Veterans Have Unusual Choice Thanks to Health Exchanges

When the House Committee on Veterans' Affairs held a hearing recently, members expressed concern that veterans might not qualify for subsidies for the new health insurance marketplaces if they were enrolled in VA health coverage.

A Treasury Department official explained that veterans will actually have more options next year than most folks, not fewer.

Here's the deal: Veterans who get their health care through the VA system don't have to buy any extra coverage to satisfy the health law's requirement that they have insurance starting Jan. 1.

Still, if they want to, they can sign up for coverage on the state-based marketplaces, also called exchanges, to supplement their VA coverage.

However, veterans who are enrolled in VA health care won't be eligible for premium tax credits on the exchanges, Treasury officials said. Those subsidies will be available to people with incomes up to 400 percent of the federal poverty level to help make coverage more affordable.

That tax treatment is similar to the situation for people who have coverage available through their jobs, said Jason Levitis, a senior adviser to the assistant secretary for tax policy at the Treasury Department.

"The general way that the tax credit is set up is that an individual who is eligible for other coverage...can't get the tax credit," he said.

But there's a key difference. Veterans get to decide whether they want to stick with their VA coverage or go onto the marketplaces and buy a plan there and get a tax credit if they qualify.

Most people with coverage available through their jobs don't have that option. If they have on-the-job coverage available that meets the law's standards for affordability (individual premiums that are no more than 9.5 percent of income) and adequacy (a plan that covers at least 60 percent of allowed medical expenses) they won't generally be eligible for tax credits on the marketplace.

"We created a rule that effectively gives veterans a choice," said Levitis.