Equivalent contributions required for medicare enrolled employees

[JDuns]

I have heard several people opine that an employer who contributes to HSAs of its employees must make equivalent contributions for employees who are medicare enrolled (in an FSA, HRA or cash).

This statement is based either on the ADEA or Medicare Secondary Payer rules.

Has anyone else heard this comment?

[GBurns]

No and I cannot see where either "the ADEA or Medicare Secondary Payer rules" could be applicable.

"Comparable contributions" for HSAs are related to IRC 4980G and E. Particular guidance is provided in Notice 2004-50, Q&A -46 and 47.

An individual with Medicare entitlement (not eligibility) is not HSA eligible. I think this was Q&A 2.

Did the person who made the statement, also give you any cites etc to support their position?

[mbozek]

The issue may be whether employers are required to provide for equivalent contributions under the ADEA requirements that benefits for employees protected under the ADEA must meet the equal benefit/contribution rule of 29 CFR 1625.10(a). A benefit plan will be in compliance with the ADEA where the actual amount of payment or cost incurred for an older worker is equal to that made or incurred for a younger worker even if the older worker receives a lower amount of benefit than the younger worker. Check the EEOCs website for any rulings. This is not related to compliance with the requirments of IRC 4980D.

[GBurns]

I should have asked what you mean by "medicare enrolled (in an FSA, HRA or cash)." ?

What does Medicare enrollment have to do with FSA, HRA or cash?

If a person is Medicare enrolled they are not eligible for an HSA, regardless of ADEA. ADEA would not be applicable.

As far as I know Medicare Secondary payer rules do not apply to FSA, HRA or HSAs. There is no COB with plans of this nature.

[mbozek]

It isnt a question of whether medicare eligible employees can be excluded from HSAs. The question is whether a lower level of employer contributions for medicare eligible employees in health benefits than the contributions for younger employees in the HSA violates the ADEA regs. I dont know the answer but I think the question needs to be pursued with the EEOC.

[GBurns]

Who asked such a question?

JDuns,

Is this what you meant? Health benefits rather than HSA???

[JDuns]

mbozek interpreted my question correctly.

If the employer charges all employees (medicare enrolled or not) the same premium for the HDHP and also provides HSA contributions for HSA eligible employees (obviously excluding the medicare enrolled employees), the employer is making a lower total dollar contribution to the health benefits of the non-eligible individuals.

Since such treatment would potentially violate the medicare secondary payor rules (creating an incentive to opt out of the HDHP and make medicare primary) or the ADEA (under the Erie decision), I have heard some commentary that the employer should pay the medicare enrolled employees an amount equal to the HSA contribution that would have been made for the medicare enrolled employee. That payment could be structured as additional cash compensation, a contribution to a FSA, or a contribution to a HRA.

Neither CMS nor the EEOC have issued an opinion on the question so I was wondering what (if anything) others are considering.

[Guest greatlakeshsa]

<I have heard some commentary that the employer should pay the medicare enrolled employees an amount equal to the HSA contribution that would have been made for the medicare enrolled employee.

I can say for certain the employer does not have to contribute an amount equal to the HSA contribution of people not enrolled in the HD plan - regardless if they are on medicare or not. I will site the reg later - but I would bet my house on it!

[jstorch]

JDuns-

I thought the EEOC had backed off the Erie decision, but haven't followed it--did they come out with something new?