Medicare-eligible employees are often the people an ICHRA works best for. Instead of being stuck on a group plan that coordinates awkwardly with Medicare, you can be reimbursed for the Medicare coverage you'd choose anyway.
What the ICHRA can typically reimburse
- Part B premium (the one deducted from Social Security, or billed quarterly)
- Part D prescription drug plan premium
- Medicare Advantage (Part C) premium
- Medigap / Medicare Supplement premium
- Part A premium, if you're one of the few who pays one
Medicare counts as qualifying coverage for the ICHRA, as long as you're enrolled in Part A and B, or Part C. You'll generally still do the annual attestation and provide proof of your premiums like everyone else.
Example
Linda is 67, still working, and her employer's allowance for her age band is
$700/mo. She enrolls in Part B ($185), a Medigap Plan G ($160), and a Part D plan ($35).
Total Medicare premiums$380
Allowance$700
Linda's net cost$0
The unused $320 typically stays with the employer, unless her ICHRA also reimburses other medical expenses — in which case it may cover her Part B deductible and prescription copays.
Things to watch
- Enroll in Medicare on time. Leaving a group plan for an ICHRA can change whether you have "creditable" employer coverage for Medicare enrollment purposes. Check with Social Security before your ICHRA starts so you don't pick up a late-enrollment penalty for Part B or Part D.
- Medigap Open Enrollment is a one-time, six-month window starting when you enroll in Part B. Inside that window, carriers generally can't turn you down or charge more for health conditions. Outside it, they often can.
- HSA contributions stop once you're enrolled in any part of Medicare. Your existing balance is still yours to spend.
- Same offer as your class. Your employer generally can't offer Medicare-eligible employees a different deal than others in the same class — the allowance formula is the same; it just pays Medicare premiums instead.
Under 65 and on Medicare?
If you're on Medicare due to disability or ESRD, the same reimbursement rules generally apply. If you're covering a spouse or dependent who is on Medicare while you're on an individual plan, both sets of premiums can typically be reimbursed up to your family allowance.
Who to call
For "should I enroll in Part B now?" questions, the answer comes from
Social Security (1-800-772-1213) or your State Health Insurance Assistance Program (SHIP), which is free. For "will the ICHRA reimburse this?" the answer comes from your
ICHRA administrator.