Employer Reimbursement on Medicare costs can save you from choosing between employer group coverage and Medicare. When this program is available to you, there are many options, but before you choose, it’s important to verify the terms of coverage with your Human Resources department.

If you’re eligible, you must have many questions about Medicare reimbursement and coverage options. Well, all your questions can be answered below.

Is an Employer Able To Reimburse An Employee For Medicare Premiums?

Employers can designate employee funds to apply for health insurance coverage payments with a section 105 plan. The section 105 plan must be set up by your employer, and they will issue you a refund for your monthly Medigap premiums. Employers cannot pay any Medicare premiums directly.

Instead, employers can fund a Health Reimbursement Arrangement (HRA) to reimburse employees for medical premiums and expenses. Talk to your employer about your options.

The reimbursement for Medicare premiums cannot be offered on a pre-tax basis because doing so is considered an incentive to enroll in Medicare, which is illegal.

Also, it’s important to note that there is a difference between receiving reimbursement from your employer for your Medicare costs and applying for a Medicare reimbursement.

How Does the Medicare Premium Reimbursement Work with an Employer?

Your employer must enroll and participate in a Section 105 plan, allowing you and other eligible co-workers to enroll in the HRA. Employers can reimburse active employees for Medicare Part B and Part D costs.

What is a Section 105 Plan?

When qualified businesses have a Section 105 plan, they can deduct 100% of health insurance premiums for eligible employees. In most cases, costs such as long-term care, vision, dental, and other expenses qualify for reimbursement.

How Can I Get a Reimbursement Arrangement with a Small Employer?

Organizations with fewer than 50 employees and no group coverage can still offer the “Qualified Small Employer Health Reimbursement Account” to those enrolled in Part A. You must meet the minimum coverage standard to qualify for reimbursement.

Part A premiums are free for most people, and the cost won’t qualify for reimbursement if you do have to pay.

What is an Individual Coverage Health Reimbursement Arrangement?

You may be eligible for an Individual Coverage Health Reimbursement Arrangement if you don’t work for a small employer. To qualify, you’ll need Original Medicare, Part A, and Part B. You may also choose to enroll in Part C.

Eligible reimbursements include premiums for Medicare and Medicare Supplements. There are some conditions to reimbursement arrangements; the same rules must apply to all employees, and coverage can’t revolve around Medicare.

Employers that offer this program will ask you to choose between the employer group plan and the Medicare reimbursement plan.


What is a Medicare premium reimbursement arrangement?

The size of your employer will determine the type of Section 105 plan available. Some employers may only pay premiums for the employer group plan.

Talk to your human resources department about the plan they offer.

Are Medicare reimbursements taxable?

Medicare Part B reimbursements aren’t taxable. So, you won’t incorporate those premium costs into the Medicare premiums portion of your taxes. The HRA pays the premiums.

Is Medicare reimbursement considered income?

No. Since the reimbursement is for the money you already have and spent, that would amount to double taxation, which wouldn’t occur. Conversely, if you get a reimbursement, you cannot claim the money returned as a tax deduction.

Can my employer reimburse Medigap premiums?

If your employer has a Section 105 plan arrangement, you can qualify for a refund on your Medigap premiums. Talk to your benefits administrator to discuss what your employer will cover.

How To Get Reimbursement For Medicare Supplement Plans

Speaking of premiums, you can possibly get your employer to reimburse your premiums for a Medicare Supplemental plan. At the same time, you’d be expanding your coverage, so there are no unexpected out-of-pocket costs.

Our licensed insurance agents can answer all of your Medicare-related questions. They’re also invested in making sure you have the best coverage you can afford. You can contact and speak with our agents for free as well.

So give us a call today for more information. Or fill out our convenient online rate form to get the best rates in your area.

Written By:
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Lindsay Malzone, Lindsay Malzone is the Medicare editor for Medigap.com. She's been contributing to many well-known publications since 2017. Her passion is educating Medicare beneficiaries on all their supplemental Medicare options so they can make an informed decision on their healthcare coverage.
Reviewed By:
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Rodolfo Marrero, Rodolfo Marrero is one of the co-founders at Medigap.com. He has been helping consumers find the right coverage since the site was founded in 2013. Rodolfo is a licensed insurance agent that works hand-in-hand with the team to ensure the accuracy of the content.