Do Employers Pay for Medicare Premiums?

Employers don't typically pay for Medicare premiums. It's possible to get a refund for monthly health insurance premiums under certain circumstances, however, an employer must have a Section 105 plan in place to do this.

What Is a Section 105 Plan for Medicare?

A Section 105 plan for Medicare is a reimbursement health plan that allows companies to repay employee medical costs on a tax-exempt basis. This type of health reimbursement plan covers specific types of medical and insurance costs, as defined by Section 105 of the Internal Revenue Code. 

How Does Medicare Premium Reimbursement Work With an Employer Section 105 Plan?

There are several Section 105 plans your employer might offer. Which one your employer offers will depend on the size of your company and whether they provide health insurance for employees.

Although there are alternatives, most health reimbursement arrangements will fall under two categories. 

Individual Coverage Health Reimbursement Arrangement

An Individual Coverage Health Reimbursement Arrangement (ICHRA) requires you to have Original Medicare (Part A and/or Part B) or a Medicare Advantage plan (Medicare Part C).

This allows your employer to reimburse Medicare and Medigap insurance premiums alongside other health-related costs. 

Many employers choose this type of plan because an ICHRA provides more choice for which medical costs are reimbursed. The only catch is that terms must be equal for all employees, and medical coverage costs can't be designed around what Medicare does or doesn't pay. If your employer offers an ICHRA, you'll need to choose between having this plan cover your Medicare costs or using the group policy option. 

Qualified Small Employer Health Reimbursement Arrangement

If your company has less than 50 full-time employees and doesn't offer group health insurance, they can still provide a Qualified Small Employer Health Reimbursement Account (QSEHRA). 

To be eligible for participation in a QSEHRA through your employer, you have to be enrolled in at least Medicare Part A or Part C. Enrolling in Part B isn't enough alone, but you can enroll in it along with Part A if desired.

If you're eligible, a QSEHRA will cover nearly all Medicare premiums, including those associated with Medigap, Advantage and Part D. The only premiums not eligible for reimbursement are those that come with Part A.