Previously, we discussed the ongoing and serious crisis that lack of financial literacy poses for veterans’ retirement, breaking down the issue in terms of problems that can be resolved with an eye for building up savings.
Since then, a study conducted by the Government Accountability Office shows that this problem isn’t going away. In fact, in response to the study, Rebecca Burgess, a veterans studies research fellow at the American Enterprise Institute, even noted that this and other studies like it:
… consistently find that military pay and benefits and financial health are in the top tier of concerns, much more so than mental health issues.
The list of obstacles noted in our earlier piece as well as the resources listed remain vital tools for veterans worrying for their financial health. But no discussion of this subject is complete without addressing the elephants in the room affecting veterans and their families: healthcare, as well as end of life costs.
In a Gallup poll conducted in early 2019, 17% of respondents named healthcare costs as their number one financial problem of concern. That was the top response to the open-ended question and up significantly from 12% in 2018. Over twice as many considered the high and rising costs of healthcare to be their chief financial antagonist. Only “lack of money/low wages” came in close at 11% of responses.
The Department of Veterans Affairs offers current and former military personnel many resources and tools civilians don’t have, which we’ll explore below in addition to other public and private options. But even when knowing that options exist, many still struggle to make sense of them and understand the terms, the coverage, and how to afford their benefits.
Here, we’ll start by taking a global-level view of healthcare and healthcare costs for veterans. Then, we’ll drill down into specific resources every vet should have at hand.
How to Use This Guide
This guide is designed to help U.S. veterans and their families work with the resources available to pay for the healthcare they need, from routine medical care through emergencies.
Last updated: 9/15/2022
Insurance Coverage for Veterans
The insurance premium is the central component of covering medical costs. It’s also one of the highest costs associated with healthcare for any American. Even for veterans—who have some alternative options for coverage—that’s still true, but it can get a bit trickier.
Why does health insurance coverage matter, particularly if it’s costly? Although the monthly premiums may cause some sticker shock, the plans themselves can cover significant portions of the costs of preventive healthcare as well as services to address any illnesses or other health issues that may arise—both emergencies and not. While you will likely pay copayments and/or coinsurance until you meet your deductible, overall your health insurance coverage will likely save you money from both anticipated as well as unforeseen medical care costs.
As we get into the options available to current and former military members, we have to consider a number of factors: age, family makeup, military service, employment status, and current health needs.
Obviously, age plays a role here, as many veterans remain in the workforce outside of service. Employee programs and company-provided plans continue to make up the vast majority of coverage in the U.S.
According to the Wall Street Journal, employers covered 71% of all family plan premiums in 2019. For working-age veterans, this trend remains true. According to the Census Bureau, 59.4% of working-age veterans receive their health care from an employer-sponsored plan. That’s nearly twice the number of working-age veterans who use the VA.
Not all veterans are still covered by employer-sponsored plans. In fact, half of all veterans are 65 or older and eligible for Medicare; only half of them rely solely or partially on Medicare coverage. Understanding where and how the different insurance options can overlap, as well as what other options are available to help cover costs, is critical for financial stability.
But age isn’t the only contributor to available coverage options. Factors like family makeup, current health needs, and employment status are important to consider, although their impact may vary according to the specific plan being considered. An unemployed single vet will need to consider a different set of coverage options than a married vet with four young children.
With this in mind, here are some options that span this wide range of circumstances:
- VA Health Care – Although it may seem like the most obvious option, the VA is not always the first choice among veterans who might not know they are eligible. You can find the full requirements here. If you’ve served your full period when you signed up and were not dishonorably discharged, you likely qualify.
- Employment-Based Insurance – An employer-sponsored plan might be the best fit depending on individual needs. It’s important to note that veterans are able to receive both employer coverage and VA benefits at the same time.
- Affordable Care Act – The ACA opened up health insurance exchanges to find coverage options. In turn, this is a great resource for vets without VA or employer coverage to find plans that fit their own family needs.
- In general, you can enroll for ACA coverage during the annual enrollment window at the end of the year, or within 60 days of termination of your previous health insurance plan. If you miss ACA enrollment, short-term health insurance might be an option to tide you over until the next enrollment window; however, these plans come with limitations, including no coverage of pre-existing conditions.
- TRICARE – This is health insurance for active duty personnel, as well as military retirees and their dependents. You can find its eligibility requirements here.
- Civilian Health and Medical Program of the Department of Veterans Affairs (CHAMPVA) – For those military families that don’t qualify for TRICARE, CHAMPVA offers benefits for spouses, children, and survivors of veterans.
- Medicare – At the age of 65, Medicare becomes available to all, although it may not always play nicely with the VA Health Care. For example, it won’t pay for care at VA facilities. TRICARE, on the other hand, does offer a system to work with Medicare called TRICARE for Life. You can find more about that here.
