TRICARE and VA Health Care: Impact of the
Patient Protection and Affordable Care Act
(PPACA)

Sidath Viranga Panangala
Specialist in Veterans Policy
Don J. Jansen
Analyst in Defense Health Care Policy
January 21, 2011
Congressional Research Service
7-5700
www.crs.gov
R41198
CRS Report for Congress
P
repared for Members and Committees of Congress

TRICARE and VA Health Care: Impact of the Patient Protection and Affordable Care Act

Summary
The 111th Congress passed, and the President signed into law, the Patient Protection and
Affordable Care Act (P.L. 111-148; PPACA), as amended by the Health Care and Education
Reconciliation Act of 2010 (P.L. 111-152; HCERA), and hereafter referred to as PPACA. In
general, PPACA did not make any significant changes to the Department of Defense (DOD)
TRICARE program or to the Department of Veterans Affairs (VA) health care system. However,
many have sought clarification as to whether certain provisions in PPACA, such as a mandate for
most individuals to have health insurance, or extending dependant coverage up to age 26, would
apply to TRICARE and VA health care beneficiaries.
To address some of these concerns, Congress has introduced and/or enacted legislation. The
TRICARE Affirmation Act (H.R. 4887; P.L. 111-159), signed into law on April 26, 2010, affirms
that TRICARE satisfies the minimum acceptable coverage requirement in PPACA. Similarly, P.L.
111-173, signed into law on May 27, 2010, clarifies that the Civilian Health and Medical Program
of the Department of Veterans Affairs (CHAMPVA), Spina Bifida Health Care Program, and the
Children of Women Vietnam Veterans Health Care Program meet the “minimum essential
coverage” requirement under PPACA. TRICARE coverage of children was extended to age 26 by
the Ike Skelton National Defense Authorization Act for Fiscal Year 2011 (P.L. 111-383).
PPACA requires that if a health insurance plan provides for dependent coverage of children, the
plan must continue to make such coverage available for an adult child until age 26. This
requirement relating to coverage of adult children will take effect for the plan years beginning on
or after September 23, 2010. Under PPACA, both married and unmarried children will qualify for
this coverage. The authorizing statute for CHAMPVA currently does not conform to this PPACA
requirement. Furthermore, although the TRICARE authorizing statute has been amended to
provide for coverage of children until age 26, the coverage provided by the new legislation differs
from that required by PPACA in some important ways. To address the CHAMPVA situation, the
CHAMPVA Children’s Protection Act of 2011 (H.R. 115) has been introduced in the 112th
Congress, although it has seen no action so far.
This report addresses key questions concerning how PPACA affects TRICARE and VA health
care. This report will be updated if events warrant.

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TRICARE and VA Health Care: Impact of the Patient Protection and Affordable Care Act


Contents
Introduction ................................................................................................................................ 1
Background ................................................................................................................................ 2
TRICARE............................................................................................................................. 2
The VA Health Care System and Eligibility for Care.............................................................. 2
Civilian Health and Medical Program of the Department of Veterans Affairs
(CHAMPVA) ............................................................................................................... 4
Questions and Answers ............................................................................................................... 4
How Does PPACA Affect TRICARE?................................................................................... 4
How Does PPACA Affect VA Health Care? ........................................................................... 5
Do TRICARE and VA Health Care Meet “Minimum Essential Coverage”
Requirements? ................................................................................................................... 5
Will VA Coverage of Children with Spina Bifida and Certain Birth Defects Meet the
“Minimum Essential Coverage” Requirement?................................................................... 6
Does PPACA Require TRICARE to Provide Coverage to Dependent Children Up to
Age 26? ............................................................................................................................. 6
Will PPACA Extend Coverage to Dependent Children Under CHAMPVA Up to Age
26?..................................................................................................................................... 7
Will PPACA Affect the Cost of Prescription Drugs and Medical Devices Provided to
Veterans? ........................................................................................................................... 8

Contacts
Author Contact Information ........................................................................................................ 9

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TRICARE and VA Health Care: Impact of the Patient Protection and Affordable Care Act

