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How to Reimburse Medicare When You Have Fewer Than 20 Employees

5/21/2019

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​The Affordable Care Act’s $100-a-day penalty for improper medical reimbursements likely has your attention. And it should. But you can find many reimbursements that are allowed without penalty, including the ability to reimburse Medicare when you have fewer than 20 employees.
​Some group insurance plans do not cover Medicare-eligible employees if the group plan covers fewer than 20 employees because:
  • With fewer than 20 employees, the insurance company is the primary payer and Medicare is secondary.
  • With 20 or more employees, Medicare is the primary payer and the insurance company is secondary.
 
​If you (a) offer group insurance coverage to your fewer-than-20-employee workforce and (b) have one or more of the fewer than 20 employees on Medicare, you may use a health reimbursement account (HRA) or other account-based plan to reimburse Medicare parts B and/or D and Medigap insurance, if you satisfy the following requirements:
  1. You offer a group health plan to employees who are not eligible for Medicare.
  2. The employee receiving the HRA or other account-based Medicare reimbursement plan is actually enrolled in Medicare Part B or D.
  3. You make the HRA or other account-based Medicare reimbursement plan available only to employees who are enrolled in Medicare Part B or D.
  4. You permit the Medicare employee to permanently opt out of and waive future reimbursements from the HRA or other account-based plan at least annually and upon termination of employment.
 
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    Spencer Accounting Group, LLC does not provide investment, tax, legal, or retirement advice or recommendations in these blogs. The information presented here is not specific to any individual's personal circumstances.

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    To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances.
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    Author

    Keana Spencer is an Accountant, Entrepreneur, and Educator to her clients, with a strong passion.  Keana has over 10 years of experience and through her practice, she is a source of knowledge and strategies to her clients.

    Keana founded this website and decided and created this blog page to offer a space for those seeking knowledge to understand, however not to be confused with advice or planning strategies.

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