ICHRA and Medicare Eligibility
Is this information for me?
This information is for active employees and their covered family members who are or will soon be eligible for Medicare and have an Individual Coverage Health Reimbursement Arrangement (ICHRA) benefit through an employer.
If you're retiring or don't have an ICHRA benefit, this information doesn't apply to you.
Turning 65? How Medicare Works With Your ICHRA
If you or a family member covered by your employer's health plan is becoming eligible for Medicare, you may need to take action to prepare for the change in coverage.
Your ICHRA can reimburse you for eligible Medicare premiums. But an ICHRA isn't health insurance and doesn't automatically enroll you in Medicare or a Medicare plan.
This guide explains what you need to do, when to enroll, and how Medicare works with your ICHRA benefit.
On this page
Start Here: What You Need to Do
How ICHRA and Medicare Work Together
Turning 65: When to Enroll in Medicare
Already Medicare-Eligible?
Choosing Your Medicare Coverage
Have an HSA? Read This Before Enrolling
Using Your ICHRA Benefit
Start Here: What You Need To Do
If you're becoming eligible for Medicare and plan to use your ICHRA benefit with Medicare coverage, here's where to start:
Step 1: Enroll in Medicare Parts A and B
You generally need Original Medicare Parts A and B before you can enroll in a Medicare Advantage or Medigap plan.
You can sign up for Medicare through the Social Security Administration online at ssa.gov, by phone at 1-800-772-1213, or at a local Social Security office.
Step 2: Get your Medicare information
You'll need your Medicare Number and your Part A and Part B effective dates to enroll in additional Medicare coverage.
Step 3: Choose your Medicare coverage
Once you are enrolled in Parts A and B and have your Medicare card, you can choose the Medicare coverage that meets your needs. Depending on your situation, you may choose:
Original Medicare with a Medicare Supplement Insurance (Medigap) plan and a Part D prescription drug plan, or
A Medicare Advantage (Part C) plan.
Step 4: Enroll in your Medicare coverage
Make sure you understand when your current coverage ends and when your new Medicare coverage begins to help avoid a gap in coverage.
Step 5: Use your ICHRA benefit
After you're enrolled in eligible Medicare coverage, your ICHRA can reimburse you for eligible premiums.
Have a Health Savings Account (HSA)?
Medicare enrollment affects your ability to contribute to an HSA. Be sure to read the Have an HSA? Read This Before Enrolling section below before enrolling in Medicare.
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How ICHRA and Medicare Work Together
Your ICHRA is not health insurance. It's an employer-funded benefit that can reimburse you for eligible healthcare premiums.
The order matters:
First: Enroll in Medicare Parts A and B.
Next: Choose and enroll in your Medicare coverage.
Then: Use your ICHRA benefit to be reimbursed for eligible premiums such as Medicare Part B, Medigap, Part D prescription drug, and Medicare Advantage plans.
Understanding Medicare
Original Medicare
Original Medicare includes Part A and Part B:
Part A generally covers inpatient hospital care.
Part B generally covers doctor visits, outpatient care, and other medical services.
Original Medicare doesn't pay all your healthcare costs and doesn't generally include prescription drug coverage. You may choose additional coverage to help with these costs.
Original Medicare + Medigap
Medigap works with Original Medicare to help pay certain out-of-pocket costs, such as copays, coinsurance, and deductibles.
Medigap doesn't include prescription drug coverage. If you choose Medigap, you can also enroll in a separate Part D prescription drug plan.
Medigap plans are identified by letters, such as Plan G or Plan N. Plans with the same letter provide the same standardized benefits, although premiums may differ by insurance carrier.
Medicare Advantage
Medicare Advantage (Part C) is another way to receive your Medicare Part A and Part B coverage through a Medicare-approved private insurance company.
Many Medicare Advantage plans include prescription drug coverage and may offer additional benefits. Provider networks, costs, and benefits vary by plan, so it's important to compare your options.
Medicare Part B Premiums
Medicare Part B has a monthly premium. The amount you pay may vary based on your income.
Your ICHRA benefit can be used to reimburse eligible Medicare Part B premiums.
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Turning 65: When to Enroll in Medicare
When you should enroll in Medicare depends on when you become eligible and when your current employer group health coverage ends.