Introduction
On March 23, 2010, President Obama signed the Patient Protection and Affordable Care Act (P.L.
111-148, PPACA). On March 30, 2010, PPACA was amended by P.L. 111-152, the Health Care
and Education Reconciliation Act of 2010 (HCERA). Throughout this report, this amended
version is referred to as PPACA. This health reform legislation touched on many aspects of the
nation’s health care delivery and financing systems. However, in general, PPACA did not make
any significant changes to the Department of Defense (DOD) TRICARE program or to the
Department of Veterans Affairs (VA) health care system.
Among its numerous provisions, PPACA (when fully implemented in 2014) will require most
individuals, large employers, and health plans to meet certain coverage requirements. Beginning
in 2014, PPACA includes a mandate for most individuals to have health insurance,1 or potentially
pay a penalty for noncompliance.2 Individuals will be required to maintain minimum essential
coverage for themselves and their dependents. Those who do not meet the mandate will be
required to pay a penalty for each month of noncompliance. Under PPACA, private health
insurance provisions that take effect prior to 2014 (including some this year) include the
following: ending lifetime and unreasonable annual limits on benefits, prohibiting rescissions of
health insurance policies, requiring coverage of preventive services and immunizations, extending
dependant coverage up to age 26, capping insurance companies’ nonmedical administrative
expenditures, guaranteeing coverage for preexisting health conditions for enrollees under age 19,
and providing assistance for those who are uninsured because of a preexisting condition.
Furthermore, PPACA raises revenues to pay for expanded health insurance coverage by imposing
excise taxes and fees on industries in the health care sector, limiting tax-advantaged health
accounts, and increasing the Medicare payroll tax on upper-income households and adding an
additional tax on net investment income on upper-income households.3
Since the enactment of PPACA, concerns have been raised by veterans and Veterans Service
Organizations (VSOs) on how the new law would affect TRICARE beneficiaries, as well as
veterans and certain dependents receiving care through the VA health care system.4 Moreover,
many have sought clarification as to whether certain provisions in PPACA, such as a mandate for
most individuals to have health insurance, or extending dependant coverage up to age 26, would
apply to TRICARE and VA health care beneficiaries.5 Although the Obama Administration issued

1 §1501(b) as amended by §10106 (b) of P.L. 111-148 and by §1002 of P.L. 111-152.
2 §1501 of P.L. 111-148 includes congressional findings that address the constitutionality of an individual mandate to
obtain health insurance. For more information on this issue, see CRS Report R40725, Requiring Individuals to Obtain
Health Insurance: A Constitutional Analysis
, by Jennifer Staman et al.
3 For further details on provisions in PPACA, see CRS Report R41220, Preexisting Exclusion Provisions for Children
and Dependent Coverage under the Patient Protection and Affordable Care Act (PPACA)
, by Hinda Chaikind and
Bernadette Fernandez; CRS Report R41166, Grandfathered Health Plans Under the Patient Protection and Affordable
Care Act (PPACA)
, by Bernadette Fernandez; CRS Report R40725, Requiring Individuals to Obtain Health Insurance:
A Constitutional Analysis
, by Jennifer Staman et al.; CRS Report R41586, Upcoming Rules Pursuant to the Patient
Protection and Affordable Care Act
, by Curtis W. Copeland and Maeve P. Carey; CRS Report R41390, Discretionary
Funding in the Patient Protection and Affordable Care Act (PPACA)
, coordinated by C. Stephen Redhead; and CRS
Report R41128, Health-Related Revenue Provisions in the Patient Protection and Affordable Care Act (PPACA) , by
Janemarie Mulvey.
4 Michael Posner, “Veterans Push For Fixes To New Law,” Congress Daily, April 6, 2010.
5 Jane Norman, “Military Families Left Out of Expanded Health Coverage for Adult Children,” CQ HealthBeat CQ
Today
, September 27, 2010.
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statements assuring that the two health care systems would not be negatively affected, some
veterans groups have been demanding statutory clarification.6 To address some of these concerns,
Congress has introduced and/or enacted legislation. This report, one of a series of CRS products
on PPACA, addresses key questions concerning the impact of enactment of the PPACA on the
TRICARE and VA health care programs. To provide some context to this discussion, the report
begins with a brief overview of the two health care systems and eligibility for care under each
system.
Background
TRICARE7
The Department of Defense (DOD) administers health care services through a program known as
TRICARE to over 9 million eligible beneficiaries that include active duty uniformed personnel
and their dependents, eligible members of the Reserve Component and their dependents, and
uniformed services retirees and their dependents and survivors. TRICARE provides health care
services through both military and nonmilitary hospitals, clinics, and other providers. TRICARE
is administered on a regional basis by the TRICARE Management Activity, which uses a regional
managed care support contractor to develop networks of civilian providers and process
beneficiary claims in each of its North, South, and West regions. TRICARE has three basic
options for non-Medicare eligible beneficiaries: TRICARE Prime, which is a managed care
option that relies primarily upon military providers and treatment facilities; a fee-for-service
option known as TRICARE Standard; and a preferred-provider option known as TRICARE Extra.
Individuals who are eligible for Medicare and otherwise eligible for TRICARE may enroll in
Medicare Part B and receive “wrap-around” TRICARE coverage through the TRICARE for Life
Program, which covers costs not paid by Medicare that would otherwise be incurred by the
beneficiary.
The VA Health Care System and Eligibility for Care8
The Department of Veterans Affairs (VA), through the Veterans Health Administration (VHA),
operates the nation’s largest integrated direct health care delivery system.9 While Medicare,
Medicaid, and the Children’s Health Insurance Program (CHIP) are also publicly funded

