Haris Ashley
Military personnel and their families have access to TRICARE, the military's health insurance program. TRICARE offers comprehensive coverage, including medical, dental, and vision plans, as well as life insurance and prescription drugs. Military members and retirees should receive IRS Form 1095 from their insurance provider, which is necessary for tax filing. Depending on the type of insurance and income, military personnel may be eligible for tax credits or penalties. Additionally, military tax benefits are available for those serving or having served in specific organizations, including the Army and uniformed services.
| Characteristics | Values |
|---|---|
| Military health insurance | TRICARE |
| TRICARE eligibility | Service members, retirees, and their families worldwide |
| TRICARE benefits | Comprehensive coverage, health plans, special programs, prescriptions, and dental plans |
| TRICARE pharmacy options | Military pharmacies, home delivery, network pharmacies, and non-network pharmacies |
| TRICARE Reserve Select | Premium-based health plan for selected reserve members (and their families) who qualify |
| TRICARE Young Adult | Children enrolled under a parent's plan may purchase this when their coverage ends at 21 (or 23 if enrolled in college) if they meet eligibility requirements |
| TRICARE basic benefit | Services for those with special needs, including applied behavior analysis, cancer clinical trials, durable medical equipment, home health care, hospice care, mental health care, and skilled nursing facility care |
| TRICARE SUD options | Opioid treatment programs, office-based opioid treatment, and emergency inpatient hospital services |
| TRICARE cost | Lower copays and cost shares for non-active beneficiaries |
| TRICARE Form | 1095-B or 1095-C |
| IRS Form 1095 | Received by all Americans with qualifying health insurance for the full tax year |
| IRS Form 1095-A | For insurance purchased on the Health Insurance Marketplace or Exchange |
| IRS Form 1095-B | For retirees, annuitants, former spouses covered by TRICARE, and people enrolled in VA healthcare or Medicare |
| IRS Form 1095-C | For active-duty members and their families covered by TRICARE and federal civilian employees |
| Tax exemption | Bonuses for enlisting and reenlisting in the military |
| Tax-free payment | $100,000 from the Armed Forces death gratuity program for survivors of soldiers who die on active duty or in certain reserve duties |
| Service Members' Group Life Insurance (SGLI) | Low-cost group life insurance for Active-Duty, Army Reserve, and Army National Guard Soldiers |
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What You'll Learn
- Military members and retirees receive Form 1095 from Defense Finance and Accounting Service (DFAS)
- TRICARE is the health care program for service members, retirees and their families
- Military tax benefits are available for members of organisations directly supporting military operations in combat zones
- Veterans and their families can access free or low-cost coverage through Medicaid or the Children's Health Insurance Program (CHIP)
- Military members can set aside pretax earnings to help cover health care costs with a Health Care Flexible Spending Account
Military members and retirees receive Form 1095 from Defense Finance and Accounting Service (DFAS)
Military members, retirees, and their families receive healthcare coverage through TRICARE, which offers comprehensive health plans, prescriptions, and dental plans. Additionally, TRICARE provides coverage for a range of mental health and substance use disorders, including opioid treatment programs.
As part of tax reporting requirements, military members and retirees who receive healthcare coverage through TRICARE will receive Form 1095 from the Defense Finance and Accounting Service (DFAS). This form serves as proof of health insurance coverage for the full tax year and is required by the Affordable Care Act.
There are three types of Form 1095 relevant to military members and retirees:
- Form 1095-A: For those who purchase insurance through the Health Insurance Marketplace or Exchange and receive partial premium payments from the Federal Government. This form may entitle individuals to a tax credit.
- Form 1095-B: For retirees, annuitants, former spouses covered by TRICARE, and individuals enrolled in VA healthcare or Medicare.
- Form 1095-C: For active-duty members and their families covered by TRICARE, as well as federal civilian employees.
Upon receiving Form 1095-B or 1095-C, individuals simply need to check the appropriate box on Form 1040, 1040A, or 1040EZ when filing their taxes. No additional action is required. However, for Form 1095-A, individuals must enter the information on IRS Form 8962 during tax filing.
It is important to keep information updated in the Defense Enrollment Eligibility Reporting System (DEERS) to ensure accurate reporting of health insurance coverage to the IRS by DFAS.
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TRICARE is the health care program for service members, retirees and their families
TRICARE is a health care program that provides comprehensive coverage to service members, retirees, and their families worldwide. It offers a range of health plans, special programs, prescriptions, and dental plans. TRICARE also covers care for a variety of mental health and substance use disorders, including opioid treatment programs and emergency inpatient hospital services. With TRICARE, there are lower copays and cost shares for non-active beneficiaries, and a wider range of authorized providers for mental health treatment.
TRICARE offers four pharmacy options: military pharmacies, home delivery, network pharmacies, and non-network pharmacies. Each option is available worldwide, although there may be some limits on overseas prescriptions. TRICARE also has a Military Treatment Facility Locator tool that allows users to find the nearest MTF by ZIP code or military installation. This is useful for service members and their families who are seeking care.
TRICARE provides additional benefits to service members who were injured while on active duty. These benefits include no out-of-pocket costs, no benefit caps, and coverage for a range of services such as reproductive services, mental health care, and substance use disorder treatment. TRICARE also offers the Extended Care Health Option (ECHO), which provides financial assistance to beneficiaries with special needs. This includes coverage for applied behavior analysis, cancer clinical trials, durable medical equipment, home health care, hospice care, and skilled nursing facility care.
