; 
Cost for 2006[A] (in billions): $1.9; 
Total cost for 2003-2007 (in billions): $7.0. 

Benefit option: TRICARE with premium similar to that of FEHBP[B]; 
Option description: Reservists (or their employers) would pay an annual 
premium for TRICARE; 
Cost for 2006[A] (in billions): $1.1; 
Total cost for 2003-2007 (in billions): $4.0. 

Note: The difference in the cost to DOD among the three types of 
options is affected by both the percentage that reservists share in the 
premium and the number of reservists expected to participate at that 
level of premium sharing. See app. II for a discussion of these 
assumptions. 

[A] Based on costs for 2006 assuming all eligible beneficiaries who are 
going to enroll in the program will actually be using the program. 

[B] Federal employees are responsible for about 28 percent of health 
insurance premium costs. 

Sources: GAO analysis; cost estimates from CBO. 

[End of table] 

Providing insurance through FEHBP would be more expensive to DOD
because CBO estimated the premium would be based on the existing
FEHBP pool—an older population using more health care services. (See
table 3.) While CBO estimates that the actual cost of providing health 
care for reservists and their dependents under FEHBP would be about 
$10.9 billion, [Footnote 36] similar to the cost of providing the 
TRICARE benefit, it estimates the DOD health insurance premium costs 
for FEHBP to be about $19.7 billion. [Footnote 37] If reservists paid 
the typical FEHBP employee portion of the premium, CBO estimates that 
DOD premium costs would be reduced to about $10.2 billion. [Footnote 
38] 

Table 3: Costs to DOD of Providing Continuous Coverage under FEHBP: 

Benefit option: FEHBP (no premium); 
Option description: Cost to DOD for insurance (no premium for 
reservists); 
Cost for 2006[A] (in billions): $5.3; 
Total cost for 2003-2007 (in billions): $19.7. 

Benefit option: FEHBP (regular premium)[B]; 
Option description: Similar to current federal employees, reservists 
would share in the costs of FEHBP for coverage; 
Cost for 2006[A] (in billions): $2.8; 
Total cost for 2003-2007 (in billions): $10.2. 

Note: The difference in the cost to DOD between the no premium and 
regular premium options is affected by both the percentage that 
reservists share in the premium and the number of reservists expected 
to participate at that level of premium sharing. See app. II for a 
discussion of these assumptions. 

[A] Based on costs for 2006 assuming all eligible beneficiaries who are 
going to enroll in the program will actually be using the program. 

[B] Federal employees are responsible for about 28 percent of health 
insurance premium costs. 

Sources: GAO analysis; cost estimates from CBO. 

[End of table] 

The cost for options providing health care coverage only during
mobilizations or for expanding the benefit after mobilizations would be
from $89 million to $1.8 billion over the 5-year period, according to 
CBO estimates. (See table 4.) For example, in lieu of a TRICARE 
benefit, DOD might assume the costs of reservists’ civilian coverage 
during mobilization. The value of this benefit would vary from 
reservist to reservist depending on (1) the cost of the reservist’s 
portion of the premium, (2) the extent of employer coverage, and (3) 
whether the employer continued to pay the premium during the 
reservist’s mobilization. CBO estimates that if each year 80,000 
reservists, the approximate number mobilized in April 2002, were 
mobilized for a 1-year period, the cost to fully pay for civilian health
coverage for the 5-year period would be about $1.8 billion. [Footnote 
39] The cost of DOD allowing dependents with civilian insurance the 
choice of TRICARE or a monetary voucher equivalent to the estimated 
value of the TRICARE benefit would be about $1.1 billion over 5 years, 
according to CBO’s estimate. Although the amount of this voucher would 
be based on the average cost of the TRICARE benefit for which the 
dependent is eligible, this option would increase DOD’s costs because 
historically many dependents of mobilized reservists have relied on 
their civilian coverage and have not used their TRICARE benefit. 
Revising the transitional period that DOD has provided so that 
demobilized reservists retain their TRICARE benefits for an additional 
30 days and their dependents retain benefits for a 90-day period would 
cost $89 million for the 5-year period, according to CBO’s estimate. 

Table 4: Costs to DOD of Providing Coverage during/following 
Mobilizations: 

Benefit option: During periods of mobilization only: Pay civilian 
insurance; 
Option description: Federal government pays the reservist’s entire 
civilian insurance premium, including employer and reservist 
contributions; 
Cost for 2006[A]: $394 million; 
Total cost for 2003-2007: $1.8 billion. 