6 Ibid. Also see Department of Veterans Affairs, “Statement from VA Secretary Eric K. Shinseki,” press release, March
21, 2010, http://www1.va.gov/opa/pressrel/pressrelease.cfm?id=1871; Department of Defense, “Tricare Meets Health
Care Bill’s Standards, Gates Says,” press release, March 22, 2010, http://www.defense.gov//News/NewsArticle.aspx?
ID=58412, and Letter from Kathleen Sebelius, Secretary of Health and Human Services, to Honorable Max Baucus,
Chairman, Senate Committee on Finance, March 24, 2010, http://www.tricare.mil/downloads/Baucus%20PPACA.PDF.
7 For more detailed information on the TRICARE program, see CRS Report RL33537, Military Medical Care:
Questions and Answers
, by Don J. Jansen, and CRS Report RS22402, Increases in Tricare Costs: Background and
Options for Congress
, by Don J. Jansen.
8 For a complete discussion of eligibility for VA health care, priority groups, and enrollment, see CRS Report R41343,
Veterans Medical Care: FY2011 Appropriations, by Sidath Viranga Panangala.
9 U.S. Department of Veterans Affairs, FY 2008 Performance and Accountability Report, Washington, DC, November
17, 2008, p. 10. Established on January 3, 1946, as the Department of Medicine and Surgery by P.L. 79-293, succeeded
in 1989 by the Veterans Health Services and Research Administration, renamed the Veterans Health Administration in
1991.
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programs, most health care services under these programs are delivered by private providers in
private facilities. In contrast, the VA health care system could be categorized as a veteran-specific
national health care system in the sense that the federal government owns the medical facilities
and employs the health care providers.10
In general, eligibility for VA health care is based on veteran status,11 presence of service-
connected disabilities12 or exposures,13 income,14 and/or other factors, such as status as a former
prisoner of war or receipt of a Purple Heart.
The VHA also pays for care provided to veterans by private-sector providers on a fee basis under
certain circumstances. Inpatient and outpatient care are also provided in the private sector to
eligible dependents of veterans under the Civilian Health and Medical Program of the Department
of Veterans Affairs (CHAMPVA; see discussion below). All enrolled veterans are offered a
standard medical benefits package.15
Veterans do not pay premiums or enrollment fees. However, under current law most veterans are
required to pay copayments for the treatment of nonservice-connected conditions.16 It should be
noted that those veterans who are rated 50% or more service-connected disabled and enrolled in
the VA health care system do not pay copayments even for nonservice-connected care. Moreover,
VA is required to collect reasonable charges for medical care or services (including prescription
drugs) from a third-party insurer to the extent that the veteran or the provider of the care or
services would be eligible to receive payment from a third-party insurer for a nonservice-
connected disability for which the veteran is entitled to care (or the payment of expenses of care)
under a health insurance plan.17

