More people are working beyond age 65, making the Medicare HRA a benefit worth having. Your 2021 Medicare HRA communication is key to helping older workers navigate the Medicare terrain.
One of the hottest demographics in the labor market is men and women working beyond the traditional retirement age of 65. According to the Bureau of Labor Statistics, the 65- to 74-year-old labor force will reach 32% by 2022, up from 20% in 2002.
These older workers are staying in the job market for a variety of reasons. Many are still physically able to work. Others are trying to save more for retirement. Some folks just aren’t ready to walk off into the sunset. Whatever the reason, they all have one thing in common: they’re eligible for Medicare. A Medicare HRA can help these employees pay for Medicare premiums.
What Is a Medicare HRA?
First, a Health Reimbursement Arrangement (HRA) is a benefit plan sponsored by an employer that offers tax advantages for both the company and its employees. With an HRA, your company provides a monthly benefit allowance for each employee. The employee uses the money, tax-free, to reimburse certain health plan premiums and out-of-pocket medical expenses. Your company owns the HRA and completely funds it. Employees do not contribute to an HRA and it does not count as taxable income.
Employees can have an HRA and Medicare. What’s more, two types of HRAs allow employer reimbursement for Medicare premiums.
1 – Qualified Small Employer HRA (QSEHRA)
If your business has fewer than 50 employees, you may offer a QSEHRA. In this type of health reimbursement arrangement, employees can get reimbursed for certain out-of-pocket medical expenses. They can also be reimbursed for their own individual health insurance premiums, including Medicare.
You must offer the same allowance amount for each employee, however, there can be differences according to their age and family size. You can make the HRA available to all employees or only full-time employees. You also have the option to set up the HRA to reimburse premiums only or premiums plus expenses.
To qualify for a QSEHRA, an employee who is eligible for Medicare must have health coverage that provides minimum essential coverage. Either Medicare Part A (Hospital Insurance) or Part C (Medicare Advantage) qualify as minimum essential coverage.
A QSEHRA may be used to reimburse premiums for Medicare Parts A, B, C and D. For Part B premiums to be reimbursable, the employee must also have either Part A or Part C.
2 – Individual Coverage HRA (ICHRA)
Companies of any size can participate in the ICHRA. Under this health reimbursement arrangement, employees can get reimbursed for certain out-of-pocket medical expenses. They can also be reimbursed for their own individual health insurance premiums, including Medicare.
You can offer a group plan alongside an ICHRA, and there are no caps on the annual allowance. You can also create employee classes based on job requirements and offer different allowances for each. Employees are only eligible for the ICHRA if they have coverage under an individual health insurance policy that provides minimum essential coverage. Marketplace plans, job-based plans and Medicare are examples of policies that provide minimum essential coverage.
To qualify for an ICHRA, an employee who is 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.
An ICHRA may be used to reimburse premiums for Medicare, Medicare supplemental health insurance (Medigap) and other medical care expenses. Premiums for Parts A, B, C, D, and Medigap policies are all eligible for reimbursement.
Prep Your Employees for Medicare Success
As employees continue to work past age 65, they’ll need support to understand their choices, including how HRA accounts and Medicare work together. An effective 2021 Medicare HRA communication strategy can educate older workers and help them avoid potential penalties, such as late-enrollment fines.
What Do Employees Need to Know?
When employees become eligible for Medicare, they can enroll in Medicare or remain on their current company health plan. If they choose to stay on their current health plan, they must know the rules. The Centers for Medicare & Medicaid Services (CMS) has several resources you can share with employees to help explain things like:
· The different “parts” of Medicare (Part A, Part B, Part C, Part D)
· Supplemental plans (Medigap plans)
· HRA and Medicare eligibility
· Enrollment deadlines
· Possible penalties
· The relationship between your company plan and Medicare benefits
2021 Medicare HRA Communication Should Be Early and Often
Start educating your employees on things like Medicare and HRA accounts long before they reach age 65. Generally, they’ll be able to enroll in Medicare from three months before to three months after their 65th birthday month. This seven-month time frame is known as the Initial Enrollment Period.
Send communication multiple times before they turn age 65. Items like Medicare enrollment tip sheets, FAQs and important contact lists are all helpful resources.
Emails, digital platforms and direct mail are effective tools for reaching your audience. Consider sending an announcement piece, a deadline piece and a reminder piece to your employee audience.
Contact us for help creating effective, world-class communication.