Benefit option: During periods of mobilization only: Provide voucher for
civilian insurance; 
Option description: Federal government provides reservists with 
vouchers to assist in paying their civilian insurance in an amount 
equal to the estimated cost of the TRICARE benefit coverage (for fiscal 
year 2003, $126 individual and $431 family per month); 
Cost for 2006[A]: $250 million; 
Total cost for 2003-2007: $1.1 billion. 

Benefit option: Following mobilizations: Extend/offer transition 
period; 
Option description: Extend transition benefits for reservists by 30 
days and provide dependents a 90-day benefit; 
Cost for 2006[A]: $19 million; 
Total cost for 2003-2007: $89 million. 

[A] Based on costs for 2006 assuming all eligible beneficiaries who are 
going to enroll in the program will actually be using the program. 

Sources: GAO analysis; cost estimates from CBO. 

[End of table] 

Conclusions: 

Because most reservists have civilian insurance and maintain it while
mobilized, few of their dependents experience problems with disruptions
to their health care, such as being forced to change providers, learn 
new health care plan requirements, and adjust to different benefit 
packages. However, when using TRICARE some dependents of mobilized 
reservists have experienced certain problems—in part, because they do 
not adequately understand how the plan works. 

Problems that reservists and their dependents face with health coverage
during mobilizations could be mitigated if DOD improved the information
and assistance provided them. Reservists are confronted with choices and
circumstances that are more complex than those faced by active duty
personnel. Their decisions about health care are affected by a variety 
of factors—length of orders, where they and their dependents live, 
whether they or their spouses have civilian health coverage, and the 
amount of support civilian employers would be willing to provide with 
health care premiums. In addition, reservists must determine whether 
their existing civilian providers would be willing to accept TRICARE 
while they are mobilized since their desire not to disrupt these 
relationships during a temporary mobilization may outweigh other 
considerations. 

Recommendations for Executive Action: 

We recommend that the Secretary of Defense direct the Assistant
Secretary of Defense for Health Affairs to: 

* ensure that reservists, as part of their ongoing readiness training, 
receive information and training on health care coverage available to 
them and their dependents when mobilized and; 

* provide TRICARE assistance during mobilizations targeted to the needs 
of reservists and their dependents. 

Agency Comments: 

DOD reviewed and commented on a draft of this report. It concurred with
the report’s recommendation and generally agreed with its findings. DOD
stated that it recognized the importance of a well-informed TRICARE
beneficiary population and to that end has already taken a number of 
steps to ensure that reservists understand their health care benefits. 
For example, the TRICARE Management Activity website and the Reserve
Affairs portion of the Department of Defense website provide information
about the health benefits available for reservists. Further, DOD stated 
it will continue to emphasize the importance of health care education 
and, as problem areas are identified, will immediately take steps to 
correct them. DOD’s comments are reprinted in appendix III. 

DOD provided additional comments from the Department of the Army and
technical comments from the TRICARE Management Activity and from the
Office of the Assistant Secretary of Defense for Reserve Affairs. The 
Army took exception to some of the information presented in the report 
that was obtained from DOD’s 2000 Survey of Reserve Component Personnel.
The Army stated that the number of reservists who continued to retain
their civilian health care coverage “seems exceptionally high” although
they could provide no basis to support this claim. Nevertheless, 
because of their concern, we subsequently contacted DOD officials at 
the Defense Manpower Data Center, who were responsible for the survey, 
to reconfirm the information they provided. After we explained the 
Army’s position to them, they reaffirmed that the data from the survey 
instrument were correct. They stated that for the period covered by 
this survey prior to the 2001 partial mobilization there was no reason 
to question the accuracy of the estimate. The Army also asked for other 
analyses, such as a cost-benefit analysis of various TRICARE 
demonstration programs that were beyond the scope of our work. 
Technical corrections and clarifications have been incorporated into 
the text as appropriate. 

We are sending copies of this report to the Secretary of Defense,
appropriate congressional committees, and other interested parties.
Copies will also be made available to others on request. In addition, 
the report is available at no charge on the GAO Web site at [hyperlink, 
http://www.gao.gov]. If you or your staffs have any questions about this
report, please contact me at (202) 512-7101. Other contacts and major
contributors are listed in appendix IV. 

