Hey Retired Hawaii Public Employees: Are You Missing Out on Thousands of Dollars in Medicare Premium Reimbursements?
For many Hawaii retirees, Medicare premiums represent a significant and growing retirement expense. What many former state and county employees may not realize, however, is that they could be entitled to reimbursement of their Medicare Part B premiums through the Hawaii Employer-Union Health Benefits Trust Fund (EUTF).
Even more surprising, eligible retirees may receive reimbursement not only for their own premiums but also for their spouses' premiums, including the substantial additional surcharges that Medicare imposes on higher-income households.
This is a valuable retirement benefit that deserves far more attention than it receives.
How the EUTF Medicare Reimbursement Benefit Works
The EUTF administers health benefits for eligible Hawaii state and county employees and retirees. Among its benefits is reimbursement of Medicare Part B premiums for qualifying retired public employees.
For retirees originally hired before July 1, 2023, the benefit is particularly generous. Under current rules, eligible retirees and their spouses(!) or qualifying domestic or civil union partners may receive reimbursement of their Medicare Part B premiums, including any Income-Related Monthly Adjustment Amount (IRMAA).
IRMAA is the additional premium Medicare charges beneficiaries whose income exceeds certain thresholds. These surcharges are determined primarily by modified adjusted gross income reported on federal income tax returns from two years earlier.
For higher-income retirees, IRMAA can increase Medicare premiums significantly.
The remarkable feature of the EUTF benefit is that eligible retirees can have these additional Medicare Part B premiums reimbursed, too.
There are some important limitations. The EUTF does not reimburse Medicare late-enrollment penalties or Medicare Part D prescription drug premiums. Eligibility also depends on meeting applicable retirement benefit requirements.
How Much Could This Benefit Be Worth?
For 2026, the standard Medicare Part B premium is $202.90 per month, or $2,434.80 annually.
For a married couple in which both spouses qualify for EUTF reimbursement, that represents $4,869.60 per year in Medicare Part B premiums that may be reimbursed, even without IRMAA.
Now consider a married couple whose income is high enough to trigger Medicare's IRMAA surcharges. The maximum 2026 surcharge for a single tax payers is $5,888 above the regular $2,434.80 premium for single filers. For joint filer the surgcharge would tack on an additional $11,688 above the ordinary Medicare premium payment.
Yet, if the retired public employee was hired before July 1, 2023, and both spouses meet the eligibility requirements, the EUTF may reimburse those higher premiums as well!
As you can see, this important benefit could save retire state and local government employees thousands of dollars every year.
An Unexpected Financial Planning Opportunity: Larger Roth Conversions
There is another potentially valuable financial planning implication of the EUTF's Medicare reimbursement program that deserves attention.
For retirees contemplating Roth IRA conversions, the EUTF's reimbursement of Medicare Part B IRMAA surcharges may open the door to significantly larger conversions.
Here's why.
One of the biggest obstacles to Roth conversions for Medicare-eligible retirees is that the additional taxable income generated by a conversion can trigger higher Medicare premiums two years later.
For example, a married couple considering a $100,000 Roth conversion might find that the additional taxable income pushes them into a higher Medicare IRMAA bracket. In some cases, this could result in thousands of dollars in additional Medicare premiums for both spouses.
This additional expense can materially reduce the financial benefits of the Roth conversion.
However, for eligible Hawaii public-sector retirees hired before July 1, 2023, the calculation is different.
Because the EUTF reimburses Medicare Part B IRMAA surcharges for both the retiree and qualifying spouse, much of the potential Medicare premium penalty associated with a Roth conversion effectively disappears.
This could make it financially advantageous to convert larger amounts from traditional IRAs to Roth IRAs than would otherwise be prudent.
There is one important caveat. The EUTF does not reimburse Medicare Part D IRMAA surcharges, so the potential impact of larger conversions on prescription drug premiums must still be considered.
Of course, Roth conversion decisions should continue to be guided by careful analysis of current and future income tax rates, the impact on Social Security taxation, and other relevant tax considerations.
But for eligible EUTF retirees, the elimination of Medicare Part B IRMAA as an out-of-pocket expense removes a significant obstacle to Roth conversion planning.
For some households, this little-known benefit could be worth far more than the annual Medicare premium reimbursements themselves.
The July 1, 2023, Hiring Date Is Critical
In 2023, Hawaii lawmakers changed the rules governing Medicare Part B reimbursements for newly hired public employees.
The distinction is important:
Employees hired before July 1, 2023: Eligible retirees may receive reimbursement of their Medicare Part B premiums, including IRMAA. Their qualifying spouses or partners may also receive reimbursement.
Employees hired on or after July 1, 2023: Eligible retirees may receive reimbursement of the standard Medicare Part B premium, but not IRMAA. Their spouses or partners are not eligible for Medicare Part B reimbursement through the retiree's benefit.
