Employment Law Blog

News, trends and analysis in employment law and HR

Aug 07, 2012

Employers should steer clear of Medicare incentives

Q&AEmployee Benefits 

Q: Can we pay our Medicare-eligible employees extra cash if they agree not to enroll in our health plan?

A: No. The Medicare Secondary Payer rules prohibit an employer of 20 or more employees from providing incentives in any form for a Medicare-eligible individual to opt off the employer’s health plan. In addition, IRS rules provide that the tax-favored status of health benefits is lost if you allow employees to freely choose between receiving additional cash in lieu of enrolling in the health plan. There are, however, ways to get around this rule—contact Vigilant to learn more.

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