Signed by: 

Marjorie E. Kanof: 
Director, Health Care—Clinical and Military Health Care Issues: 

Congressional Committees: 

The Honorable Carl Levin: 
Chairman: 
The Honorable John Warner: 
Ranking Minority Member: 
Committee on Armed Services: 
United States Senate: 

The Honorable Daniel K. Inouye: 
Chairman: 
The Honorable Ted Stevens: 
Ranking Minority Member: 
Subcommittee on Defense: 
Committee on Appropriations: 
United States Senate: 

The Honorable Bob Stump: 
Chairman: 
The Honorable Ike Skelton: 
Ranking Minority Member: 
Committee on Armed Services: 
House of Representatives: 

The Honorable Jerry Lewis: 
Chairman: 
The Honorable John P. Murtha: 
Ranking Minority Member: 
Subcommittee on Defense: 
Committee on Appropriations: 
House of Representatives: 

[End of section] 

Appendix I: Scope and Methodology: 

To determine whether reservists had health coverage when not on active
duty and the source of any civilian coverage, we obtained analyses from
the Department of Defense’s (DOD) 2000 Survey of Reserve Component
Personnel. [Footnote 40] Although all survey questions had not been 
analyzed, we obtained information from DOD on selected questions for 
which survey processing had been completed. Because DOD had not yet 
completed processing for all questions, we were unable to obtain a more 
thorough DOD analysis or to obtain data for our own analyses. Using the 
analyses DOD provided, we were able to do limited checks for 
consistency of results, but, for the most part, we were not able to 
verify the accuracy of DOD’s data. 

To learn about the type of civilian health care coverage reservists and 
their dependents have and the extent to which mobilizations caused 
disruptions in coverage, we obtained information from 286 mobilized, or 
recently mobilized, reservists from three judgmentally selected reserve 
units—representing the Army, Navy, and Air Force. We selected these 
units with the help of DOD personnel using two criteria: (1) the unit 
consisted of at least 50 reservists and (2) at the time of our audit 
work, the unit was mobilized or had recently completed a mobilization 
and was drilling. We visited these sites and administered a 
questionnaire to identify the types and volume of problems that 
reservists and their dependents were experiencing with health care 
coverage. Sometimes we used the questionnaire as a structured interview 
guide and administered it to individuals; more frequently, reservists 
completed the questionnaires in a group and spoke with us individually 
afterwards if they had issues they wanted to discuss. During these 
visits, we also interviewed unit commanders, personnel responsible for 
mobilization activities, TRICARE personnel, and medical staff, when 
available. 

We also used our questionnaire as a guide in conducting a telephone
survey of an additional 74 reservists or their family members. 
[Footnote 2] We obtained a randomized list of reservists who had been 
mobilized during the period July 2000 through December 2001, along with 
the sampled reservists’ home addresses and telephone numbers, from 
DOD’s Defense Manpower Data Center. We first excluded from the sample 
those reservists whose records lacked both addresses and telephone 
numbers; then proceeded in order from the first name on the list, 
either calling the telephone number provided or attempting to locate a 
telephone number using the name and address. When we were not able to 
obtain a telephone number or when the telephone number given to us had 
been disconnected or was determined to be inaccurate, we also excluded 
that reservist. Of 100 reservists whom we were able to contact or leave 
messages for, we ultimately completed an interview with 74 reservists 
or family members. The remaining 26 reservists either did not return 
our calls or refused to participate in our survey. 

Finally, we interviewed officials in the offices of the Assistant 
Secretary of Defense for Reserve Affairs and the Assistant Secretary of 
Defense for Health Affairs; the TRICARE Management Activity; the 
National Guard Bureau; the Department of Labor; [Footnote 42] 
representatives of the Army, Navy, and Air Force Reserve Components; 
and reservist advocacy groups, including the Enlisted Association of 
the National Guard of the United States, the National Guard Association 
of the United States, the National Military Family Association, the 
Ohio Air National Guard, the Reserve Officers Association, the Retired 
Officers Association, and the Retired Enlisted Association. We also 
reviewed our prior work on reservists and military health care. 

