If you’re 65 or older and still working, your employer can’t pay your Medicare premiums directly, but you may be reimbursed for premiums you pay yourself.
Reimbursement is available if your employer has set up a Section 105 Medical Reimbursement Plan. Depending on the type of plan, you may also be eligible for reimbursement for Supplemental Medicare premiums.
But before you look into reimbursement, you must decide whether to enroll in Medicare at all. It can be tempting to keep your familiar employer plan, but that’s not always a smart move. Especially if you work for a small business.
When an employer has fewer than 20 employees, Medicare is considered the primary insurance once you turn 65. Your employer coverage will be secondary, meaning it will only pay claims after Medicare has paid. If you don‘t sign up for Medicare, your healthcare may not be covered at all.
If there are 20 or more employees, it’s the opposite – your employer coverage is primary and Medicare is secondary. You can keep your employee coverage and enroll in Medicare later without any penalties.
Or you can give up your employer coverage and enroll in Medicare plus a Medigap plan. The right decision depends on the costs and benefits of your employee coverage vs. Medicare.
Can My Employer Pay My Medicare Part B Premium
Employee health insurance is a major expense for employers. It hits small business owners especially hard because they pay more money to ensure their older workers.
Signing up for Medicare can be a cost saver for your employer since the monthly Medicare Part B premium is probably less than the premium for your employer-sponsored coverage.
It might seem reasonable, then, for your employer to pay your Medicare Part B premium for you. But in general, that’s not allowed. You must be the one to pay Medicare.
However, employers can pay Medicare premiums for active employees if the company’s payment plan is integrated with the group’s health plan.
For example, the linked group plan must provide minimum value by paying for at least 60 percent of the actuarial value of services received. These payments must be limited to Part B & Part D.
Can My Employer Reimburse Me for my Part B Premium
Although your employer can’t pay your Medicare premium directly, there is a way for you to get reimbursed for your premium payments.
Your employer can reimburse you for your Part B premium if your employer has set up a Section 105 Medical Reimbursement Plan.
With a Section 105 plan, the employer sets money aside to pay for employees’ insurance premiums, including the premium for Part B.
The plan can also pay for dental insurance. Many Section 105 plans are medical reimbursement plans, also known as HRAs. Some HRAs are available to all employees, while others are offered to employees individually.
Can an Employer Pay for Medicare Supplemental Insurance
Medicare Part B only pays 80 percent of covered medical expenses, so it’s important to have good supplemental coverage if Medicare is your primary insurance. Your employer insurance is one option. A Medicare Supplement, or Medigap, plan is another.
Employers cannot pay for Medigap coverage directly. And employers can only reimburse you for your monthly Medigap premiums if they have set up a Section 105 plan for their whole employee group.
These types of Section 105 plans reimburse employees for buying their own health care coverage, including Medicare and Medigap.
If you can’t get reimbursement for Medigap, that doesn’t mean you should automatically choose your employer’s coverage as your secondary insurance.
Even without any reimbursement, Medigap will often be less expensive and provide better coverage than the insurance your employer offers.
Is Employer Reimbursement of Medicare Premiums Taxable
If your employer’s Section 105 plan only allows for reimbursement of medical premiums and expenses, then the reimbursements you receive are not taxable.
However, if the plan pays you in cash for any unused benefits, then the reimbursement and the cash payment will probably be taxable.
Can My Employer Make Me Go on Medicare
Your employer can’t force you to go on Medicare. Medicare laws don’t allow employers to take Medicare eligibility into account when offering employee benefit.
Nor can an employer offer lesser benefits to people who are eligible for Medicare. It’s also against the law to offer you money or other incentives to choose Medicare instead of the employee health plan.
Can a Company Reimburse an Employee for Medicare Premiums
A company can reimburse an employee for Medicare Part B premiums if the employer has a Section 105 plan. Depending on the type of plan the company has, it may also offer reimbursement for Part D prescription coverage and Medigap coverage.
It’s not always easy to decide whether to enroll in Medicare when you’re still working. At MedicareFAQ, we can help you evaluate the costs and understand how primary and secondary coverage works. We can also give you a free quote on the types of policies you’re most interested in. Just give us a call or fill out our form.