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Tricare, vehicle insurance, and uninsured/underinsured motorists

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I’ve enjoyed military retirement for over 10 years, and in that time I’ve been lucky enough to be mostly ignorant of my Tricare Prime benefits. I found a good civilian clinic for my primary care manager (just a couple of miles from our house), and I’ve only visited once or twice a year for the usual respiratory infections or knee injuries or immunizations. No complaints.

I’d always assumed that Tricare would cover your medical insurance. I knew from shipmates’ stories that if you woke up with appendicitis, Tricare would cover the operation and recovery. I knew that if you fell off a ladder and fractured a bone, Tricare would cover the ambulance ride and the surgery and the physical therapy.

But I haven’t had a fender-bender for over three decades. I recently learned that if you’re injured in a vehicle accident then Tricare coverage isn’t so simple anymore.

I started to learn this when a neighbor’s car was rear-ended during her commute. (The other driver was at fault.) She seemed all right, but she was shaken up so the EMTs took her to the hospital for more tests. She said and did all the right things, so there were no legal issues. She took painkillers for a couple of days and had several physical therapy sessions. (She’s fine now, and her car has been fixed too. No problems.) I helped her fill out the insurance claims paperwork for her car, and USAA wanted to know about doctors and emergency rooms and physical therapy.

As expected, during the week after her accident the medical bills started rolling in. She let everyone know that she had insurance with USAA and Tricare, and the billing agents were happy.

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Much to my surprise, the following week she received a letter from Tricare telling her that they would not pay her medical expenses. She didn’t understand why, and I didn’t either.

So I finally did something that strikes fear & trembling into the hearts of all U.S. military veterans and their spouses: I called the Tricare “customer service” line at TriWest. It actually went a lot better than I expected. I didn’t even spend any time on hold, which seems most unusual. I decided to go for the worst-case situation, so I asked them: if I was disabled in a vehicle accident caused by the other driver’s fault, and I carried only the minimum state-required insurance, and the other driver had no insurance, would Tricare still cover me? What about my family? What about lifetime care if I was an invalid?

The woman in the Benefits section kept breaking into my questions to make comforting noises and to reassure me that Tricare would take care of me. I guess that’s part of her job, but the only problem was that she couldn’t answer the question. She kept telling me (in between reassurances) that it would be an insurance issue. She kept telling me that the other driver was required by law to have insurance. I kept trying to clarify that the question assumed the other driver had no insurance. She kept telling me that I should really have more insurance to protect myself. Then she told me I should have long-term care insurance too. This was not comforting.

She politely decided to get rid of me by passing me to Claims. (I supported that.) The Claims branch was all over it. The representative understood my questions but answered them in her own way. She told me that for vehicle accidents, Tricare is not first-party coverage. The vehicle insurance companies would sort out their claims first (if both sides had auto insurance). Then the state would step in with personal injury coverage (whatever limit was on the policy). If the other driver didn’t have insurance then I could be protected by Uninsured Motorist/Underinsured Motorist coverage. Whether or not I had UM/UIM insurance, my auto insurance company would pursue the at-fault driver for whatever they could get.

Finally, if I was confronting disability, Tricare would see if I qualified for Medicare benefits. If so then Medicare would step in and Tricare would be second payer under Tricare For Life. If nobody else was required to pay anything further for my medical care, then Tricare would step up as the payer of last resort. They’d only pay for medical issues, and frankly it seemed like a fuzzy line between medical expenses and long-term care expenses. Bottom line, however, was that Tricare would pay for any remaining medical expenses– but only after everyone else had finished paying their part. Underpayment for injury claims has been a problem in some parts of the insurance industry, so I was glad to learn that Tricare would backstop us.

Keep in mind that I might have other expenses. If I was still working and wanted to replace my employment income, then I’d need disability insurance. The Veteran’s Administration might cover some of my disability or long-term care expenses, or I’d have to pay out of my pension & savings. (I’m still relatively ignorant of VA coverage.) If I needed long-term care for my activities of daily living, then I’d need long-term care insurance.

If a family member was injured in the accident, then the same process would be followed– as long as that family member was also covered under Tricare. My vehicle insurance company would pay for any of my passengers– up to our policy limits.

Everything worked out fine for our neighbor. USAA is very good at member service and she hasn’t had to worry about any of the medical bills. But this incident made me take a look at our own insurance coverage.

Triwest’s answers raised an interesting question for the Ohana Nords insurance plan. Nearly two decades ago, when our college student was a toddler, we bought a huge amount of UM/UIM insurance coverage. The idea was that it would cover her expenses if she was disabled in a vehicle accident and needed lifetime care. However last month she bought her own car and she insured it under her own name. She was no longer on our USAA policy, so hypothetically we no longer needed to carry UM/UIM insurance. This “hypothetical” question is costing us over $220/year. (We may be financially independent, but researching these questions is how we got there.) So I called USAA.

Of course I’m a little cynical about asking an insurance company if I need more insurance. I ended up speaking to one of USAA’s experts who understands both the financial-planning issues and insurance-coverage issues. One of USAA’s challenges at answering this question is that the laws vary by state, and each member’s specific insurance policy may have different types of coverage. It’s not easy to just spit out a blanket answer like “You should have lots of UM/UIM insurance, thanks for calling!”

At the national level, he said that USAA has no problems working with Tricare. He said that UM/UIM coverage is set up for vehicle passengers (guests who might not have Tricare) as well as for drivers and family members. He agreed that in Hawaii, if my spouse and I did not have UM/UIM insurance, then after USAA and the state were finished, any remaining medical expenses would be covered by Tricare. We’d still be on the hook for the non-medical aspects of long-term care, and we still might need long-term care insurance, but Tricare (and Medicare if necessary) would cover our medical needs.

Not only was that good news, but it also matched what we learned from TriWest.

In the end, we decided to keep forking out the $220/year for a couple more years. NROTC has kept our young adult pretty busy with summer school and Navy training, and now she’s living off campus in her own year-round apartment, but she’s still staying with us in Hawaii for 4-6 weeks/year. Although she has her own vehicle insurance policy with USAA, they still consider her a “guest driver” of our car. She won’t have her own medical insurance until she’s commissioned and on active duty, and she’ll only have Tricare coverage from us until she turns 23 years old. If she’s a driver or passenger in our car, UM/UIM coverage still gives us the peace of mind today that we sought when she was a toddler.

Otherwise, our driving habits are minimal– my spouse and I are retired on an island that’s only 30×40 miles, with no other family, and we don’t drive very much. We rarely have passengers in our car, either, and the occasional passenger that we do carry is usually an adult with their own insurance. When our daughter has her own active-duty Tricare insurance and she’s off our policy, then we’ll cancel our USAA UM/UIM coverage.

Keep in mind that every state has different laws, and your family situation might be different from ours. However I finally have a better understanding of Tricare’s coverage and the benefits of UM/UIM insurance. I hope this information helps you decide how to optimize your insurance coverage too!

Related articles:
Buying a used car on a cash advance in a new town
USAA starts an online service to sell your car
Joining NFCU, PenFed, and USAA (part 2 of 2)

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