Can employers reimburse employees for Medicare premiums?

There are two scenarios in which an employer can reimburse employees for Medicare premiums:

1) Small Employers (under 50 EEs) can reimburse employees for Medicare premiums (and other health insurance plan premiums or any IRC Section 213d medical expense) through the use of a Qualified Small Employer HRA (QSEHRA) provided that the reimbursements are not restricted only to Medicare premiums.

2) An employer with fewer than 20 employees, (i.e. not subject to Medicare as secondary payer rules) can pay for employees’ Medicare Part B or D premiums so long as the employer also had standard small group coverage that is subject to market reforms, such as the annual dollar limit prohibition and preventative services requirements.

Regarding the QSEHRA – Not every small employer is eligible to implement a QSEHRA and certain restrictions may make it an undesirable solution, but a QSEHRA may be the right fit for certain employers.

Regarding employers with fewer than 20 employees – See the answer to question #3 in this IRS publication for a more detailed explanation of the requirements for a Medicare reimbursement arrangement.

If you or your clients are interested in learning more about the QSEHRA or Medicare reimbursement, our HR compliance partners TASC and HR Service can assist brokers and employers in setting up and administering QSEHRA’s and maintaining compliance for reimbursement arrangements. Please visit the HR Compliance section on our partner page for company descriptions and contacts.