10 Adam Oliver, “The Veterans Health Administration: An American Success Story?” The Milbank Quarterly, vol. 85,
no. 1 (March 2007), pp. 5-35.
11 Veteran’s status is established by active-duty status in the U.S. Armed Forces and an honorable discharge or release
from active military service. Generally, persons enlisting in one of the armed forces after September 7, 1980, and
officers commissioned after October 16, 1981, must have completed two years of active duty or the full period of their
initial service obligation to be eligible for VA health care benefits. Service members discharged at any time because of
service-connected disabilities are not held to this requirement.
12 A service-connected disability is a disability that was incurred or aggravated in the line of duty in the U.S. Armed
Forces (38 U.S.C. § 101 (16). VA determines whether veterans have service-connected disabilities, and for those with
such disabilities, assigns ratings from 0% to 100% based on the severity of the disability. Percentages are assigned in
increments of 10% (38 C.F.R. §§ 4.1-4.31).
13 For example, veterans who may have been exposed to Agent Orange during the Vietnam War or veterans who may
have diseases potentially related to service in the Gulf War may be eligible to receive care.
14 Veterans with no service-connected conditions and who are Medicaid eligible, or who have an income below a
certain VA means-test threshold and below a median income threshold for the geographic area in which they live, are
also eligible to enroll in the VA health care system.
15 A detail listing of VHA’s standardized medical benefits package is available at 38 C.F.R. § 17.38 (2010).
16 38 U.S.C. § 1729.
17 38 U.S.C. § 1729(a)(2)(D); 38 C.F.R. § 17.101(a)(1)(i) (2010).
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Civilian Health and Medical Program of the Department of Veterans Affairs
(CHAMPVA)18

Unlike TRICARE, VA health care covers only a select group of dependents. In 1973, Congress
established the Civilian Health and Medical Program of the Department of Veterans Affairs
(CHAMPVA) as a means of providing health care services to dependents and survivors of certain
veterans.19 CHAMPVA primarily is a fee-for-service program that provides reimbursement for
most medical care for certain eligible dependents and survivors of veterans rated permanently and
totally disabled from a service-connected condition. CHAMPVA was designed to provide medical
care in a manner similar to the care provided to certain eligible beneficiaries under the DOD
TRICARE program. Eligibility for CHAMPVA requires inclusion in one of the following
categories:20
• the individual is the spouse or child of a veteran who has been rated permanently
and totally disabled for a service-connected disability;
• the individual is the surviving spouse or child of a veteran who died from a VA-
rated service-connected disability;
• the individual is the surviving spouse or child of a veteran who was at the time of
death rated permanently and totally disabled from a service-connected disability;
or
• the individual is the surviving spouse or child of a military member who died on
active duty, not due to misconduct (in most cases, these family members are
eligible under TRICARE, not CHAMPVA).
Questions and Answers
How Does PPACA Affect TRICARE?
In general, PPACA does not affect TRICARE administration, health care benefits, eligibility, or
cost to beneficiaries.
PPACA does open a special Medicare Part B enrollment window to enable certain individuals to
gain coverage under the TRICARE for Life program.21 TRICARE was extended to Medicare-
eligible military retirees, their Medicare-eligible spouses and dependent children, and Medicare-
eligible widow/widowers by the Floyd D. Spence National Defense Authorization Act of 2001
(P.L. 106-398). This law established the TRICARE For Life (TFL) program, which acts as a
secondary payer to Medicare and provides supplemental coverage to TRICARE-eligible
beneficiaries who are entitled to Medicare Part A based on age, disability, or end-stage renal
disease (ESRD). In order to participate in TFL, these TRICARE-eligible beneficiaries must enroll