The Congressional Budget Office (CBO) calculated costs associated with
options specified in the 2002 NDAA for providing coverage for 
reservists. [Footnote 43] We did not independently verify data used to 
calculate the cost estimates. See appendix II for CBO’s assumptions. 

[End of section] 

Appendix II: CBO’s Assumptions for Cost Estimates: 

In calculating the cost estimates specified in the National Defense
Authorized Act for FY 2002 for providing health care coverage to
reservists, [Footnote 44] CBO used the following basic assumptions: 
[Footnote 45]: 

* The estimates were based on 865,000 reservists, unless otherwise
indicated. 

* The benefit would start on January 2003. 

* The percentage of the reserve force with dependents is 50.42. 

* Reservists with dependents each have about 2.17 dependents. 

* Inflation would be 8.5 percent in 2003, 7.5 percent in 2004, and 6.5 
percent in the remaining years. 

* The 14 percent of reservists who were federal employees were excluded
from the estimates because they presumably have health insurance 
coverage under Employees Health Benefits Program (FEHBP). The specific 
assumptions used to develop each benefit option are discussed below. 

Options for Continuous Coverage under TRICARE (Shown in Table 2): 

TRICARE (no premium): 

* Ninety percent of reservists would take advantage of this option. 

* Reservists and their dependents would use TRICARE-approved civilian
physicians with little use of military treatment facilities (MTF). 

* TRICARE costs were weighted from FEHBP costs, assuming that 
reservists cost about 40 percent of the FEHBP premium and families cost
about 60 percent. 

* TRICARE costs were estimated at $1,513 for a single reservist and 
$5,173 for a family during 2003. 

* Costs of TRICARE Prime and TRICARE Standard are the same. 

* Some beneficiaries would use TRICARE as a second payer insurance. (The
14 percent of reservists who presumably were enrolled in FEHBP was used 
as a proxy for this purpose.) 

* Second payer costs were 25 percent of the regular TRICARE costs. 

* Reservists will enroll over 3-year phase-in period. 

TRICARE with premium similar to under 65 active duty retirees: 

* Premium consists of $230 per year for individuals and $460 per year 
for families. 

* Seventy percent of reservists would enroll in TRICARE under these
conditions. 

* Reservists and their dependents would use TRICARE-approved civilian
physicians with little use of MTFs. 

* TRICARE costs were weighted from FEHBP costs, assuming that 
reservists would cost about 40 percent of the FEHBP premium and 
families would cost about 60 percent of the FEHBP premium. 

* TRICARE costs were estimated at $1,513 for an individual and $5,173 
for a family during 2003. 

* Costs of TRICARE Prime and TRICARE Standard are the same. 

* No second payer costs exist. 

* Reservists will enroll over 3-year phase-in period. 

TRICARE with premium-share equal to that of FEHBP: 

* Reservists would pay 28 percent of premium costs, which is similar to 
the percentage of FEHBP premiums paid by civilian federal employees. 

* Fifty percent of reservists would enroll in TRICARE under these
conditions. 

* Reservists and their dependents would use TRICARE-approved civilian
physicians with little use of MTFs. 

* TRICARE costs were weighted from FEHBP costs, assuming that 
reservists cost about 40 percent of the FEHBP premium and families cost
about 60 percent. 

* Cost for an individual would be $1,513 and cost for a family would be
$5,173 during 2003. 

* Costs of TRICARE Prime and TRICARE Standard are the same. 

* No second-payer costs exist. 

* Reservists will enroll over 3-year phase-in period. 

Options for Continuous Coverage under FEHBP (Shown in Table 3): 

FEHBP (no premium): 

* Ninety percent of reservists would enroll in this program. 

* DOD would pay the employee’s share of the premium for the 14 percent 
of reservists who presumably were enrolled in FEHBP. 

* Blue Cross/Blue Shield and Kaiser Permanente premiums were used to
calculate costs. 

* The estimated average annual cost was $3,760 for individuals and 
$8,718 for families during 2003. 

* Reservists will enroll over 3-year phase-in period. 

FEHBP (regular premium): 

* Seventy percent of reservists would enroll in FEHBP if they had to 
pay the employee’s share of the premium. 

* No cost was included for the 14 percent of reservists who presumably 
are enrolled in FEHBP. 

* Average premiums for individuals and families were based on data
provided by FEHBP actuaries. 

