Ask HR: Covering Employee Medicare.


Dear HR,

One of our long-time employees is now on Medicare and our business would like to pay for the Medicare premiums. What is the best way for us to pay/reimburse our employee for the premiums without causing them to incur tax consequences?

HR Answer,

Employers can pay Medicare premiums for active employees if the company’s payment plan is integrated with the group’s health plan. For example, the linked group plan must provide minimum value by paying for at least 60 percent of the actuarial vale of services received. These payments must be limited to Medicare Part B, Medicare Part D.

Another way an employer can pay is through the Internal Revenue Code (IRC). Under IRC’s Section 105 Plan, employers are allowed to reimburse their employees their Medicare health insurance premiums.

The section 105 reimbursement plan allows employers to give an allowance to its aging Medicare-insured workforce for a broad range of medical premiums including Medicare Part B, Medicare Part D, Medicare Advantage, and Medigap.

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