- Medicaid – This option is available to those with low incomes, which can include veterans. Like Medicare, it doesn’t work at VA facilities. However, it too works in conjunction with TRICARE.
These are the primary options available to veterans in need of healthcare coverage. Selecting one is the first step in figuring out your financial plan, as relates to your health.
But to select your health insurance plan, you need to understand what it covers and what costs will be coming your way. With this comes plenty of terms and concepts you need to understand, but that might catch you off-guard—none of this is stuff we learned in school or that’s necessarily “common knowledge.” Fortunately, there are some good resources online for this.
- Types of costs – The best page here walks through the differences between deductibles, coinsurance, and out-of-pocket maximums, which often trip people up; but this entire section on paying for healthcare does a great job of walking through considerations.
- Types of insurance plans – There are several different types of plans you can choose from, and so here, you’ll find a good overview of them so that you can more easily sort through your options.
- Glossary of insurance terms – This is a great glossary of terms relating to coverage.
Being insured is the first step in gaining financial security on the healthcare front.
Unforeseen Medical Costs
According to an American Journal of Public Health study in March 2019, two-thirds of all bankruptcies are primarily caused by medical bills and unexpected medical costs. Despite the rate of uninsured individuals having dropping since the passage of the Affordable Care Act in 2010, costs due to underinsurance and unexpected medical bills have risen.
This affects veterans too. While the VA covers many medical issues, it doesn’t cover everything. Even those with dual insurance plans often face stiff deductibles and high copays often combined with high coinsurance.
A typical high-deductible private insurance plan has an average deductible of $1,655, according to the Kaiser Family Foundation. That’s $1,655 that has to come out of the insured pocket before the insurer has to pay a dime. Considering that just 40% of Americans have even $1,000 socked away for unexpected medical bills, there’s a clear gap in affordability.
You also need to consider costs outside of those directly billed by a hospital, which can include pharmacy costs, at-home accommodations, transportation to appointments, and even sometimes childcare during appointments.
There are resources and steps one can take to avoid or at least reduce the blow of unexpected medical costs, which can depend on the individual’s current medical situation and insurance plan. But navigating unforeseen medical bills is crucial to maintaining a financial plan for both health and retirement savings and security.
- Request financial hardship assistance – For starters, the VA offers extensive options for veterans unable to meet copays or medical debt. If you use VA Health Care, you may qualify for a waiver or a repayment plan that can help ease any unforeseen costs. Many major medical centers also offer solutions ranging from payment plans through support for individuals who cannot afford to pay due to financial hardship.
- Contribute to a Health Savings Accounts (HSAs) – If the only coverage available to meet one’s needs is a high-deductible plan, an HSA allows him or her to save for future medical costs. Funds added to these accounts are not taxed when deposited. Search online to find one if you don’t already have an HSA in place.
- Keep your HSA even if you switch plans – While you must have a high-deductible health plan (HDHP) to open or contribute to an HSA, you are allowed to keep an HSA you’ve already contributed to even if you drop your HDHP or switch to a plan that isn’t HSA eligible. You aren’t taxed on that money unless you withdraw it for non-healthcare related reasons. So, this tax break is worth preserving for most people, even if they can’t continue to contribute to it.
- Use your HSA to cover retirement medical expenses. If made from your payroll, your contributions are pre-tax, while if paid from your pocket, your contributions are tax-deductible. If you use these HSA funds to pay for approved medical expenses, they remain tax-free.
- Open a separate savings account – If you don’t qualify to open an HSA but would still like to safeguard against unforeseen medical bills, standard savings accounts can be an option for an emergency fund. You won’t enjoy tax benefits, but the peace of mind of knowing you can cover certain unexpected medical complications is worth it. For the best results, stick to making regular contributions.
- Drawing from retirement accounts – Most IRAs and 401(k)s have an early withdrawal penalty of 10%. However, there can be exceptions to this for certain medical expenses (which vary between IRAs and 401(k)s) and other hardships. Be sure to check if you qualify for this fee exclusion if you are forced to withdraw from your retirement savings.
- Work with a specialized nonprofit or other group. There are several nonprofits that work to help veterans and their loved ones find support to pay for unforeseen medical costs.
- DAV (Disabled American Veterans) – This nonprofit is dedicated to helping vets receive benefits to support their health and well-being. That’s everything from finding insurance plans to dealing with longer-term medical costs, transportation, to doctor’s visits through filing claims.
- Fisher House – This nonprofit helps coordinate housing and airline tickets for veterans’ families while they are in the hospital for an injury, illness, or disease.
- CancerCare – This group offers financial help, including limited aid available to assist with cancer-related costs, including transportation to appointments and childcare. They also have support groups and other ways of helping.
- Semper Fi Fund – This nonprofit provides emergency financial assistance to veterans who became wounded or ill during their service.
- USO Pathfinder – This service can help service members find financial stability for themselves and their families as they transition back into civilian life.
