Medicare Premium Reimbursement program through 125 plan

[Belgarath]

An employer has asked if a Medicare premium reimbursement can be "run through" a cafeteria plan on a pre-tax basis?

This will display my ignorance in this arena, but it seems to me that while it may be possible to have a Medicare reimbursement program if the requirements of IRS Notice 2015-17 are met (i.e. those enrolled in Part B or D are offered health coverage that is minimum value and not solely excepted benefits) that it couldn't be pre-tax through a cafeteria plan? Or is that incorrect? I'd appreciate any thoughts on this. Thanks!

[lvena]

See IRS Notice 2013-54 for the details. It can, but has restrictions.

[Belgarath]

Thanks - is this changed by the QSEHRA for small (under 50) employers? Seems like the new QSEHRA provides for reimbursement for medical expenses under IRC 213(d), (which includes the Medicare premiums, at least for Part B? what about part D?) 

You can't have the QSEHRA if the employer offers group health coverage anyway. If you are over 50 employees, then you have to follow the restrictions in IRS Notice 2015-17?

I look at this stuff only on a very sporadic basis, and I'm now officially a bit confused.

[Chaz]

The MSP rules make it generally impossible for a 20+ employee employer to reimburse Medicare premiums, with or without a QSEHRA.  It may work for employers with fewer than 20 employees.

[hr for me]

I agree with Chaz....the MSP rules don't want employers paying Medicare for the employees -- they want employers to keep these people on the employer plan. So no incentives can be given to opt INTO Medicare, including the employer paying the premiums through 125 (with the caveat of employers with less than 20 employees).

[Belgarath]

Thanks for the above. But am I correct that the guidance is re an HRA, rather than a 125 plan? I feel pretty comfortable that Medicare premiums as discussed can be reimbursed through an HRA, subject to the parameters and the 20-person rule mentioned already, but I thought you couldn't do in a 125 plan?

In a twist on this - can a cafeteria (125) plan allow an employee to purchase private Medicare supplemental insurance? I think the answer is no, but a second opinion would be great!

 

[hr for me]

HRA can reimburse for retirees-- I actually researched it based on your other post just to clarify it against what I know about the MSP rules, but didn't comment. 

It's for current employees (non-retired) through a 125 that it might be an issue with MSP.  That's your twist question... I agree the answer there is no due to the MSP rules.

I am going to link an explanation that I found that might help you out:

http://megrobenefits.com/2015/03/19/irs-provides-details-on-reimbursing-premiums-for-individual-health-coverage-or-medicare-part-b-part-d-or-medigap-for-active-employees-conshohocken-benefit-broker/

[Belgarath]

Thank you. So in two situations, it seems clear to me that an HRA can reimburse:

1. Retiree only HRA

2. Subject to the parameters of IRS Notice 2015-17 (and other applicable guidance) and the MSP rules.

But in a 125 plan, I'm still less "certain" of the answer, although it does seem to me that you can't. Thanks again for the link.