We often talk about the various nuances that go along with qualifying for Medicare, how to use it, and for whom it’s intended to help. In another realm, you may also see we frequently shed light on the gaining popularity of Individual Coverage Health Reimbursement Arrangements (ICHRAs.)
As more employers adopt this benefit in lieu of traditional coverage, Americans are growing increasingly familiar with the platform. But what about those who qualify for Medicare and also have an ICHRA through their employers? There are some complexities with this scenario. So, we figured it might be helpful to discuss how paying for Medicare with an ICHRA benefit works and what you can expect for health insurance coverage with this type of a plan setup.
Understanding How to Apply and Sign Up for Medicare
Before you move forward, it’s best to first make sure you’re eligible for Medicare and understand the benefits associated with the program’s many benefits. You can then dive in further to explore which costs and premiums can be reimbursed with your employer’s ICHRA offering.
General Medicare Qualifications
In general, Medicare is a program available to anyone over the age of 65. It is also an option for younger individuals who may have disabilities. Another key criteria for eligibility includes anyone who may be suffering from an End-Stage Renal Disease, where kidney failure may be imminent, and a transplant or dialysis is needed.
Medicare Advantage Plans
Once you’re qualified, there are two types of Medicare plans to consider. The first is what many call the Medicare Advantage plan. This umbrella type coverage combines a host of different Medicare benefits into one subscription. Typically, there are hospital or HMO network restrictions, but premiums tend to be $0 to those who enroll.
Medicare Supplement Plans
The second type of Medicare option involves a menu of Medicare Supplements. In this scenario, you can review Medicare parts A and B. You will also be able to choose your own Parts C and D. But to be considered a “Minimum Essential Coverage,” you’ll need to make sure you enroll in a combination of these.
Understanding Your Company’s ICHRA Benefits
Now that you know you’re all set with enrolling and paying for Medicare, you may be wondering about your employer’s Individual Coverage Health Reimbursement Arrangement (ICHRA.) These benefits plans are designed to reimburse employees for health insurance premiums and out-of-pocket medical costs. But can you be refunded for your Medicare premiums and expenses?
How to Qualify for ICHRA Plans
Before you can take advantage of your company’s ICHRA, you’ll need to enroll and prove your coverage in an affordable health care plan. Qualifying for Medicare doesn’t automatically ensure reimbursement participation. You’ll need to make sure you’re enrolled in either a Medicare Advantage or Medicare Supplements plan to move forward.
What Reimbursements Apply to Medicare
In January of last year, the IRS rolled out the guidelines for the ICHRA plans. These included options for employers to pay for individual health insurance premiums as well as some Medicare premiums. As long as an individual isn’t already eligible for a group health plan, Medicare Parts A and B are covered, as are Medicare Advantage plan premiums if costs exist. Some of those Medicare Supplements don’t qualify as stand-alone expenses since they’re not “Minimum Essential Coverage.” So, as long as you have a combination of Medicare Supplements, your premiums can be reimbursed through your company ICHRA.
What About Other Medical Expenses?
Employers have the discretion to carve out the list of reimbursement expenses for each ICHRA plan. However, most will additionally cover out-of-pocket costs and health-related services, including copays, coinsurance, and prescriptions. Premium reimbursements apply as long as pre-tax dollars were not already applied. COBRA premiums are also eligible in some ICHRA plans.
How It All Works Together
Because the ICHRA plan is owned and set up by the employer, it’s important that you connect with your company’s benefits coordinator to fully understand the qualifications and submissions process, in your specific case.
What Types of Employees Are Permitted to Participate?
ICHRAs are becoming more popular with businesses, in part because of the flexibility of employee types permitted to participate. Of course, any full-time employees not already covered by a group medical plan can participate. But others including part-time staff, salaried employees, hourly employees, seasonal and temp workers, and new hires not yet eligible for the company’s group plan because of a probationary hiring period, are eligible.
The Disincentive Example at the Employer Level
There is another angle to consider when merging the benefits of Medicare and ICHRA plans. It’s illegal for any employer to incentivize a staff member to move off of a group health plan and onto Medicare. It may be a sensible move for you. But your company can’t ask or force you to do so.
As an example, if a company has a full roster of full-time, aging workers, it might be more cost-effective for the company if those employees moved to a Medicare plan instead of staying on the company’s group coverage. In this scenario, the company can’t reimburse for Medicare because the employees are full-time, and there is an affordable group plan available. If those aging workers were to go part-time, it would be a different story. But separating the ICHRA reimbursement platform can’t just apply to Medicare employees but must be offered to all available employees. Be mindful of your options and make sure you move forward with your plan and coverage selection based on what’s best for you.
How and Where to Find Support
If you’re looking to take the next health insurance step, whether it be to enroll in Medicare or explore your company’s ICHRA options, there are resources to help you navigate. Your company’s benefits coordinator or third-party ICHRA partner is a great place to start to learn more about your employer’s ICHRA guidelines. You can also visit the HHS.gov site for more information about Medicare plans and regulations.
If you find yourself looking on the Marketplace for healthcare coverage options, browse with W3ll. If you’re a business looking to explore your ICHRA options or perhaps need a third-party partner to help implement your benefits plan, W3ll can help you, as well.