How to reimburse medicare when you have fewer than 20 employees

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:

You offer a group health plan to employees who are not eligible for Medicare.The employee receiving the HRA or other account-based Medicare reimbursement plan is actually enrolled in Medicare Part B or D. You make the HRA or other account-based Medicare reimbursement plan available only to employees who are enrolled in Medicare Part B or D. 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.