10 USC 1086 - Contracts for health benefits for certain members, former members, and their dependents

(a) To assure that health benefits are available for the persons covered by subsection (c), the Secretary of Defense, after consulting with the other administering Secretaries, shall contract under the authority of this section for health benefits for those persons under the same insurance, medical service, or health plans he contracts for under section 1079 (a) of this title. However, eye examinations may not be provided under such plans for persons covered by subsection (c).
(b) For persons covered by this section the plans contracted for under section 1079 (a) of this title shall contain the following provisions for payment by the patient:
(1) Except as provided in clause (2), the first $150 each fiscal year of the charges for all types of care authorized by this section and received while in an outpatient status and 25 percent of all subsequent charges for such care during a fiscal year.
(2) A family group of two or more persons covered by this section shall not be required to pay collectively more than the first $300 each fiscal year of the charges for all types of care authorized by this section and received while in an outpatient status and 25 percent of the additional charges for such care during a fiscal year.

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(3) 25 percent of the charges for inpatient care, except that in no case may the charges for inpatient care for a patient exceed $535 per day during the period beginning on April 1, 2006, and ending on September 30, 2009. The Secretary of Defense may exempt a patient from paying such charges if the hospital to which the patient is admitted does not impose a legal obligation on any of its patients to pay for inpatient care.
(4) A member or former member of a uniformed service covered by this section by reason of section 1074 (b) of this title, or an individual or family group of two or more persons covered by this section, may not be required to pay a total of more than $3,000 for health care received during any fiscal year under a plan contracted for under section 1079 (a) of this title.
(c) Except as provided in subsection (d), the following persons are eligible for health benefits under this section:
(1) Those covered by sections 1074 (b) and 1076 (b) of this title, except those covered by section 1072 (2)(E) of this title.
(2) A dependent (other than a dependent covered by section 1072 (2)(E) of this title) of a member of a uniformed service
(A) who died while on active duty for a period of more than 30 days; or
(B) who died from an injury, illness, or disease incurred or aggravated
(i) while on active duty under a call or order to active duty of 30 days or less, on active duty for training, or on inactive duty training; or
(ii) while traveling to or from the place at which the member is to perform, or has performed, such active duty, active duty for training, or inactive duty training.
(3) A dependent covered by clause (F), (G), or (H) of section 1072 (2) of this title who is not eligible under paragraph (1).

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(d) 
(1) A person who is entitled to hospital insurance benefits under part A of title XVIII of the Social Security Act (42 U.S.C. 1395c et seq.) is not eligible for health benefits under this section.
(2) The prohibition contained in paragraph (1) shall not apply to a person referred to in subsection (c) who
(A) is enrolled in the supplementary medical insurance program under part B of such title (42 U.S.C. 1395j et seq.); and
(B) in the case of a person under 65 years of age, is entitled to hospital insurance benefits under part A of title XVIII of the Social Security Act pursuant to subparagraph (A) or (C) of section 226(b)(2) of such Act (42 U.S.C. 426 (b)(2)) or section 226A(a) of such Act (42 U.S.C. 426–1 (a)).
(3) 
(A) Subject to subparagraph (B), if a person described in paragraph (2) receives medical or dental care for which payment may be made under medicare and a plan contracted for under subsection (a), the amount payable for that care under the plan shall be the amount of the actual out-of-pocket costs incurred by the person for that care over the sum of
(i) the amount paid for that care under medicare; and
(ii) the total of all amounts paid or payable by third party payers other than medicare.
(B) The amount payable for care under a plan pursuant to subparagraph (A) may not exceed the total amount that would be paid under the plan if payment for that care were made solely under the plan.
(C) In this paragraph:
(i) The term medicare means title XVIII of the Social Security Act (42 U.S.C. 1395 et seq.).
(ii) The term third party payer has the meaning given such term in section 1095 (h)(1) of this title.
(4) The administering Secretaries shall develop a mechanism by which persons described in subparagraph (B) of paragraph (2) who do not satisfy the condition specified in subparagraph (A) of such paragraph are promptly notified of their ineligibility for health benefits under this section. In developing the notification mechanism, the administering Secretaries shall consult with the Administrator of the Centers for Medicare & Medicaid Services.
(e) A person covered by this section may elect to receive inpatient medical care either in
(1)  Government facilities, under the conditions prescribed in sections 1074 and 1076–1078 of this title, or
(2)  the facilities provided under a plan contracted for under this section. However, under joint regulations issued by the administering Secretaries, the right to make this election may be limited for those persons residing in an area where adequate facilities of the uniformed service are available. In addition, subsections (b) and (c) of section 1080 of this title shall apply in making the determination whether to issue a nonavailability of health care statement for a person covered by this section.
(f) The provisions of section 1079 (h) of this title shall apply to payments for services by an individual health-care professional (or other noninstitutional health-care provider) under a plan contracted for under subsection (a).
(g) Section 1079 (j) of this title shall apply to a plan contracted for under this section, except that no person eligible for health benefits under this section may be denied benefits under this section with respect to care or treatment for any service-connected disability which is compensable under chapter 11 of title 38 solely on the basis that such person is entitled to care or treatment for such disability in facilities of the Department of Veterans Affairs.
(h) 
(1) Subject to paragraph (2), the Secretary of Defense may, upon request, make payments under this section for a charge for services for which a claim is submitted under a plan contracted for under subsection (a) to a hospital that does not impose a legal obligation on any of its patients to pay for such services.
(2) A payment under paragraph (1) may not exceed the average amount paid for comparable services in the geographic area in which the hospital is located or, if no comparable services are available in that area, in an area similar to the area in which the hospital is located.
(3) The Secretary of Defense shall periodically review the billing practices of each hospital the Secretary approves for payment under this subsection to ensure that the hospitals practices of not billing patients for payment are not resulting in increased costs to the Government.
(4) The Secretary of Defense may require each hospital the Secretary approves for payment under this subsection to provide evidence that it has sources of revenue to cover unbilled costs.