Medicare Premiums Reimbursem*nt Through Employer (2024)

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Can my employer pay my Medicare premiums?

Employers can’t pay employees’ Medicare premiums directly. However, they can designate funds for workers to apply for health insurance coverage and premium payments with a Section 105 plan.

Can my employer pay my Part B premium?

No, it’s not allowed. As a beneficiary, YOU are responsible for paying your premiums. Employers can reimburse any Medicare Part B and Part D premiums for employees who are actively working. This requires the company’s payment plan to integrate with the group insurance plan.

Can my employer reimburse me for my Part B premium?

Your employer can refund you for your Part B premium if they’ve set up a Section 105 Medical Reimbursem*nt Plan. Some Section 105 plans may only permit refunds on healthcare costs and premiums. This compensation isn’t taxable. If the Section 105 plan reimburses with cash for any remaining benefits, both the money and reimbursem*nts are taxable.answer

Can a QSEHRA reimburse Medicare premiums?

This type of arrangement can help reimburse employees for their Medicare premiums. If an employee holds minimum essential coverage (MEC), they can get assistance in paying for virtually all Medicare costs, including Medigap premiums.

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1. Can an employer with 35 full-time employees and has an employer sponsored group medical plan, set up a Section 105 for employees who pay the Medicare Part B premium?

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   1. Yes, an employer with 35 full-time employees and an employer-sponsored group medical plan can set up a Section 105 plan to reimburse employees for Medicare Part B premiums. However, the Section 105 plan must comply with IRS regulations and other relevant laws governing HRAs.

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2. I am a broker in New York. I am currently working with a large employer group with ~150 employees. They have 13 Medicare-eligible employees and/or dependents on the group health plan because they offer a group health plan, they really don’t want to drop it to offer an ICRAH. What can the large employer do to assist the 13 medicare employees from leaving the company plan and enrolling in Medicare?

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3. Dear medicarefaq.com owner, You always provide in-depth analysis and understanding.

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4. Can my Individual insurance premiums through Medicare Part B, Supplemental and Part C be reimbursed through my employer’s Section 125 POP Plan? Employer size is over 20.

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   1. Hi Vickie, great question! A Section 125 Plan cannot cover the costs of your Medicare part B premium or Medicare Supplement. However, if you have been participating in the Section 125 plan prior to receiving Medicare, it does lower your taxable income and could affect your Part B premium.

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5. If we do have a section 105 plan and reimburse our employee for her Medicare premiums do I report this on her W2 anywhere?

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   1. Hi Patti –because medical reimbursem*nts are not taxable, Section 105 plans don’t need to be reported on the W2.

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6. I have a group that was recently acquired, and the owner is retiring. As part of the retirement package, the group has agreed to pay his health insurance. He has a Medicare Supplement plan through the employer. Can the group pay for this (not for his Medicare but the Supplement plan) pre-tax, or will that be post-tax to them? Is there an IRS publication that clarifies this? I’m pulling out my hair trying to document a response.

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7. Lindsay,

   I understand that IRS does not allow the large employer to use the HRA to pays for Medicare premium as it stated in the IRS Code.
   The Code also allows for HRA to reimburse the employee for the other medical expenses such as Deductible, Copay, and etc.
   Now, Can HRA reimburse the employee for a copay of Medicare Advantage if the plan has 0 premium?

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   1. Hi, Heady! Yes, an HRA can reimburse copays regardless if they are copays under Original Medicare or a Medicare Advantage plan.

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8. Hello, I am about to go on Medicare Part A & B & D. I am self employed in a corporation that is a sub S corp. I am the president and only employee. The S Corp has never had an employee health plan because I took my health ins through my wife’s employers because it was our best cost as a family plan. I am required to switch to Medicare because my wife’s plan doesn’t allow us to stay past 65. Can I set up a sect 105 plan under the S Corp and reimburse myself for the part B & part D or reimburse myself for a Medicare Advantage plan? If so is the reimbursem*nt a tax deductible expense to the S Corp and are any of the reimbursem*nt taxable income to me if the S Corp reimburse me?

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   1. Hi Dale. I found some great information on HRAs and s-corporations for owners that should be able to help answer your question.

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9. Hi Lindsay, I looked at the ICHRA rules and talked to some other people. It does not seem like that will work if I leave everyone else on the group plan. ICHRA has certain classes of employees needed to be divided into and cannot fit the Medicare person into a seperate class. I guess what I am struggling with is the exact type of HRA to set up for the Medicare person while leaving my Group Coverage and group coverage HRA in place. I read all types of things about being able to reimburse my Medicare person through a Section 105 plan, but cannot find any providers that say they can accomodate what I want to do.

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10. I have a further question on this, similar scenario, six employees, five on group health plan, one on medicare. Since I am employer of less than 20 I can make the medicare-eligible employee ineligible for my group plan. Can I then set up ICHRA to reimburse the medicare employee and at the same time have a seperate integrated HRA coupled with my group health plan to help those employees offset deductible and coinsurance.

