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Demystifying Veterans' Retirement and Medical Benefits

Sep 08, 2020 5 min read Roger Wohlner

Key Takeaways

  • Veterans typically qualify for the same Social Security and Medicare benefits as non-veterans.
  • Medicare, TRICARE, and VA benefits can work in tandem to meet your retirement health care needs.
  • Talk to a military health benefits advisor about your situation.

Veterans and their families are generally eligible for the same Social Security and Medicare benefits available to most Americans. In some cases, these benefits are enhanced. It's important for all veterans and their eligible dependents to be aware of available retirement and medical programs and how to use them best. Unfortunately, the details are often unclear and processes can be confusing.

This article will help you navigate the maze by touching on three valuable retirement and healthcare benefits available to veterans – Social Security, TRICARE and Medicare, and VA Benefits – and offers principles for applying them to your situation.

Understanding Social Security benefits

More than 20% of Social Security beneficiaries have served in the military, and about 35% of people receiving Social Security benefits are veterans and their families Opens in new window. It is fitting that those who served their country in the military receive care and support when they return to civilian life, particularly when they embark upon their retirement years.

Yet, the Social Security Administration (SSA) says that veterans may not be aware that they can sometimes qualify for Social Security benefits, even while they are receiving VA benefits. According to the SSA, about 621,000 military veterans received disability insurance benefits through its wounded warrior program Opens in new window.

If you became disabled while serving on active duty on or after October 1, 2001, you can apply for disability benefits through the SSA and receive expedited processing of your claim.

Additionally, if you have a VA compensation rating of 100% permanent and total Opens in new window (P&T), your application for disability benefits with the SSA may also be processed faster. While it doesn't guarantee benefits, the SSA will consider your request in a timely manner.

Depending on when you served in the military, you may automatically qualify for additional, special Social Security credits Opens in new window, and you can receive both a military pension and Social Security benefits.

Overall, it helps to remember that you paid Social Security taxes while you were in military service, so you have all the rights to the benefits that civilians do.


Evaluating TRICARE and Medicare options

Those Social Security taxes you pay as a service member include Medicare taxes, which means you can qualify for Medicare like everyone else. However, your military service may also qualify you to receive TRICARE Opens in new window and TRICARE for Life Opens in new window.

During the period of time after you retire up until age 65 or the time at which you become eligible for Medicare, you can qualify for the benefits of TRICARE Opens in new window, just as you did during active duty service. This includes various TRICARE plans Opens in new window like TRICARE Prime, TRICARE Extra, and TRICARE Standard as well as the TRICARE Retiree Dental Program (TRDP).

Once you turn 65, or you or a family member becomes eligible earlier through a disability for Medicare Part A, you can apply to receive TRICARE for Life. This program is usually a second payer of health insurance bills after Medicare, which is the first payer.

While these options together may not cover all of your health expenses, it is good to know that you may have both working for you as a retired veteran.

Exploring VA benefits

The Veterans Health Administration (VA) provides health care to eligible veterans. With over 1,200 hospitals and medical offices, going to the VA for health care is a common option for many veterans. A few important things to know about VA benefits as a veteran include:

  • If you are enrolled in VA health care, you do not need an additional insurance plan to meet your Affordable Care Act health coverage requirement.
  • Most veterans qualify for cost-free health care; some veterans have co-payments for health care and prescription medications.
  • To qualify for VA benefits, you must have performed active duty service and must not have been dishonorably discharged.
  • You'll need proof of discharge papers Opens in new window to apply for VA benefits.

Learn more about VA benefits available to veterans by exploring the eligibility requirements and health care coverage benefits on the VA's website Opens in new window.


Considerations for coordinating your care

With TRICARE, VA benefits, and Medicare as potential options for veterans entering retirement, it's important to get the right combination of coverage to best meet your needs.

For instance, if you are receiving TRICARE pharmacy benefits and you become eligible for Medicare and Medicare Part D, it may not make financial sense to enroll in Medicare Part D as your needs may already be sufficiently met through TRICARE.

Also, TRICARE does not cover all medical costs. If you require a hospital stay, you may have bills left to pay after TRICARE makes its payments. For this reason, supplemental health insurance, or long-term care insurance, may make sense for you.

It's important to note that Medicare and VA benefits do not work together. For example, Medicare will not pay for care you receive at a VA hospital, and VA benefits do not cover care you receive at a non-VA facility. VA benefits cannot be applied to deductibles, copays or coinsurances required by Medicare.

The VA, Department of Defense or a military health benefits advisor Opens in new window may be able to help you better understand what benefits you qualify for and which ones are best for you and your family. A financial advisor may help you determine if other types of insurance, such as long-term care insurance, will be of benefit to you.


What you can do next

Sit down with a knowledgeable financial professional or tax advisor who is well-versed in coordinating benefits for veterans and their families to make sure you're taking advantage of all the programs available to you.


John Schmoll is the founder of Frugal Rules, a finance blog covering investing, budgeting and frugal living. He is a father, husband and veteran of the financial services industry who's passionate about helping people find freedom through frugality.


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