For employees to participate in an HRA and receive reimbursements, they must be covered by a qualified individual health plan that meets MEC (minimum essential coverage). Major medical plans qualify, as well as Medicare. However, the integration of Medicare with HRAs is complex, since there are existing laws guarding Medicare that require a bit more clarity. Let’s take a look!
Integration of Individual Coverage HRAs with Medicare
When you're signing up for Medicare, there are two routes you can go. The first is "Medicare Advantage" - these are the newer arrangements that have all of the parts mushed together. You buy one Medicare Advantage plan and you're covered. They usually have a $0 premium but are tied to a single system (sort of like a hospital HMO network).
The second route is Medicare Supplements. That's where you choose your own Part C and Part D plans. You still have to have A & B.
Which Medicare Parts are reimbursable by ICHRA?
According to the massive legal document that we went to the trouble of perusing for you, (you’re welcome!) here's what to know about the ins and outs of ICHRA and Medicare:
To qualify for an ICHRA, the employee eligible for Medicare must have coverage of Part A and Part B together or Part C - Part B by itself doesn't qualify as Minimum Essential Coverage.
ICHRA may be used to reimburse premiums for Medicare and Medicare supplemental health insurance (Medigap), as well as other medical care expenses. (Premiums for Parts A,B, C, D, and Medigap policies are all eligible for reimbursement).
Which Medicare Insurance qualifies for QSEHRA participation?
In order to participate, employees need to have health coverage that meets Minimum Essential Coverage (MEC). Either Medicare part A (Hospital Insurance) or part C (Medicare Advantage) qualify as MEC.
- Medicare part A (Hospital Insurance) Most people do not pay a premium for Part A as it is a benefit from paying Medicare taxes for a certain period of time. This is known as “premium free Part A.” If for some reason you are not covered under social security (or weren't a government employee who paid Medicare tax), you can voluntarily enroll in Medicare A. In this situation you can include the premium for reimbursement through a small business HRA.
- Medicare B (Medical Insurance) is a supplemental medical insurance. Premiums you pay for Medicare B are an eligible medical expense as long as you have either Medicare A or C as well. Check the information you received from the Social Security Administration to find out your premium.
- Medicare C (Medicare Advantage) is offered by a private company that contracts with Medicare. Any premiums paid directly out of pocket to the insurance company are eligible for reimbursement through a small business HRA.
- Part D (Medicare Prescription Drug Coverage) is a supplemental insurance and premiums paid directly out of pocket are eligible for reimbursement through a small business HRA.
What expenses are eligible for QSEHRA reimbursement with Medicare?
Employers have the option to set up the HRA to reimburse premiums only or premiums + expenses. We recommend the option to include eligible medical expenses to most of our clients so that all employees have a chance to maximize their benefit.
In terms of eligible medical expenses for QSEHRA reimbursement: any copays, deductibles, coinsurance, prescriptions, dental, vision, and more are eligible for reimbursement. Employees just need to submit a copy of their medical expense for review through their employee portal.
Still need help?
Our team at Take Command Health is here to help you understand your HRA. Chat with us on our website any time for solid advice.