The Veteran at a Small Employer: TRICARE Coordination Nobody Manages

Approximately 1.9 million veterans are employed by small businesses, per SBA Office of Advocacy data. When a veteran employed at a small employer is offered group health coverage, they face a TRICARE coordination decision their employer’s broker cannot competently advise on. TRICARE Prime, the managed care option for active duty servicemembers and their families, charges no premium for the servicemember. TRICARE Reserve Select, available to Selected Reserve members and their families, carries monthly premiums of approximately $52 for individual and $263 for family coverage in 2026. Most employer-sponsored plans at small employers cost the employee $150 to $400 per month in premium contributions for family coverage. The veteran who can keep TRICARE has better coverage at lower cost than what the employer offers. The veteran who enrolls in the employer’s plan may be paying more for less. The decision depends on the veteran’s specific TRICARE eligibility category, the employer’s plan design, and coordination-of-benefits rules that neither the broker nor the HR contact has been trained to apply.

The Coordination Problem

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When a veteran enrolled in TRICARE is also offered employer-sponsored coverage, two things happen simultaneously. First, the veteran must decide whether to enroll in the employer plan, decline it, or carry both. Second, the employer’s participation rate calculation is affected by the veteran’s decision. Carriers offering fully insured coverage to small employers typically require 70 to 75 percent participation of eligible non-waiving employees. A veteran who declines ESI in favor of TRICARE is a non-participating employee. If three veterans in a 15-person firm decline coverage, participation drops to 80 percent of the remaining eligible employees, and any additional waivers may push the group below the carrier’s minimum. In a level funded arrangement, the participation requirement is typically enforced by the stop-loss carrier or the TPA’s underwriting standards rather than by a carrier rule, but the economics are similar: a smaller enrolled group produces a less predictable risk pool.

The veteran who enrolls in ESI as primary and TRICARE as secondary receives coordination of benefits that most small employer TPAs have never administered. TRICARE as secondary payer requires the primary plan to process and adjudicate first; TRICARE then covers the remaining cost-sharing (deductibles, copayments, coinsurance) up to the TRICARE-allowed amount. The TPA that mishandles the coordination creates balance billing exposure for the employee. The provider bills the balance between the primary plan’s payment and the provider’s billed charge; TRICARE covers the difference up to its allowable, but only if the claim is submitted correctly to the TRICARE claims processor. When coordination fails, the veteran absorbs out-of-pocket costs that should have been covered by the secondary payer.

The Structural Explanation

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The ACA prohibits employers from discriminating against employees who decline coverage when they have other minimum essential coverage. TRICARE qualifies as minimum essential coverage under the ACA. The employer cannot penalize the veteran for declining ESI. The employer can, however, require the veteran to attest to other MEC as the basis for the waiver, which creates an administrative documentation obligation that most small employer HR operations are not equipped to manage consistently.

The underlying problem is that TRICARE and the commercial group insurance market were designed by different agencies for different purposes and have never been integrated into a coherent decision framework for the veteran at a small employer. The Defense Health Agency publishes TRICARE plan descriptions and cost comparison tools, but they are designed for individual beneficiary navigation, not employer benefit decision-making. The broker advising the small employer has typically never administered a TRICARE coordination case and does not know the veteran’s decision calculus well enough to advise accurately. The veteran is left to figure it out on their own, using TRICARE resources that do not address the employer plan comparison and employer resources that do not address TRICARE.

What Partially Exists

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Several veteran service organizations, including MOAA (Military Officers Association of America) and VFW, provide benefits counseling that includes TRICARE coordination guidance. The Veterans Benefits Administration maintains a network of accredited benefits counselors who advise on TRICARE and VA health system coordination. These resources are real and competent. They are also entirely disconnected from small employer HR infrastructure. The veteran who calls the MOAA helpline gets accurate TRICARE advice; the veteran’s employer never learns what the correct coordination looks like. The result is ad hoc decision-making: the veteran picks whichever option seems simpler, the broker shrugs, and the coordination either works by accident or fails by default.

For the veteran who is a National Guard or Reserve member, TRICARE Reserve Select (TRS) is a premium-based plan available during periods when the member is not on active duty. TRS provides comprehensive coverage at premiums well below the ACA individual market (approximately $52 per month for individual coverage in 2026, compared to $400 to $700 per month for a comparable individual market plan at working age). The reservist employed at a small employer has a genuine coverage choice that the civilian employee does not: TRS as primary with no employer plan, or ESI as primary with TRS as secondary, or ESI alone. The correct answer depends on the plan design, the network geography, and the total out-of-pocket comparison. Nobody at the employer is equipped to run that comparison.

The Gap as Opportunity

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The employer in a region or industry with high veteran concentration (defense contracting supply chains, law enforcement, healthcare systems with military-adjacent hiring, skilled trades in communities near military installations) faces a recurring TRICARE coordination problem that most brokers cannot address. A broker or TPA that develops genuine TRICARE coordination expertise, that can advise the employer on participation rate implications of veteran waivers, that can train the HR contact on coordination-of-benefits documentation, and that can help veterans make the enrollment decision accurately, creates a differentiator in employer segments that currently receive generic advice. The cost of developing this expertise is low: TRICARE plan structures are public, coordination rules are published by the Defense Health Agency, and the veteran population is identifiable. The value is high: the employer who gets TRICARE coordination right retains veterans who would otherwise leave for a larger employer with a benefits team that understands their situation.