* During 2003, the estimated cost for an individual would be $3,670 with
DOD paying about 71 percent, and cost for a family would be $8,635 with
DOD paying about 73 percent. 

* Reservists will enroll over 3-year phase-in period. 

Options during Mobilizations (Shown in Table 4): 

Pay civilian insurance: 

* Costs are based on 80,000 reservists—the approximate number mobilized
in April 2002. 

* No cost was included for the 14 percent of reservists who presumably 
are enrolled in FEHBP. 

* Ninety percent of reservists would enroll in the program. 

* Average cost of employee premium and employer’s share were based on
Kaiser Family Foundation data. 

* During 2003, cost for an individual would be $2,877 with DOD paying 86
percent, and cost for a family would be $7,656 with DOD paying 74 
percent. 

* There is no phase-in period. 

Provide voucher for civilian insurance: 

* Costs are based on 80,000 reservists—the approximate number mobilized
in April 2002. 

* Voucher could be used to pay for any current health insurance 
coverage, including both employee’s and employer’s share. 

* FEHBP enrollees would not receive vouchers. 

* Ninety percent of reservists would use vouchers. 

* Voucher costs were based on 2003 estimated TRICARE costs of $1,513 for
individuals and $5,173 for families. (TRICARE costs were weighted from
FEHBP costs, assuming reservists would cost about 40 percent of the
FEHBP premium and families would cost about 60 percent.) 

* Voucher may not be used to cover the cost of paying second payer
insurance—only covers primary insurance. 

* There is no phase-in period. 

Option following Mobilizations (Shown in Table 4): 

Extend/Offer transition period following demobilization: 

* Costs are based on 80,000 reservists— the approximate number mobilized
in April 2002. 

* Forty percent of demobilized reservists would use this option. 

* No cost was included for the 14 percent of reservists who presumably
were enrolled in FEHBP. 

* Reservists would use TRICARE-approved civilian physicians with little 
use of MTFs. 

* TRICARE costs were weighted from FEHBP costs (assuming reservists 
would cost about 40 percent of the FEHBP premium and families would
cost about 60 percent of the FEHBP premium). 

* All reservists were eligible regardless of existing insurance 
coverage. 

* Benefit for reservist is only 30 days since the first 60 days are 
currently covered. 

* Dependents would be covered for 90 days. 

* There is no phase-in period. 

[End of section] 

Appendix III: Comments from the Department of Defense: 

The Assistant Secretary Of Defense: 
Health Affairs: 
Washington, D.C. 20301-1200: 

August 23, 2002: 

Marjorie E. Kanof, MD, Director: 
Health Care-Clinical and Military Health Care Issues: 
U.S. General Accounting Office: 
Washington, DC 20548: 

Dear Dr. Kanof: 

This is the Department of Defense (DoD) response to the General 
Accounting Office (GAO) draft report GAO-02-829, "DEFENSE HEALTH CARE: 
Most Reservists Have Civilian Health Coverage But More Assistance 
Needed When TRICARE Is Used," dated July 9, 2002 (GAO Code 290151). 

The Department concurs with the GAO recommendation, and a response to 
the recommendation is enclosed (Enclosure 1). The TRICARE Management 
Activity has also made several technical change suggestions which are 
enclosed (Enclosure 2). Several general comments from the Department of 
the Army and from the Office of the Assistant Secretary of Defense 
(Reserve Affairs) are also enclosed (Enclosures 3 and 4). 

Sincerely, 

Signed by: 

William Winkenwerder, Jr., MD: 

Enclosures: As stated: 

Appendix IV: GAO Contacts and Staff Acknowledgments: 

GAO Contacts: 

Deborah L. Edwards, (202) 512-7101: 
Lois L. Shoemaker, (404) 679-1806: 

Staff Acknowledgments: 

In addition to those named above, the following staff members made key
contributions to this report: Aditi Archer, Richard Wade, Julianna
Williams, Mary W. Reich, and Karen Sloan. 

[End of section] 

Footnotes: 

[1] The armed forces reserve components consist of the Air Force 
Reserve, the Air National Guard, the Army Reserve, the Army National 
Guard, the Navy Reserve, the Marine Corps Reserve, and the Coast Guard 
Reserve. National Guard components carry out a dual mission. They are 
responsive both to the federal government for the national security 
mission and to governors for state missions. 

