A growing number of large employers no longer run a traditional retiree medical plan on their own; instead, they fund an account for each retiree and point them to a private marketplace to pick an individual Medicare plan.

What is a retiree HRA, and who pays into it?

A Health Reimbursement Arrangement, or HRA, can only receive contributions from the employer; the retiree does not put money into it. Contributions aren't counted as the retiree's income, and reimbursements paid out for qualified medical expenses incurred after enrollment are not taxed, as long as the arrangement follows the IRS rules that apply to it.

How does a private Medicare exchange fit into this setup?

This kind of exchange is a marketplace, usually run by a benefits administrator on the employer's behalf, where a retiree compares and enrolls in an individual Medicare Advantage, Medicare Supplement (Medigap), or Part D prescription plan, often with help from a licensed benefit advisor rather than going it alone.

How do the HRA dollars actually reimburse premiums?

Once enrolled in a plan through the exchange, the retiree generally pays the plan's premium directly, then files a claim, or in some designs is reimbursed automatically, so the HRA credits offset what was already paid rather than covering the premium up front.

What happens if a retiree skips enrolling in a plan through the exchange?

Many of these programs are built so the HRA credit and any related employer-sponsored coverage are tied to actually completing enrollment in a qualifying plan through the exchange; a retiree who skips that step typically forfeits the credit for that period; and depending on the plan design, employer coverage for the retiree and any covered dependents can end as well. The exact consequence depends entirely on how a given employer's program is written.

Why would an employer set things up this way instead of running its own group plan?

Moving retirees onto individual Medicare plans through an exchange gives each retiree a wider menu of plan options than an employer-run group plan usually offers, since the retiree picks from many Medicare Advantage, Medigap, and Part D plans sold on the open market instead of a plan an employer negotiated. For the employer, funding a fixed-dollar HRA credit also makes the yearly cost of the retiree health commitment more predictable than an open-ended group plan would be.

That trade means the retiree takes on more of the shopping and paperwork, comparing premiums, provider networks, and drug formularies across plans, instead of being enrolled automatically in whatever plan the employer already picked.

Can the HRA reimburse Medicare premiums, not just other medical bills?

Federal rules let an individual coverage HRA be integrated with Medicare, covering a participant enrolled in Medicare Part A and Part B or Part C, alongside dependents who might instead be on individual health insurance coverage. A retiree-only HRA works differently: it falls outside the ACA market-reform rules that limit HRAs for active employees, so it can be designed to reimburse premiums for the Medicare Advantage, Medigap, or Part D plan a retiree picks on the exchange, rather than only other medical bills.

What if someone wants to delay Medicare Part B while still working?

Someone 65 or older who is still covered under a group health plan based on their own or a spouse's current employment can generally delay Part B without a late-enrollment penalty, instead signing up during an 8-month Special Enrollment Period that starts the month after that employment or group coverage ends, whichever comes first.

COBRA coverage and retiree health coverage are not considered coverage based on current employment for this purpose, so that 8-month window doesn't open when either of those ends.

Is there a separate penalty for enrolling in a Part D plan late?

Yes, and it's independent of anything the HRA or exchange does. Going 63 or more days in a row without Part D or other creditable drug coverage after someone's Initial Enrollment Period generally triggers a Part D late-enrollment penalty equal to 1% of the national base beneficiary premium, $38.99 in 2026, for each full month without that coverage, added to the monthly Part D premium for as long as the person has Part D coverage.

Do unused HRA dollars carry over to the next year?

Whether a balance carries forward depends on plan design: some HRAs allow it and some do not. Where carryover is allowed, the employer is not permitted to pay out any part of that balance in cash, and the money can only be used later to reimburse qualified medical expenses.

Does this work differently before 65 compared with after?

Before Medicare eligibility, a retiree is usually outside the scope of a Medicare-based exchange altogether and instead relies on whatever interim coverage the employer offers. Medicare eligibility itself can start well before 65 for someone receiving Social Security disability benefits, who is automatically enrolled in Part A and Part B after 24 months of those benefits.

For everyone else, eligibility begins with the 7-month Initial Enrollment Period surrounding the 65th birthday, and after that, the annual window each October 15 through December 7 is when most people revisit their Medicare Advantage or Part D choice for the following year.

Exactly how this plays out, meaning whether AT&T offers a retiree HRA at all, how the dollar credit is set, what plan a retiree needs to enroll in to keep it, and what the cost split looks like before and after 65, comes down to AT&T's own program design rather than any general rule.

How Does AT&T's Retiree HRA Work Today?

AT&T retirees who are already weighing an HRA against the exchange described above are dealing with a program that changed shape a few years back. AT&T's Health Reimbursement Account for Medicare-eligible retirees stopped receiving new company contributions on December 31, 2023, so no further credits are added regardless of which AT&T Medicare plan a retiree picks. A retiree with money left in that account can still submit claims against it, including reimbursement for Medicare Part B premiums and other eligible out-of-pocket costs. Check the AT&T Benefits Center for the exact balance before assuming new credits are still arriving.

What Do AT&T's Own Medicare Plans Cost in 2026?

Those exchange-versus-plan comparisons change once AT&T's own sponsored options are on the table. For 2026, Medicare-eligible retirees can enroll in the AT&T Group Medicare Advantage (PPO) Plan with the AT&T MedicareRx for Groups (PDP) prescription plan at no monthly cost, or step up to the AT&T Group Medicare Advantage (PPO) Plus Plan, which adds dental, vision and hearing benefits, for a $50 monthly premium. Retirees who would rather shop a wider menu than those two options can still use AT&T's private Medicare exchange instead; its administrator is not an insurance company and does not design, select or sponsor any of the policies listed there. Which path fits better often comes down to what a retiree's own HRA balance still covers and which doctors or prescriptions need to stay in network.