18 For more information, see CRS Report RS22483, Health Care for Dependents and Survivors of Veterans, by Sidath
Viranga Panangala.
19 Veterans Health Care Expansion Act of 1973 (P.L. 93-82).
20 38 U.S.C. § 1781; 38 C.F.R. § 17.270-17.278.
21 Sec. 3110 of PPACA.
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in and pay premiums for Medicare Part B. TRICARE-eligible beneficiaries who are entitled to
Medicare Part A based on age, disability, or ESRD, but decline Part B, lose eligibility for
TRICARE benefits.22 In addition, individuals who choose not to enroll in Medicare Part B upon
becoming eligible may elect to do so later during an annual enrollment period; however, the
Medicare Part B late enrollment penalty would apply. PPACA also waives the Medicare Part B
late enrollment penalty during the 12-month special enrollment period (SEP) for military retirees,
their spouses (including widows/widowers), and dependent children who are otherwise eligible
for TRICARE and are entitled to Medicare Part A based on disability or ESRD, but have declined
Part B. The Secretary of Defense is required to identify and notify individuals of their eligibility
for the SEP; the Secretary of Health and Human Services (HHS) and the Commissioner for Social
Security must support these efforts. This section was amended by the Medicare and Medicaid
Extenders Act of 201023 to clarify that section 3110 applies to Medicare Part B elections made on
or after the date of enactment of PPACA. This is the only provision in PPACA that has an effect
on beneficiary eligibility under the TRICARE program.
How Does PPACA Affect VA Health Care?
In general, PPACA does not appear to affect current VA health care benefits, eligibility, or cost to
beneficiaries.
However, PPACA does contain several provisions related to the VA. Specifically, it includes a
provision (Sec. 9011) that requires the VA to report to Congress on the effect to VA health care
regarding the annual fee imposed by PPACA on certain manufacturers and importers of branded
prescription drugs, as well as the a new excise tax imposed on the sale of medical devices by
manufacturers, producers, or importers (see question on medical devices below). Furthermore, it
requires VA to participate in the Interagency Working Group on Health Care Quality (Sec. 3012),
exempts the VA from a fee on all health insurers based on their market share (Sec. 4377), and
provides VA access to the National Practitioner Data Bank without a charge (Sec. 6403).
Do TRICARE and VA Health Care Meet “Minimum Essential
Coverage” Requirements?

It appears that TRICARE beneficiaries and veterans enrolled in the VA health care system would
meet the minimum essential coverage requirements of PPACA.
PPACA requires certain individuals to maintain minimal essential health care coverage and
provides a penalty for failure to maintain such coverage beginning in 2014. “Minimum essential
coverage” is explicitly defined as coverage under VA Health Care; Medicare Part A; Medicaid;
CHIP; the TRICARE for Life program; the Peace Corps program; an eligible employer-sponsored
plan (as defined by PPACA); a governmental plan (local, state, federal) including the Federal
Employees Health Benefits Program (FEHBP) and any plan established by an Indian tribal
government; any plan offered in the individual, small group, or large group market; a
grandfathered health plan; and any other health benefits coverage, such as a state health benefits
risk pool, as recognized by the HHS Secretary in coordination with the Treasury Secretary. The

22 10 U.S.C. § 1086(d).
23 Section 201, P.L. 111-309.
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relevant definition24 of “government plan” includes the TRICARE program beyond the
TRICARE for Life program. However, because TRICARE is not explicitly listed as minimum
essential coverage, some concern had been expressed by beneficiary groups that regular
TRICARE coverage may not meet the requirement. The TRICARE Affirmation Act (H.R. 4887;
P.L. 111-159), signed into law on April 26, 2010, amends the Internal Revenue Code to provide
that TRICARE coverage satisfies the minimum essential coverage requirements as required by
PPACA. Likewise, P.L. 111-173, signed into law on May 27, 2010, clarifies that those enrolled in
the VA health care system meet the minimum essential coverage requirement.
Will VA Coverage of Children with Spina Bifida and Certain Birth
Defects Meet the “Minimum Essential Coverage” Requirement?

