How Medicare Works With VA Benefits

It is possible to have both Department of Veterans Affairs (VA) benefits and Medicare at the same time. Many veterans rely on both programs to meet their healthcare needs. As of 2022, nearly half (48.6%) of veterans enrolled in the VA healthcare system also have Medicare coverage. 

While the two programs do not work together to pay claims, there are benefits to enrolling in both systems. Combining VA benefits with Medicare gives veterans greater choice in the services they receive and the doctors and facilities that provide their care.

Medicare Coverage Can Supplement VA Benefits for Veterans

With 82% of respondents to a recent study reporting dissatisfaction with using the VA healthcare system, there are reasons why veterans use Medicare to supplement their VA coverage.

Patient experience surveys show that VA medical centers tend to perform lower than civilian hospitals on some measures of care quality, such as care coordination and access to primary and specialty care. By enrolling in Medicare, veterans gain the option to get care in a non-VA facility if they choose to do so.

Even veterans who are fully satisfied with their VA experiences appreciate the freedom to get medical care through Medicare. For instance, there may be a non-VA facility that’s closer to home or a specific specialist who’s outside the VA system. 

Understanding Medicare Benefits

Medicare is a federal government program that provides health coverage to people who are 65 or older, as well as some younger adults with disabilities. Nationwide, approximately 65 million people are enrolled in the program. 

Eligible people can get their Medicare benefits through Original Medicare (Part A and B) or through a Medicare Advantage Plan (Part C). Those who opt for Original Medicare may supplement their coverage with a Part D drug plan and/or Medigap plan.

Medicare Eligibility Criteria

Medicare is designed to increase access to health coverage, so its eligibility requirements are straightforward. There are three eligibility pathways:

• Age: Medicare eligibility begins at age 65. Most current beneficiaries (87.6%) have Medicare due to their age. 
• Disability: People younger than 65 become eligible after receiving disability benefits from Social Security or the Railroad Retirement Board for 24 months. 
• End-Stage Renal Disease: People who’ve been diagnosed with permanent kidney failure may be eligible, regardless of their age.

Medicare Part A

Medicare Part A is one-half of Original Medicare. It’s also known as Hospital Insurance, and it offers coverage for:

• Inpatient hospital care: This covers the medical services and supplies provided during a hospital stay, including stays in inpatient rehabilitation facilities or psychiatric facilities.
• Skilled nursing facility care: To help beneficiaries recover from a hospital stay, Part A covers up to 100 days in a skilled nursing facility. It doesn’t cover long-term nursing home care.
• Home healthcare: For people who are certified as homebound, Medicare covers in-home nursing care and rehabilitation therapies.
• Hospice care: For people with terminal illnesses, Part A covers the costs of hospice care. 

Medicare Part B 

Medicare Part B, also known as Medical Insurance, is the other half of Original Medicare. Its benefits include, but aren’t limited to:

• Doctor and non-doctor services: This includes services provided by doctors, nurse practitioners, physician assistants, and other healthcare providers.
• Preventive and wellness services: To help beneficiaries stay healthy, Part B covers preventive care like screenings, wellness counseling, and some vaccinations.
• Outpatient hospital services: Part B covers care beneficiaries receive without being admitted to the hospital, such as emergency department care and same-day surgeries.
• Diagnostic services: This covers laboratory tests, such as blood or urine tests, as well as imaging tests, such as X-rays, MRIs, and CT scans. 
• Durable medical equipment: Medicare covers durable medical equipment beneficiaries need to use at home, such as wheelchairs, infusion pumps, and nebulizers.