[2] Mobilization is the process by which the armed forces are brought 
into a state of readiness for war or national emergency or to support 
some other operational mission. In this report, mobilization means 
calling up reserve components for active duty. 

[3] When a governor mobilizes the state’s National Guard under state 
authorities, the personnel and their dependents are not eligible for 
federal TRICARE benefits. However, the state may provide health 
coverage for them during this period. The benefits discussed in this 
report apply to the men and women of the National Guard when they are 
called up by the federal government. 

[4] Pub. L. No. 107-107, § 721, 107 Stat. 1012, 1167 (2001). 
[5] The survey was administered to a generalizable sample of 74,487 
Selected Reserves. Selected Reserves are those reservists who are most 
likely to be among the first to be mobilized. The term “reservists” in 
this report will be used to refer to Selected Reserves. 

[6] These reservists agreed to meet with us during site visits to an 
Air Force and a Navy site where reservists were currently mobilized and 
to an Army unit that had recently completed a mobilization and, at the 
time of our audit, was conducting its regular weekend drill. 

[7] In the absence of specific legislative language, CBO’s estimates 
should be considered preliminary. Final CBO estimates would reflect 
actual legislative language and CBO’s then current baseline 
assumptions. 

[8] These data represent mobilizations and may overstate the number of 
unique reservists mobilized since some reservists may have been 
mobilized more than once during this period. The numbers do not include 
those who have served voluntarily. 

[9] In the event Congress declares war or a national emergency, 
reservists could be mobilized for 6 months longer than the war or 
emergency. 

[10] According to an Office of Reserve Affairs official, mobilization 
orders for these operations were for periods of 180 days to 1 year. 

[11] From fiscal years 1996 through 2001, only Selected Reserves were 
involuntarily mobilized. However, about 2 percent of reservists 
mobilized for operations Noble Eagle and Enduring Freedom were 
Individual Ready Reserves, a manpower pool comprised principally of
individuals with previous training, with active duty service or service 
in the Selected Reserves, and with a period of their military 
obligation remaining. 

[12] 50 U.S.C. App. §§ 501-593 (2000). National guardsmen mobilized by 
a governor under state authorities are not eligible for SSCRA 
protection. 

[13] 38 U.S.C. §§ 4301-4333 (2000). 

[14] The reservist’s individual insurance premium may be increased 
during this period, but only if it would have increased had the 
coverage been uninterrupted by mobilization. 

[15] Preexisting conditions that are service connected are excluded 
from coverage. For example, individual policies would not have to cover 
battle injuries, which are covered by the Department of Veterans 
Affairs. 

[16] For deployments of 31 days or more, USERRA permits the employer to 
assess an additional 2 percent administrative fee if reservists elect 
to continue with civilian insurance and pay the full premium, including 
the employer share. 

[17] When the employer elects to continue mobilized reservists’ health 
insurance, the reservist may continue to be liable for the employee 
portion of the premium. However, some employers pay the full premium. 

[18] Reservists ordered to inactive duty training or active duty for 
less than 31 days are entitled to medical care for any injury, illness, 
or disease that they might incur or aggravate in the line of duty. 

[19] For dependents’ prescriptions filled by MTFs, no copayment 
applies; for prescriptions filled by DOD’s mail order pharmacy or 
network pharmacies, a $3 to $9 copayment applies. For prescriptions 
filled by non-network pharmacies, copayments are the greater of $9 or 20
percent of total prescription costs. 

[20] Pub. L. No. 106-65 §§ 714, 716, 113 Stat. 512, 689, 690-1 (1999) 
(codified at 10 U.S.C. §§ 1095d and 1097b (2000)) and Pub. L. No. 106-
398, § 721, 114 Stat. 1654, 1654A-184 (2000). 

[21] DOD uses a fee schedule based on Medicare rates as the maximum 
amount that it will pay civilian physicians. However, non-network 
physicians are allowed to charge patients an additional fee up to 15 
percent above the fee schedule rate. 

[22] In response to the loss of family member transitional benefits, 
DOD published notice in the June 12, 2002, Federal Register of a 
demonstration program that extends transitional benefits to dependents 
retroactive to January 1, 2002. 

[23] DOD categorizes enlisted personnel as E-1 to E-9, with E-1 to E-4 
considered junior enlisted and E-5 to E-9 senior enlisted. The average 
age of junior enlisted ranges from 19.9 years for E-1 personnel to 27.8 
years for E-4; the average age of senior enlisted ranges from 34.4 
years for E-5 to 49.8 for E-9. The average age for officers is 40 
years. 