It was initially unclear whether the Spina Bifida Health Care Program (SBHCP) and the Children
of Women Vietnam Veterans Health Care Program (CWVV) met the “minimum essential
coverage” requirement under PPACA. However, P.L. 111-173, signed into law on May 27, 2010,
clarifies that CHAMPVA, SBHCP, and CWVV meet the minimum essential coverage
requirement.
VA administers the Spina Bifida Health Care Program (SBHCP) for those biological children
diagnosed with spina bifida of veterans who served in Vietnam, and of veterans who served in
Korea during the period September 1, 1967, through August 31, 1971.25 The program provides
reimbursement for comprehensive medical care for those beneficiaries diagnosed with spina
bifida except for conditions associated with spina bifida occulta. Similarly, VA administers the
Children of Women Vietnam Veterans Health Care Program (CWVV). Under this program, VA
reimburses for care of certain birth defects identified by the VA as resulting in permanent physical
or mental disability of the biological child of a woman veteran who served in Vietnam between
February 28, 1961, and May 7, 1975.26
Does PPACA Require TRICARE to Provide Coverage to Dependent
Children Up to Age 26?

The PPACA provision extending health insurance coverage to dependent children until age 26 did
not extend to extend to TRICARE beneficiaries.
In general, eligibility for TRICARE is lost when either a dependent child turns 23 (if enrolled in
an accredited school as a full-time student) or 21 if not enrolled. Section 1001 of PPACA amends
Part A of Title XXVII of the Public Health Service Act (PHSA) to add a new Section
2714 specifying that a group health plan and a health insurance issuer offering group or
individual health insurance coverage that provides dependent coverage of children shall continue
to make such coverage available for a until the dependent child turns 26 years of age. However,
the provisions of title XXVII of the PHSA do not appear to apply to TRICARE.27

24 See 42 U.S.C. 300gg-91(d)(8).
25 38 U.S.C. §§ 1803; 1821.
26 38 U.S.C. §§ 1811; 1812; 1813.
27 See 42 U.S.C. § 300gg-21(b), as amended by PPACA (containing limitations on the applicability of the Public
(continued...)
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Coverage under the TRICARE program is governed by Chapter 55 of Title 10, United States
Code
. Under 10 U.S.C. §1072(2)(D), the term “dependent” only includes a child who has not
attained the age of 21 or has not attained the age of 23 and is enrolled in a full-time course of
study at an institution of higher learning.
Section 702 of the Ike Skelton National Defense Authorization Act for Fiscal Year 2010 (P.L. 111-
383)28 amended title 10, United States Code, to add a new section 1110b extending coverage to
children up to age 26 who are not otherwise eligible to enroll in an employer-sponsored plan to
purchase TRICARE coverage. The premium would be equal to the cost of the coverage as
determined by the Secretary of Defense on an appropriate actuarial basis. The program is to be
effective retroactively, not later than January 1, 2011. On January 13, DOD issued a press release
that stated that the program established under this authority will be known as the “TRICARE
Young Adult Program” and that it is expected to be implemented in the spring of 2011.29
As of this date, the Department of Defense has not announced actual premiums for the coverage.
The premium feature does make the TRICARE program dissimilar from the coverage mandated
by PPACA. The PPACA provision amended the Public Health Service Act to include a section
2714 that provides:
A group health plan and a health insurance issuer offering group or individual health
insurance coverage that provides dependent coverage of children shall continue to make such
coverage available for an adult child (who is not married) until the child turns 26 years of
age.
Department of Health and Human Services regulations have interpreted this to extend dependent
coverage, not create a new policy for which a separate premium would be charged.30 Some
organizations representing military constituencies have expressed concern about the potential
amount of the premiums that might be charged under the new TRICARE program.31
Will PPACA Extend Coverage to Dependent Children Under
CHAMPVA Up to Age 26?