By their very nature, unforeseen medical costs are impossible to predict; but planning ahead for emergencies can make an enormous difference. Whether that’s through an HSA, another type of savings account or simply knowing your options in the event disaster strikes, even the unforeseen can be managed.
Medical conditions and their corresponding costs can come from an endless list of causes: wellness, work-related injuries, genetic disposition, and so forth. But for veterans, there is another major possibility: exposures to health-related issues due to military service.
While most service members are aware of specific military service exposures like interaction with Agent Orange or other tactical toxins, there are many conditions not always readily associated with previous military service. Fortunately, the VA has resources available to account for them.
The first step worth taking, even if it might not be apparent, is to check out the VA’s military exposures website here. You’ll find many tools, information, and resources available to help with both diagnosis and ensuing care options.
While the number of different types of military exposures is far too large to list, here are a few of the more common ones:
- Infectious Diseases – In just the conflicts in Afghanistan and Southwest Asia, nine infectious diseases have been identified and associated in veterans. The VA can serve a sizeable role in covering costs for their treatment.
- Traumatic Brain Injury – One of the most often missed diagnoses following service is TBI. Those whose service included active duty in conflict areas might not have ever been diagnosed with any sort of injury. However, lingering effects can cause significant problems and healthcare costs for the rest of their lives.
- Occupational Hazards – The military is just as liable for poor workplace conditions as any other employer. Many vets have been exposed to chemicals, lead paint, radiation, and harmful noises. Whether in or out of warzone activity, these exposures are often covered by the VA.
The VA provides a comprehensive site where it indexes the various specific types of exposures here. You may want to take a systematic approach to identifying exposures and getting treatment for them.
- Get an evaluation at your local VA. The VA provides health registry evaluation for free. These evaluations are specifically designed to find and diagnose exposures from military service. You don’t even need to be enrolled in VA Health Care to do this.
- Review your options (even if no official supported condition is found). The VA will also let you speak with a professional about specific options available for healthcare even if no exposure-related conditions are found since you might still be experiencing the symptoms of some illness.
- If a condition is found related to military exposure, the VA offers several benefits to care for it. These benefits include disability compensation in addition to direct healthcare options, all the way through survivors’ benefits.
- Speak to a benefits expert or transition service officer, which are both available through DAV’s services to vets dealing with toxic military exposure.
- Check with the Military Health System. Further support for exposures can be found through this joint effort between the Department of Defense and the VA.
- Search for conditional support. Each form of exposure may have additional support available from many different resources, including 501(c)(3) nonprofits devoted to people with that exposure, which can help provide financial support. These might be national, state, or even local. In addition, there may be support groups or other such options available. Search online, and ask—both at your doctors’ offices as well as at your local VA.
Unfortunately, a military exposure-related health problem generally can only be detected and treated once some of the effects start to kick in. Fortunately, resources exist to help handle them—and potentially without any additional costs to you.
Health & Wellness
Health and wellness are critical to staying out of the hospital and keeping healthcare costs to a minimum. The key here is to be proactive.
While it may seem obvious, maintaining a nutritious diet, exercise, and healthy habits are the most any of us can do to remain healthy. This positively impacts everything, from our longevity to our financial stability.
As noted above, healthcare costs contribute more than any other factor when it comes to actual financial health. Therefore, proactive health and wellness measures offer the biggest long-term cost-savers of all for veterans and civilians alike. For veterans, there are additional and specific resources available that are low-cost or even free themselves.
- VA Health & Wellness – This is a great source on information and resources available to maintain daily health and wellness, including mental health. These include everything from counseling to quitting tobacco use to living with hepatitis.
- Veterans Inc – This nonprofit can provide referrals to various veterans’ benefits that include health assessments, condition support groups, smoking cessation, stress reduction, social enrichment, personalized wellness programs, and other such resources. They can help you find programs that fit your budget or that can leverage assistance to make them affordable.
- The Wounded Warrior Project – Recognizing the impact physical fitness has on physical as well as mental health, the WWP has several programs in place to help veterans stay on track—including a personalized coaching program.
- Local Veterans Wellness Centers – Institutions like UCLA offer these centers for service members and their families to access wellness programs, including recreational programming, parenting workshops, couples’ resilience training, and more. These may be low-cost or even free, which can help save you money while still getting you the support you need to thrive.
At the end of the day, remaining proactive is also the most effective tool to achieve health and reduce the long-term costs associated with healthcare.
While 68% of American veterans rate their health as having been excellent before joining the military, a mere 7% rate it as excellent after their service has ended.
Financial literacy often involves confronting difficult topics head-on, including the headache of figuring out health insurance plans through the anxiety of paying for medical emergencies. But by realistically committing to a plan to tackle these costs, you are able to stave off long-term stress and place you—and your loved ones—closer to financial stability.