Your Initial Enrollment Period (IEP)
Your Medicare IEP generally lasts seven months:
Three months before the month you turn 65
The month you turn 65
Three months after the month you turn 65
Special Enrollment Period (SEP)
If you're still working and covered by an employer group health plan, different Medicare enrollment rules may apply. According to Medicare, individuals who are still working and have job-based group health coverage may be able to delay Medicare enrollment without incurring a late-enrollment penalty.
If your employer group coverage is ending as part of your transition to an ICHRA, you may qualify for an SEP.
Why Timing Matters
Enrolling at the right time can help you avoid a gap in coverage and potential Medicare late-enrollment penalties.
Before your employer group coverage ends, make sure you understand:
When you need to enroll in Medicare Parts A and B
When your Medicare coverage will begin
When you can enroll in additional Medicare coverage
Information You’ll Need to Enroll
To enroll in a Medicare plan, you'll need information from your Medicare card, including your Medicare Number and your Part A and Part B effective dates. Your Medicare card contains everything you need to complete your enrollment.
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Already Medicare Eligible?
Your next step depends on whether you're already enrolled in Medicare.
Already enrolled in Medicare Parts A and B?
You don't need to enroll in Medicare Parts A and B again.
Locate your Medicare card and confirm your:
Medicare Number
Part A effective date
Part B effective date
You'll need this information when enrolling in additional Medicare coverage.
Eligible for Medicare but haven't enrolled?
If you've delayed Medicare enrollment because you had employer group health coverage, you may qualify for a Special Enrollment Period when that coverage ends.
According to Medicare, when qualifying job-based coverage ends, you may have an SEP to enroll in Part B without a late-enrollment penalty.
Be sure to understand your enrollment deadlines before your current coverage ends.
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Choosing Your Medicare Coverage
Once you have Medicare Parts A and B, decide what additional Medicare coverage works best for you.
Consider your:
Doctors and other healthcare providers
Prescription medications
Healthcare needs
Preferred pharmacies
Travel needs
Premiums and other out-of-pocket costs
Two common options:
Original Medicare + Medigap + Part D
With this option, Original Medicare provides your Part A and Part B coverage.
You may add a:
Medigap plan to help pay certain costs Original Medicare doesn't cover, and
Part D Prescription Drug plan for prescription drug coverage.
Medicare Advantage
Medicare Advantage provides your Medicare Part A and Part B benefits through a Medicare-approved private plan.
Many plans include prescription drug coverage and may include other benefits. Plans may also have provider networks, so check whether your doctors, hospitals and other providers participate in the plan you're considering.
An important consideration if you're interested in Medigap
Rules about when you can enroll in Medigap without medical underwriting can vary depending on your circumstances. Because your enrollment timing can affect your Medigap options, make sure you understand the rules that apply to you before choosing your coverage.
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Have an HSA? Read this Before Enrolling
If you have a Health Savings Account (HSA), Medicare enrollment changes whether you can continue making HSA contributions.
Once you're enrolled in Medicare
Once you're enrolled in any part of Medicare, including Part A, you can no longer contribute to an HSA.
You can continue using money already in your HSA for qualified medical expenses. The restriction applies to new contributions.
Important: Medicare Part A may be retroactive
If you enroll in Medicare after age 65, your Part A coverage may be retroactive. This can affect HSA contributions you've already made.
What this means for you
If you're contributing to an HSA and preparing to enroll in Medicare:
Find out when your Medicare Part A coverage will become effective.
Stop HSA contributions early enough to avoid making contributions for months when you're covered by Medicare.
You can continue using the money already in your HSA for qualified medical expenses.
If you think you may have contributed too much, consider talking with a tax advisor about your situation.
Because Medicare enrollment can affect the tax treatment of your HSA contributions, consider talking with a tax advisor before your Medicare coverage begins.
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Using Your ICHRA Benefit
Once you're enrolled in eligible Medicare coverage, your ICHRA can reimburse you for eligible premiums.
Your ICHRA doesn't automatically enroll you in Medicare or pay your Medicare plan premiums directly. Make sure you've completed your Medicare enrollment and understand which expenses are eligible for reimbursement.
For instructions on requesting reimbursement, see the ICHRA QuickStart Reimbursement Guide.