The provision extending health insurance coverage to dependent children until age 26 in PPACA
does not appear to extend to CHAMPVA beneficiaries.
In general, eligibility for CHAMPVA is lost when either a child (other than a helpless child)32
turns 18, unless enrolled in an accredited school as a full-time student; a child, who has been a

(...continued)
Health Services Act provisions).
28 H.R. 6523 signed into law on January 7, 2011.
29 http://www.tricare.mil/mediacenter/news.aspx?fid=685.
30 http://www.hhs.gov/ociio/regulations/dependent/index.html.
31 See for example: http://www.moaa.org/lac_issues_update_101015.htm#issue3.
32 A helpless child is established after a fact-based analysis completed by a VA Regional Office determines the child to
be permanently incapable of self-support by the age of 18. See 38 C.F.R. § 3.356 and http://www.va.gov/hac/
forbeneficiaries/champva/handbook/chandbook.pdf.
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full-time student, turns 23 or loses full-time student status; a child marries; or a stepchild who no
longer lives in the household of the sponsor.
Section 1001 of PPACA amends Part A of Title XXVII of the PHSA to add a new Section 2714
specifying that a group health plan and a health insurance issuer offering group or individual
health insurance coverage that provides dependent coverage of children shall continue to make
such coverage available for an adult child until the child turns 26 years of age. This requirement
relating to coverage of adult children will take effect for the plan years beginning on or after
September 23, 2010.33 However, the provisions of Title XXVII of the PHSA do not appear to
apply to CHAMPVA.34 During the 111th Congress, the House-passed version of the National
Defense Authorization Act (NDAA) for FY2011 bill (H.R. 5136, H.Rept. 111-491) included a
provision that would have extended dependent coverage under CHAMPVA until age 26.
However, the final version of the FY2011 NDAA (H.R. 6523; P.L. 111-383) did not include any
provision to extend CHAMPVA coverage to eligible dependent children up to age 26.35 In the
112th Congress, the CHAMPVA Children’s Protection Act of 2011 (H.R. 115) has been introduced
but has not seen legislative action.
Will PPACA Affect the Cost of Prescription Drugs and Medical
Devices Provided to Veterans?

It is unclear at this time whether PPACA will affect the cost of prescription drugs and medical
devices provided to veterans.
Under current law, there are excise taxes on sales by manufacturers of certain products. Certain
sales are exempt from this tax.36 PPACA will impose an annual fee on certain manufacturers and
importers of branded prescription drugs (including biological products and excluding orphan
drugs). The fee structure will be based on annual sales and will be set to reach a certain revenue
target each year.37 In addition, under PPACA a new excise tax of 2.3% will be imposed on the sale
of medical devices by manufacturers, producers, or importers.38 This provision will exempt
eyeglasses, contact lenses, hearing aids, and any device of a type that is generally purchased by
the public at retail for individual use. The tax will apply to sales made after December 31, 2012.39
Section 9011 of PPACA requires the Secretary of Veterans Affairs to conduct a study on the effect
of provisions in Title IX of PPACA—in particular the new fees on drug and device
manufacturers—on the cost of medical care provided to veterans, and veterans’ access to medical
devices and branded prescription drugs. The Secretary is required to report the results of such a

33 Department of The Treasury, Department of Labor ,and Department of Health and Human Services, “Interim Final
Rules for Group Health Plans and Health Insurance Issuers Relating to Dependent Coverage of Children to Age 26
Under the Patient Protection and Affordable Care Act,” 75 Federal Register 27122-27140, May 12, 2010.
34 See 42 U.S.C. 300gg-91(b)(1).
35 During the 111th Congress four stand-alone measures were introduced to extend CHAMPVA coverage to eligible
dependent children up to age 26: H.R. 5185, H.R. 5206, S. 3356, and S. 3801.
36 See Internal Revenue Code Chapter 32.
37 CRS Report R40943, Public Health, Workforce, Quality, and Related Provisions in the Patient Protection and
Affordable Care Act (P.L. 111-148)
, coordinated by C. Stephen Redhead and Erin D. Williams.
38 Ibid.
39 CRS Report R41128, Health-Related Revenue Provisions in the Patient Protection and Affordable Care Act
(PPACA)
, by Janemarie Mulvey
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study to the House Committee on Ways and Means and the Senate Committee on Finance. The
report is required by December 31, 2012.

Author Contact Information

Sidath Viranga Panangala
Don J. Jansen
Specialist in Veterans Policy
Analyst in Defense Health Care Policy
spanangala@crs.loc.gov, 7-0623
djansen@crs.loc.gov, 7-4769


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