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Employer Funded Medicare Supplement - Permissable?


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See discussion from 2002 here:


Does anyone know if anything has changed on this? Is it still disallowed for an employer to subsidize the cost of a Medicare supplement and Part D coverage?

Is there any mechanism by which it would be allowed?

We've had one employee jump ship from our group plan and two more are planning to... it would be win/win if we could subsidize their supplement and Part D cost.


Kurt Vonnegut: 'To be is to do'-Socrates 'To do is to be'-Jean-Paul Sartre 'Do be do be do'-Frank Sinatra

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Medicare is primary for employees covered by a group health plan and employed by a small employer--i.e, any employer other than an employer that has twenty (20) or more employees for each working day in each of twenty (20) or more calendar weeks in the current Plan Year or the preceding Plan Year. So, those employers can encourage employees to drop group health care coverage--such as, e.g., by paying Part B premiums.

Medicare is secondary for employees covered by group health care and employed by an employer that is not a small employer, and therefore those employers cannot offer any such encouragement to drop group health care coverage.

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Thanks for confirming for me, Sieve. I've since found that the source of our initial idea came from someone involved w/ small companies (under 20 ee's), which as you note get to play the game slightly differently.

Kurt Vonnegut: 'To be is to do'-Socrates 'To do is to be'-Jean-Paul Sartre 'Do be do be do'-Frank Sinatra

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Following up on this, suppose that for a 20 or more EE situation the ER has a cafeteria plan, gives each employee $500/month worth of cafeteria credits (i.e., each eligible employee can elect and receive up to $500/month in cafeteria benefits without having to agree to corresponding payroll reduction). The cafeteria plan offers group major medical coverage. It also allows EEs to elect coverage under individual health policies that are not major medical.

An eligible employee age 66 wants to forego the major medical (otherwise a cost to him of $650/month, which would use all of the $500/month in cafeteria credits and require $150/month in payroll reduction). Instead, he wants to use $280 a month to pay for Part B and Part D coverages, and have the other $220/month of cafeteria credits used to pay for a health flex account.

If the employer does nothing to encourage those EEs on Medicare to forego the group major medical coverage, is the mere availability of the $500/month cafeteria credits to be applied to Part B supplemental coverage and otherwise a problematic inducement itself?

John Simmons


Note to Readers: For you, I'm a stranger posting on a bulletin board. Posts here should not be given the same weight as personalized advice from a professional who knows or can learn all the facts of your situation.

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