TRICARE is reported to the IRS by the Defense Finance and Accounting Service (DFAS), which collects Social Security numbers (SSNs) for all family members. This information is used to report health insurance coverage to the IRS. TRICARE beneficiaries may receive an IRS Form 1095, which indicates that they had health insurance for the entire year. This information can then be used when filing taxes to demonstrate that they had qualifying health insurance coverage as required by the Affordable Care Act.
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Military tax benefits are available for members of organisations directly supporting military operations in combat zones
Military personnel and their families can take advantage of the IRS military-based Volunteer Income Tax Assistance (VITA) program. Trained VITA volunteer assistants can address military-specific tax issues, such as filing deadlines when outside the United States, combat zone tax benefits, and the Earned Income Tax Credit (EITC) guidelines.
Military pay earned while in a combat zone is subject to Social Security and Medicare taxes and will appear on your W-2. However, there are several tax exclusions for military members serving in combat zones. Military members can exclude the following income related to military compensation:
- Basic pay for every month spent in a combat zone
- Reenlistment or continuation bonuses, if the reenlistment or the execution of the contractual agreement for continued service occurred while present in a combat zone
- Income from selling accrued leave earned while in a combat zone
- Awards and other financial incentives for submissions made while in a combat zone
Additionally, military personnel hospitalized with wounds, disease, or injuries sustained while serving in a combat zone are not subject to tax on their military pay for up to two years after the area is no longer considered a combat zone.
It is important to note that to receive the tax exclusion for combat zone service, entitlement to compensation must have fully accrued during a month in which the member served in a designated combat zone or was hospitalized due to wounds, disease, or injury incurred while serving in a designated combat zone. Each military organization will automatically certify entitlement by excluding reportable income on the member's W-2.
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Veterans and their families can access free or low-cost coverage through Medicaid or the Children's Health Insurance Program (CHIP)
Veterans and their families have access to a range of healthcare options. Depending on their circumstances, veterans may be enrolled in TRICARE, VA health care, or other health coverage plans. Importantly, veterans and their families can access free or low-cost coverage through Medicaid or the Children's Health Insurance Program (CHIP).
Medicaid and CHIP are crucial programs that provide healthcare coverage to those who need it. Medicaid is a federal-state collaboration that offers free or low-cost health coverage to certain low-income individuals, families, children, pregnant women, the elderly, and people with disabilities. The eligibility criteria vary from state to state, with some states expanding their Medicaid programs to cover all adults or individuals below specific income thresholds.
CHIP, on the other hand, is a program that provides low-cost health coverage to children in families who earn too much to qualify for Medicaid. CHIP is available in all states, and each state has its own rules regarding eligibility. Importantly, CHIP ensures that children from families with slightly higher incomes do not miss out on essential healthcare coverage.
Veterans and their families can benefit from these programs. If a veteran is enrolled in a VA health care program but has dependents who are not eligible for VA health care, these dependents may qualify for free or low-cost coverage through Medicaid or CHIP. This ensures that the veteran's family has access to affordable healthcare, even if they are not directly covered by the veteran's plan.
Additionally, veterans who are not enrolled in VA benefits or other veterans' health coverage can also take advantage of these programs. They can apply for coverage through the Health Insurance Marketplace and may qualify for Medicaid or CHIP based on their household size and income. This provides an avenue for uninsured veterans and their families to access the healthcare they need at a lower cost or even for free.
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Military members can set aside pretax earnings to help cover health care costs with a Health Care Flexible Spending Account
Military members can benefit from a Health Care Flexible Spending Account (HCFSA), which allows them to set aside pretax earnings to cover healthcare costs. This is a valuable option for service members, enabling them to plan and budget for healthcare expenses effectively. The Defense Department (DOD) offers this opportunity to support the financial well-being of military personnel and their families.
The HCFSA is a flexible spending account (FSA) that empowers military members to take control of their healthcare finances. It is a voluntary decision to enrol in this program, and participants can decide how much money to allocate annually and the frequency of deductions from their paychecks. This flexibility ensures that service members can tailor their contributions to suit their specific needs and financial situations.
The funds in the HCFSA can be used to pay for a range of eligible healthcare expenses that may not be covered by their primary healthcare plan. This includes copays, over-the-counter medications, vision and dental care, braces, glasses, contact lenses, and chiropractic care. Service members can contribute between $100 and $3,300 per year to their HCFSA, and in households where both earners are eligible, they can maintain separate accounts and contribute up to a total of $6,600 per year.
The enrolment process for the HCFSA is straightforward. Service members can enrol online at FSAFEDS.gov during the annual federal benefits open season, typically from mid-November to mid-December. Enrolment outside of the open season is also possible if a qualifying life event occurs, such as a Permanent Change of Station (PCS) or the birth or adoption of a child.
In addition to the HCFSA, the DOD also offers a Dependent Care Flexible Spending Account (DCFSA). This account is designed to assist military families in managing dependent care expenses, such as childcare, preschool, summer day camp, and adult day care. By utilising pretax earnings, families can reduce their out-of-pocket costs and make quality care more affordable.
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Frequently asked questions
TRICARE is the health care program for service members, retirees, and their families worldwide. It offers comprehensive coverage, including medical, dental, and vision plans, as well as life insurance and prescription drugs.
VA health care is provided by the Department of Veterans Affairs. It offers a range of services, including mental health services, emergency care, and prescriptions. VA health care benefits vary depending on factors such as income level, disability rating, and military service history.
You will need to report your health insurance coverage on your taxes using IRS Form 1095. There are three versions of this form: 1095-A, 1095-B, and 1095-C. The version you need depends on your specific situation.
If you had any months without health insurance coverage, you may have to pay a penalty, known as the "individual shared responsibility payment." However, gaps in coverage of three months or less are exempt from the penalty.
