QSEHRA and Medicare

Can a small business employer with less than 20 employees, who offers group health insurance, sponsor a section 105 Health Reimbursement Plan to reimburse employees who opt out of the group offering and enroll in Medicare Part B, D and supplement?

I'm confused. A QSEHRA can only be maintained by an employer that has no other health plan. So if this this employer "offers group health insurance," it can't have a QSEHRA. If what you are asking is whether an employer who has a health plan and thus does not qualify to have a QSEHRA can have a QSEHRA only for Medicare-eligible employees, I don't think so.

If a fewer-than-20-employer employer otherwise meets the requirements to offer a QSEHRA (e.g., does not offer medical coverage at all), I believe without researching that under the QSEHRA rules the employer could reimburse Medicare Part B, D, or supplement premiums through it.  It couldn't do it for  just  the Medicare folks as that would violate the rule that it generally apply to all employees.

Luke and Chaz are correct that if the employer offers any group health coverage, it cannot establish a QSEHRA (IRS Notice 2017-67/Q&A-4). And you're correct that you can only offer that kind of incentive by an employer with fewer than 20 employees since otherwise the Medicare Secondary Payor rules would kick in, prohibiting any incentive to drop group health coverage in favor of Medicare.

If these are active employees, and you can pass the 105(h) nondiscrimination tests on eligibility and benefits, there is a narrow tightrope that you might be able to navigate to enable a "regular" HRA that is limited to reimbursing only Parts B and D Medicare premiums in an under-20 employee organization.

Question. If the employer has more than 20 employees, say it has 40, but it's only plan is a QSEHRA, then do we really think that the MSP rules will prohibit the employer from reimbursing Medicare Parts B, C, and D premiums? Even if (and I have not run through the analysis), the QSEHRA would satisfy the Medicare definition of a group health plan (GHP), the employer would not be reimbursing the premiums as an inducement for the Medicare-eligible employee to drop the employer's GHP, since the QSEHRA is the employer's "GHP."