Medicare Part C, or Medicare Advantage

Medicare Advantage is a private alternative to the government’s traditional program. Medicare-approved private insurance companies sell health plans that provide members Part A and Part B benefits. Often, these plans also cover services that aren’t part of Original Medicare, such as:

• Prescription drug coverage (otherwise provided by Medicare Part D)
• Routine vision care, such as eye exams or eyeglasses
• Routine dental care, such as cleanings
• Routine hearing care, such as hearing exams and/or aids
• Over-the-counter items, such as bandages
• Gym memberships or fitness programs
• Home delivered meals
• Transportation assistance

Medicare Part D Prescription Drug Coverage

Medicare Part D is an optional coverage that helps pay for the costs of prescription drugs and is also sold by private insurance companies. Original Medicare doesn’t include drug coverage, but beneficiaries have the option to add it by purchasing a standalone Part D drug plan in addition to Original Medicare. 

Part D drug coverage varies from plan to plan but generally includes a wide range of generic and name-brand medications. Each plan publishes a list of specific drugs it covers, known as the formulary. 

Medicare Supplement, or Medigap 

Medicare Supplement Plans, also known as Medigap, are optional private plans for people with Original Medicare. They help beneficiaries pay for their share of the cost of Medicare-covered services.

Medigap coverage varies depending on the plan a person chooses but may include:

• Coinsurance for Part A hospital care
• Copays/coinsurance for Part A hospice care
• Coinsurance for skilled nursing facility stays
• Copays/coinsurance for Part B services
• Deductibles for Part A and Part B
• Excess charges for Part B services
• Deductibles for blood transfusions (first 3 pints of blood)
• Limited foreign travel emergency care

Understanding VA Benefits

The US Department of Veterans Affairs offers a broad range of benefits for active duty service members and veterans. These benefits aim to compensate current and former military personnel for their service.

Since military service may cause or worsen illnesses and injuries, many of the VA’s benefits programs address veterans’ health needs. These programs include VA healthcare, VA disability compensation, and VA pensions. 

VA Benefits Eligibility Criteria

Generally, the VA’s health-related benefits are available to people who are:

• Uniformed service members
• National Guard or Reserve members
• Veterans

Some VA benefits programs are designed to assist specific groups of veterans, such as those with service-connected disabilities, and have additional eligibility criteria.

VA Healthcare

The VA healthcare system is a nationwide network of 1,298 healthcare facilities, including hospitals and clinics. Veterans who enroll in this system receive a medical benefits package tailored to their individual needs. This package includes, but isn’t limited to:

• Preventive services, such as health exams and vaccinations
• Inpatient hospital services, such as surgeries
• Urgent and emergency care services
• Mental health services, such as substance use disorder treatments
• Prescription drugs prescribed by VA doctors

The VA determines eligibility based on priority groups. The highest-priority veterans are those with serious service-connected disabilities, while the lowest-priority veterans are those with higher incomes and no service-connected disabilities.

VA Disability Compensation

VA disability compensation provides monthly payments to veterans with service-connected conditions. This includes veterans with physical or mental health conditions that were caused or worsened by their military service.

The payment amount varies based on a veteran’s disability rating and number of dependents. For example, the basic monthly rate for a single veteran with a 100% disability rating is $3,737.85.

Veterans have the option to receive their compensation through paper checks, prepaid debit cards, or direct deposit into their bank accounts. With no restrictions on how funds are spent, veterans have the flexibility to use their disability compensation to pay for health expenses or any other needs.

VA Pension 

The VA provides pensions to low-income veterans who are either 65 and older or have a total non-service-connected disability. Veterans with more significant health challenges may receive VA Aid and Attendance or Housebound benefits, which supplement the basic VA pension.

The maximum annual pension rate varies depending on a veteran’s health status and number of dependents. For example, the maximum basic VA pension for a single veteran is $16,551. Like VA disability compensation, pensions are provided as cash benefits. Veterans are allowed to use their funds for any purpose, including paying for medically necessary healthcare. 

How Medicare and VA Benefits Work Together

	Medicare	VA Benefits with VA Health Care
Eligibility	Must be 65 and older, disabled, or diagnosed with End Stage Renal Disease.	If you actively served in the US military
Cost	Premium(s), coinsurance, deductibles	Copays
Facility coverage	Any facility or practitioner that accepts Medicare	VA facilities only
Health coverage	Original Medicare covers hospital and medical services; Medicare Advantage and Part D plans may offer more coverage.	Covered for regular check-ups, appointments with a specialist, home health care, and medical equipment.

