Medicare Payroll Deductions and Reimbursements

In the individual market, Medicare eligible employees must sign up for Medicare. Medicare enrollees may pay their premiums in one of two ways. 

If their payments are made to Medicare from their ARC account, they will appear on the payroll deduction report as a standard payroll deduction.

If their payments are deducted from their Social Security monthly benefits, they will be owed a reimbursement, and will appear on the payroll deduction report as a reimbursement (i.e. a negative number). 

The examples below describe both situations that Medicare eligible employees may fall into and how that appears to the payroll deduction reports.

Viewing a reimbursement on the Payroll Deduction Report

In this example, the employee is already signed up for Medicare, and their premium payment (Part B) is being pulled from their Social Security check. Or, the employee has not signed up for Medicare but is receiving Social Security income.

In both of these situations, the employee would work with the Medicare Enrollment Partner to provide their current Medicare information, add additional Medicare supplemental plans, or sign up for Medicare. The Medicare Enrollment Partner is responsible for entering the Medicare plans into the benefitbay platform.

On the Payroll Deduction Report, the employee deduction amount will populate as a negative number for Part B, which should result in a pre-tax reimbursement onto the employee’s paycheck for Part B. 

However, keep in mind that if the employee adds additional coverage, such as supplemental plans, and/or enrolls their dependents in off-exchange individual plans it will affect how this is applied to their paycheck. If additional plans are added, it may not result in an overall reimbursement. Always add up all plan totals. 

Viewing a Medicare payment on the Payroll Deduction Report

In this example, the employee has not signed up for Medicare and is not receiving Social Security income.

In this situation the employee would work with the Medicare Enrollment Partner to sign up for Medicare. The Medicare Enrollment Partner is responsible for entering those Medicare plans into the benefitbay platform and using the ARC account for payments.  

On the Payroll Deduction Report, the employee deduction amount will populate as a positive number, which should result in a pre-tax deduction on the employee’s paycheck. However, please note that based on the employer-allotted ICHRA contribution, their deduction may be $0.