[24] In the general population, about 73 percent of 18 to 24 year olds 
and 79 percent of 25 to 34 year olds had health insurance in 2000. 

[25] DOD’s survey data do not provide information on how reservists who 
maintained their civilian insurance financed this civilian health 
care—that is, how much, if any, of the full premium they were required 
to pay—nor do the data provide information on whether the coverage was 
under the reservists’ or family members’ policies. Of the reservists we
interviewed, 9 percent maintained coverage through spouses’ employer-
sponsored health plans. 

[26] The Kaiser Family Foundation and Health Research and Educational 
Trust, Employer Health Benefits 2001 Annual Survey (Menlo Park, Calif., 
and Chicago, Ill.: 2001). 

[27] In cases where reservists are mobilized to locations distant from 
MTFs, they must obtain health care through TRICARE network providers 
and, thus, share many of the same problems dependents experience. 

[28] We reviewed DOD’s networks and found them to be generally adequate 
with spotty deficiencies in rural areas—particularly those that are 
considered medically underserved and those with low managed care 
penetration. U.S. General Accounting Office, Military Health Care: 
TRICARE’s Civilian Provider Networks, GAO/HEHS-00-64R (Washington,
D.C.: Mar. 13, 2000). 

[29] Pub. L. No. 106-398 § 722(b), 114 Stat. 1654, 1654A-185 (2000). 

[30] Reservists are required to report changes in address, marital 
status, number of dependents, and other personal data and to ensure 
that this information is correct in DEERS. 

[31] From 1996 through 2001 the average length of mobilizations was 117 
days. 

[32] At the time of DOD’s 2000 survey, about 75 percent of reservists 
reported never having been mobilized. 

[33] In the absence of specific legislative language, CBO’s estimates 
should be considered preliminary. Final CBO estimates would reflect 
actual legislative language and CBO’s then current baseline 
assumptions. 

[34] Active duty retirees under age 65 and their dependents must pay an 
annual premium of $230 per individual or $460 per family to enroll in 
Prime. Active duty personnel and their dependents have no premium 
requirements. 

[35] Federal employees are responsible for about 28 percent of FEHBP 
premium costs. The difference in the cost to DOD of the no-premium 
option versus the premium option is affected by both the percentage 
that reservists share in the premium and the number of reservists 
expected to participate at that level of premium sharing. See app. II 
for a discussion of these assumptions. 

[36] Costs of care are based on the FEHBP (no premium) share option. 

[37] Some reductions to rates might occur over time as a result of 
adding reservists and their dependents to the FEHBP pool, but these 
adjustments are not reflected in these estimates. 

[38] The difference in the cost to DOD between the two types of premium 
options is affected by both the percentage that reservists share in the 
premium and the number of reservists expected to participate at that 
level of premium sharing. See app. II for a discussion of these 
assumptions. 

[39] As of April 2002, about 80,000 reservists were mobilized. If 
50,000 were mobilized, the estimated cost for the 5-year period would 
be $1.1 billion. If 150,000 were mobilized, the cost would be $3.3 
billion. 

[40] The survey was administered in October 2000 to a generalizable 
sample of 74,487 Selected Reserves. Selected Reserves are those 
reservists who are most likely to be among the first to be mobilized. 

[41] If we were unable to contact the reservist and a spouse or other 
dependent was able to supply the information we needed, we interviewed 
the spouse or the dependent. This was the case in 28 of the 74 
interviews. 

[42] We interviewed Department of Labor personnel to obtain information 
on the Uniformed Services Employment and Reemployment Rights Act of 
1994 (USERRA) and the Soldiers’ and Sailors’ Civil Relief Act of 1940 
(SSCRA). 

[43] In the absence of specific legislative language, CBO’s estimates 
should be considered preliminary. Final CBO estimates would reflect 
actual legislative language and CBO’s then-current baseline 
assumptions. 

[44] As in other places in this report, the term “reservists” refers to 
Selected Reserves. 

[45] In the absence of specific legislative language, CBO’s estimates 
should be considered preliminary. Final CBO estimates would reflect 
actual legislative language and CBO’s then current baseline 
assumptions. 

[End of section] 

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