Many veterans who use the VA healthcare system are also enrolled in Medicare. Some are eligible because they’re 65 or older, while others receive Medicare for veterans at a younger age because of a disability or End-Stage Renal Disease. 

While dual-eligible veterans can have both Medicare and VA healthcare, the two programs don’t work together. Other VA benefits — such as disability compensation or pensions — also don’t affect a person’s Medicare coverage. However, veterans can use these cash benefits to pay for their out-of-pocket costs in Medicare.

Coordination of Benefits

Unlike some other types of health insurance, VA benefits and Medicare do not coordinate with each other to pay claims, with limited exceptions. Instead, veterans choose which program to use depending on where they’re receiving care. 

VA healthcare covers the services veterans receive in VA facilities, such as VA medical centers, VA community-based outpatient clinics, and vet centers. Medicare for veterans covers care in non-VA facilities. 

In limited situations, Medicare and the VA coordinate their health coverage. For example, if a veteran gets permission to receive some services in a non-VA hospital, their Medicare coverage may help pay for other services during the stay. 

Medicare Part D and VA Prescription Drug Coverage 

Drug coverage is included in the VA’s basic medical benefits package. For people with Medicare, drug coverage (Part D) is optional. It’s available through either standalone plans that add drug coverage to Original Medicare or Medicare Advantage Plans that include drug coverage. 

It’s possible to have Medicare Part D and VA prescription drug coverage at the same time, and many veterans do. Among veterans with both Medicare and VA benefits, about a third (32.5%) have Part D.

While having dual coverage is common, the two prescription drug benefits don’t work together. VA drug coverage works at VA healthcare facilities and pharmacies, while Medicare Part D works at retail pharmacies in the plan’s network. Despite this lack of overlap, there are good reasons to combine Medicare and VA benefits. 

Why Have Both Medicare and VA Healthcare? 

While both Medicare and VA healthcare provide comprehensive health benefits, many veterans choose to enroll in both programs. Some of the key reasons include:

• Increasing choice in providers: Enrolling in both programs allows veterans to get care from either VA or non-VA facilities. 
• Adding coverage for additional services: Medicare covers some benefits that the VA healthcare system doesn’t, and vice versa. 
• Maintaining a backup coverage source: The VA encourages veterans to maintain other coverage in case funding for the VA healthcare system changes in the future.
• Avoiding late enrollment penalties: Veterans who don’t sign up for Medicare when first eligible may pay higher premiums if they need to sign up later due to changes in VA funding.

Medicare vs. TRICARE

	Medicare	TRICARE
Eligibility	Must be 65 and older, disabled, or diagnosed with End Stage Renal Disease.	Must be members of the uniformed services, their families, certain reservists and National Guard members, survivors, and some former spouses.
Cost	Premium(s), copayments, coinsurance, deductibles	Copayments, deductibles, and cost-sharing for covered services varying based on the beneficiary’s plan and status.
Facility coverage	Any facility or practitioner that accepts Medicare	Military treatment facilities, TRICARE network providers, and non-network providers with varying cost-sharing based on the plan.
Health coverage	Original Medicare covers hospital and medical services; Medicare Advantage and Part D plans may offer more coverage.	Comprehensive healthcare coverage, including preventive services, hospital stays, prescription medications, and specialty care, tailored to the specific plan and eligibility of its members.

Medicare and TRICARE have similar names, but they’re distinct programs. TRICARE is the US government’s healthcare program for active duty and retired military personnel, while Medicare provides coverage to civilians. Veterans who are eligible for both programs can combine Medicare and TRICARE.

Like Medicare, TRICARE covers a long list of medically necessary services, though there are some differences in coverage. For example, TRICARE covers routine dental and vision care for some enrollees, while Original Medicare doesn’t offer these benefits. Another key difference is that Medicare is individual coverage, while some TRICARE plans extend coverage to veterans’ family members.