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    See Also

    Benefits Planner | Social Security Credits and Benefit Eligibility

    1. Hi Kirk! I was able to find some good overview information on ICHRA and how it works with Medicare. Hopefully, you can find the answer to your question there! I plan to do some more research on the topic and update this article accordingly. I hope this helps!

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11. We have 5 employees. 3 will be on Medicare and 2 will remain on the company group health insurance plan. How can I reimburse the 3 employees on Medicare for their premiums? I read I cannot set up an HRA or 105 plan because we still have a Group Health Plan. The only way was for the 2 employees to shop for their own insurance, terminate the company group health and then we can reimburse through the HRA or 105 for all 5. Is that true? Our work around was to come up with a fair amount and make it a bonus through the payroll for the employees on Medicare. I cannot find the answer to this anywhere. Thank you,

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    1. Hi Geri! In most cases sure as yours, the company generally will have the employee pay their insurance and then submit the bill for re-reimbursem*nt. Some carriers do allow 3rd party payment, and we would have to look in your area to see if there is anything available for that option. Keep in mind with Option 1 you can shop around for a more stable company and lower rate vs. option 2 where you are dictated by which companies allow 3rd party payments. I hope this helps!

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12. Work for a company that has 20-22 employees and two health plan to choose from, a high deductible plan with an HRA component (the company pays a certain amount of out-of-pocket each plan year) and a traditional policy with co-pays and much smaller deductibles. Employees pay 40% of the cost via a S125 payroll reduction plan. One employee is turning 65 soon and the insurance company says this employee can no longer be on either plan since they are now Medicare eligible. This person is a HCE but not an owner. Can the company establish a S105 plan and reimburse the employee for Medicare costs and supplemental insurance?

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    1. Hi Bob! As long as the company has more than 20 employees, the employer coverage is considered creditable and the employee can stay on your plan even though they are eligible for Medicare. They can delay Part B until they retire without being penalized. I would check out our article on Medicare and employer coverage for more information. I hope this helps!

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13. Can an individual, who’s employer does not offer group health and declines Medicaid (although eligible), claim tax deductions for the premiums of their individual health plan?

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    1. Hi Torrey! Yes, some Medicare premiums are tax-deductible.

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14. I have a large group over 200 lives – they are not eligible for a Section 105 reimbursem*nt of premium expenses if we offer to pay the employee’s MedicarePart B, D and Supp. Is there any other way an employer can offer to pay for EITHER the group health plan contributions OR a Med Supp and Part B & D? Thanks

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    1. Hi Gail! Unfortunately, without a 105 Reimbursem*nt Plan, you won’t be able to contribute to your employees Medicare premiums. You can read more about Medicare and employer coverage here. You could always ask your benefits administrator to see if they know anything additional that would allow you to get around this. I hope this helps!

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15. How should an employer go about setting up a section 105 plan so they can start reimbursing employees health insurance and/or medicare premiums? Would it be a good idea to have an attorney write up the plan or can an insurance agent do this?

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    1. Hi Bret! I believe you would have to do this through your benefits administrator, they should have the documents needed. If not, you would need to call Medicare directly to find out what the process is.

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16. I receive social security disability and have had Medicare Part A since I became eligible. I opted out of Medicare Part B because I had group coverage through my husband’s employer. The cost of coverage through my husband’s employer went up significantly, and after doing some research, I enrolled in a Medicare Advantage Plan as of January 1, 2020. My question is: Can I now drop the coverage through my husband’s employer? And, do I have to notify my Medicare Advantage Plan carrier that I dropped it? I am unable to find anything specific regarding this.

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    1. Hi Janelle! This is a case by case scenario. You would need to contact your benefits administrator to get the answers. I would recommend reading our FAQ on Medicare Advantage vs. Medicare Supplements to make sure switching to an Advantage plan was the right decision. You have until the end of March to disenroll and switch to a Medigap plan if you choose to do so.

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17. I retired in 2004, 16 years ago on Medicare. My employer was under a 105 medicare premium reimbursem*nt plan. and did tell me about the program for 16 years. So i did not know that i should have been reimbursed for my medicare premiums over all those years. They said that according to their plan rules they only have to make 2 months worth of back payments which mean i must take a loss on 16 years of payments. I appreciate your insight on this because it does not seem right. To me these payments should have been initiated when i retired. In 2019 was the first year they asked for SSA verification of benefits for this purpose. I submitted the verification to them but they couldn’t find it. I submitted the 2020 verification and called to confirm receipt. This is when i found out this benefit was available.

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    1. Hi Jacqueline! Thank you for your question. I don’t have enough information to provide you with a straight forward answer. There are many different types of Section 105 plans offered through employers. They are all designed differently and have specific guidelines. If the plan rules have limits, such as only having to reimburse you for two months worth of back payments, then, unfortunately, there’s nothing you can do. However, there might be rules in place where your employer has to prove they told you about the section 105 plan upon employment and/or retirement. Hopefully, this helps!

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    2. I just noticed yesterday that my employer has been deducting Medicare f or 4 years. I have been receiving social security retirement since 2018.

       Your INFO is greatly appreciated. I will go to payroll office and se what they can do form. For sure, stop deduction.

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       1. Did your employer return your portion of the Medicare expense to you?