Importantly, this distinction is based on when the employee was originally hired, not when the employee retired.
The 2023 legislative change preserved the more generous reimbursement provisions for employees hired before the effective date.
You May Qualify Even If You Don't Have EUTF Retiree Health Insurance
Here is another provision that may surprise some retirees.
According to the EUTF's published retirement FAQs, retirees do not necessarily need to be enrolled in an EUTF retiree medical insurance plan to qualify for Medicare Part B premium reimbursement.
Eligible retirees receiving an Employees' Retirement System (ERS) pension may still qualify, provided their Medicare Part B premiums are not being paid by another entity, such as Medicaid or a Medicare Savings Program.
This is an especially important distinction for retirees who obtain medical insurance through another source or who have chosen not to participate in an EUTF-sponsored medical plan.
Retirees should not assume that declining EUTF medical insurance automatically means forfeiting their Medicare reimbursement benefit.
How to Apply for Medicare Part B Reimbursement
The reimbursement process is relatively straightforward, but retirees must provide the required documentation.
Step 1: Confirm Your Eligibility
Contact the EUTF to confirm your eligibility based on your original public employment hire date, retirement status, ERS pension eligibility, and Medicare enrollment.
If your spouse or qualifying partner is also enrolled in Medicare Part B, ask the EUTF to confirm that person's eligibility as well.
Step 2: Gather Your Medicare Documentation
You will generally need the following:
- A copy of your Medicare card showing enrollment in Medicare Part B.
- A copy of your Social Security Administration (SSA) benefit or premium notice showing your Medicare Part B premium, or an applicable Centers for Medicare & Medicaid Services (CMS) invoice.
- The corresponding Medicare documentation for your eligible spouse or partner.
- A completed EUTF Direct Deposit Agreement Form. A voided check is required when designating a checking account.
Step 3: Submit Your Documentation to the EUTF
The EUTF provides the necessary forms and instructions on its website at eutf.hawaii.gov.
Look for the Medicare Part B Reimbursement information and the Direct Deposit Agreement Form.
Follow the EUTF's submission instructions and retain copies of everything you submit.
Step 4: Watch for Your Reimbursement
Medicare Part B reimbursements are generally deposited quarterly, during the first week of January, April, July, and October, for premiums paid during the preceding quarter.
Reimbursements for eligible spouses are deposited into the same designated account as the retiree's reimbursement.
Once established, reimbursement of the standard Medicare Part B premium generally continues automatically, subject to the EUTF's rules and required documentation.
The Most Important Step: Submit Your IRMAA Notice Every Year
This is where some retirees may be leaving money on the table.
Medicare recalculates IRMAA premiums annually based on income information provided by the IRS.
However, the EUTF does not automatically receive all the information necessary to adjust a retiree's reimbursement for these higher premiums.
Instead, the EUTF generally resets IRMAA reimbursements to the standard Medicare Part B premium at the beginning of each calendar year.
Retirees paying IRMAA must submit updated SSA or CMS documentation showing their higher Medicare Part B premiums each year to receive the full reimbursement.
For example, suppose a retiree and spouse are each paying an additional $200 per month in Medicare Part B IRMAA surcharges.
That represents $4,800 annually in additional Medicare premiums for the couple.
If the retiree fails to provide the required documentation, the EUTF may continue reimbursing only the standard premium amount, leaving the couple paying thousands of dollars unnecessarily.
Fortunately, the EUTF allows a two-year lookback period for submitting documentation to claim eligible higher-premium reimbursements.
That means retirees who have neglected to report their IRMAA surcharges should investigate whether they can still recover reimbursement amounts for prior periods.
The two-year lookback specifically applies to documentation of higher premiums. Retirees should not assume the same retroactive reimbursement rules apply to an initial claim for standard Medicare Part B premiums.
A Valuable Retirement Benefit Worth Checking
After nearly four decades of working in financial planning, I have learned that some of the most valuable financial planning opportunities have little to do with choosing investments.
Instead, they involve helping consumers understand and take full advantage of benefits to which they are already entitled.
The EUTF's Medicare Part B reimbursement program is an excellent example.
For eligible Hawaii public-sector retirees, the program can eliminate one of retirement's recurring healthcare expenses. For married couples, particularly those subject to IRMAA surcharges, the potential savings can be substantial.
Beyond the immediate savings, understanding this benefit can create valuable tax-planning opportunities. For retirees considering Roth conversions, the EUTF's reimbursement of Medicare Part B IRMAA surcharges could meaningfully change the optimal conversion strategy, potentially creating substantial additional lifetime tax savings.
My advice is simple: If you or your spouse previously worked for the State of Hawaii or one of its counties and are receiving an ERS pension, take a few minutes to investigate your eligibility.
And if you are already receiving Medicare Part B reimbursements, check to make sure you are receiving the full amount, particularly if you are paying IRMAA surcharges.
You may discover that you have been overlooking one of your most valuable retirement benefits.