Individual Health Plan and Medicare Premium Contributions

If an employee chooses to purchase an individual health plan through their local ACA Marketplace or Exchange or qualifies for Medicare, their employer is prohibited from directly contributing towards the employee's plan premium.

Alternative: Salary Gross-Up

The most compliant option for an employer wishing to contribute to an employee's individual health plan is to gross-up the employee's salary (give them a raise), making the plan more affordable to the employee. However, an employer who chooses to do this cannot force the employee to spend the gross-up amount on health care.

Individual and Medicare premiums are also subject to statutory taxes and are not handled the same way as pre-tax group insurance premiums.