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HRA's and Medicare


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Client is a C corp. Owners are employees who are both enrolled in non-group medical plans. They want to set up an HRA so they can be reimbursed for medicare B, medical supplement and RX plan. This will not be available to employees under age 65.

Under age 65 employees are in a group medical plan with no HRA.

Is this type of arrangement possible?

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This does not appear to be retiree coverage. It looks like the owners want to be active employees and have the company reimburse their Medicare premiums.

In general, for employers with 20 or more employees, Medicare pays secondary to active employer coverage. The Medicare Secondary Payer Rules prohibit employers offering an incentive for active employees to enroll in Medicare rather than employer coverage (this is a slightly simplified statement). An HRA will likely be such an impermissible incentive.

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