TRICARE Eligibility

TRICARE is available to eligible military personnel, including:

• Active duty service members
• National Guard/Reserve members
• Retired service members
• Retired National Guard/Reserve members

Military personnel with TRICARE coverage have the option to add their spouses or children to their plans. These dependents remain TRICARE-eligible if their sponsor passes away.

What Does TRICARE Cover?

The TRICARE program includes several health plans — including TRICARE Prime, TRICARE Select, and TRICARE for Life — and coverage varies depending on the plan. Benefits may include, but aren’t limited to:

• Hospital care: This includes emergency department services, inpatient hospital services, and surgical procedures.
• Preventive care: To help enrollees stay healthy, TRICARE covers a variety of screenings, exams, and vaccinations.
• Mental health care: TRICARE plans cover both inpatient and outpatient mental health treatments.
• Overseas care: TRICARE coverage works when enrollees are traveling outside the US.
• Dental care: Active duty enrollees receive dental care, and other TRICARE members can add dental coverage through the TRICARE Dental Program or FEDVIP Dental.

How Does TRICARE Work?

TRICARE includes several different health plans, each with different rules for how members access care and how much that care costs. Unlike VA healthcare, TRICARE coordinates with Medicare to pay claims.

Some TRICARE plans limit enrollees to a network of providers, while others cover both in-network and out-of-network care. TRICARE for Life, the plan for Medicare enrollees who are 65 or older, covers both participating and non-participating Medicare providers.

Some TRICARE plans charge monthly premiums. Once enrollees meet their deductible (if applicable), they pay copays or coinsurance. These cost-sharing requirements vary based on the plan and service.

When a veteran has both Medicare and TRICARE, their plans work together to pay health costs. Within the US, Medicare is the primary payer, and TRICARE helps cover any remaining costs. Outside the US, TRICARE is the primary payer.

Should You Have Both Medicare and TRICARE?

Advantages

There are many reasons why veterans choose to use both Medicare and TRICARE. Some key benefits of combining these programs include:

• Reducing out-of-pocket care costs: Medicare and TRICARE work together to pay claims. When a service is covered by both programs, members generally pay $0 out of pocket.
• Adding coverage for more services: Some services are covered by Medicare but not TRICARE, and vice versa. For example, Original Medicare doesn’t pay for prescription drugs unless you have Part D, but TRICARE does.
• Adding coverage for foreign medical care: Original Medicare and Medicare Advantage don’t cover care outside the US and its territories, with limited exceptions. TRICARE works in overseas locations.

Drawbacks

While there are good reasons to have both coverages, there are also some drawbacks to combining Medicare and TRICARE. Veterans choose not to combine coverages to avoid:

• Needing to enroll in Medicare Part B: People who have premium-free Part A are required to also buy Part B to remain eligible for TRICARE. Veterans who don’t want Part B may prefer to avoid TRICARE.
• Filing more paperwork: TRICARE for Life members may need to pay their share of the cost of Medicare-covered services when they receive care, then send a claim form to TRICARE to get reimbursed. 
• Duplicating coverages: Some veterans have health coverage from other sources, such as Medicaid, VA healthcare, or an employer-sponsored health plan, and decide they don’t need to enroll in both Medicare and TRICARE.

What This Means for You 

Many veterans choose to rely on both Medicare and the VA for their healthcare needs. While enrolling in both programs isn’t right for everyone, combining these coverages offers potential advantages for veterans. 

Medicare for veterans helps supplement the care they receive within the VA healthcare system. It gives veterans the opportunity to use non-VA doctors or hospitals if they choose to do so for one reason or another. It also acts as a backup source of coverage if funding changes reduce the availability of VA healthcare.

Weighing the many coverage options available as a veteran can be challenging. For help deciding if combining VA benefits and Medicare makes sense for your needs, talk to a trusted agent.