Reimburse Employee Medicare Premiums | Medicare & HRAs
Can I reimburse my employee’s medicare premiums? Great question! Knowing what is reimbursable within QSEHRA is essential when planning to offer reimbursement benefits to your small business employees. You may have employees on Medicare and wonder if they are eligible to receive the tax free benefits of QSEHRA. The good news is yes!
Can I Reimburse My Employee’s Medicare Premiums?
There are a few qualifications that your employees must meet in order to be in compliance and reap the full benefits of an ICHRA (Individual Coverage HRA) or QSEHRA (Qualified Small Employer HRA). Employees must have a qualified health plan that meets Minimum Essential Coverage Requirements. They also must be a full time employee (30 hours or more per week), have worked for 120 consecutive days, and be a US Citizen.
You as a business owner will get to set aside tax free money to reimburse your employees to help cover the cost of insurance premiums and/or qualifying medical expenses.
You read that right. Insurance reimbursement is not taxable or considered income.
Medicare and HRAs
There are four types of Medicare but only two meet the requirements for reimbursement under HRA’s guidelines while the other two are considered supplemental coverage that are used in conjunction with the other plans. Let’s break it down below:
Medicare Part A is considered “hospital insurance”. This means that inpatient care is covered, including a skilled nursing facility, hospital, and sometimes at home care. In order to enroll in Part A you can’t be covered under social security or a government employee who paid Medicare tax. The premium can be reimbursed in this situation through the small business HRA.
Medicare Part B is also known as medical insurance. This is supplemental coverage that is used in conjunction with Medicare Part A or Part C. The premiums are reimbursable since they are considered medical expenses. Do keep in mind that there are certain instances where your premium wouldn’t be eligible for reimbursement if you have your premium deducted from your Social Security, Railroad Retirement Board, or Office of Personnel Management Benefits. You can always check with the Social Security Administration to find our your premium and how for if it’s deducted directly.
Medicare Part C known as Medicare Advantage is your only private insurance option. Medicare contracts with private companies to insure you. The premiums are in compliance to be reimbursed through the small business HRA.
Medicare Part D is the prescription drug coverage option. This is also supplemental insurance that will partner with Medicare Part A or C. You can reimburse your premiums that you pay out of pocket with QSEHRA.
→ Read more about ICHRA and Medicare here
Need help with HRAs and reimbursing medicare premiums?
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