Health Insurance After You Retire Presented by Guerren Solbach.

Health InsuranceHealth Insurance

AfterAfterYou RetireYou Retire

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Presented by Guerren SolbachPresented by Guerren Solbach

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Health Insurance After You Retire 2

Objective: Answer These Objective: Answer These QuestionsQuestions

• What health & welfare benefits can What health & welfare benefits can continue into retirement?continue into retirement?

• Who is eligible for retiree health?Who is eligible for retiree health?

• How much will I have to pay?How much will I have to pay?

• What about Medicare?What about Medicare?

• Is UC planning to cancel retiree health Is UC planning to cancel retiree health insurance?insurance?

Health & Welfare Health & Welfare BenefitsBenefits

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Health & Welfare BenefitsHealth & Welfare Benefits

• Retirees may continue into retirement:Retirees may continue into retirement:

– Medical, Dental & LegalMedical, Dental & Legal

• Vision: VSP offered to retirees Vision: VSP offered to retirees 7/1/20087/1/2008

– Retiree pays full VSP premiumRetiree pays full VSP premium

– Health Net & Kaiser cover eye glasses for Health Net & Kaiser cover eye glasses for members with Medicaremembers with Medicare

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More on Health & Welfare More on Health & Welfare BenefitsBenefits

• AD&DAD&D: retiree plan is available through direct : retiree plan is available through direct payment to Chartis (formerly AIG/American Home payment to Chartis (formerly AIG/American Home Assurance)Assurance)

• Life InsuranceLife Insurance ends ends– May convert to individual policyMay convert to individual policy

• Disability InsuranceDisability Insurance ends last day actively at ends last day actively at work or on vacationwork or on vacation

• Auto/Home/Renters’ InsuranceAuto/Home/Renters’ Insurance– Continue through direct payment to A+/California CasualtyContinue through direct payment to A+/California Casualty

• Health FSA/Dependent Care FSA/TIPHealth FSA/Dependent Care FSA/TIP end end

EligibilityEligibility●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●

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Eligibility for Retiree HealthEligibility for Retiree Health

• Medical & DentalMedical & Dental insurance may insurance may continue into retirement:continue into retirement:– UC Retirement Plan (UCRP) members must UC Retirement Plan (UCRP) members must

elect elect monthlymonthly retirement income retirement income

– Must retire within 120 days of terminating UC Must retire within 120 days of terminating UC employmentemployment

– Insurance coverage must be continuousInsurance coverage must be continuous

• If you elect a If you elect a lump sum cash outlump sum cash out, you , you forfeit UC health insuranceforfeit UC health insurance

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More on EligibilityMore on Eligibility

• If you entered UCRP If you entered UCRP before 1/1/1990before 1/1/1990::

– Ages 50-54: Must have 10 years of service creditAges 50-54: Must have 10 years of service credit

– Age 55+: Must have 5 years of service creditAge 55+: Must have 5 years of service credit

– Must not have had a break in service of more than Must not have had a break in service of more than 120 days120 days

– Eligible for 100% of UC’s maximum contribution Eligible for 100% of UC’s maximum contribution toward medical and dental insurancetoward medical and dental insurance

• If you entered UCRP If you entered UCRP on or after 1/1/1990on or after 1/1/1990::

– Graduated EligibilityGraduated Eligibility

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Graduated EligibilityGraduated Eligibility

• Percentage of UC’s maximum contribution Percentage of UC’s maximum contribution based on based on full yearsfull years of UCRP service credit of UCRP service credit

Service Credit Percentage of UC’s contribution

0-4 N/A

5-9If Age + Service Credit ≥ 75: 50%

(otherwise not eligible)

10 50%

11-2055-100%

(5% for every year above 10)

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100% of UC’s Contribution100% of UC’s Contribution

Net cost

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Example A (2010)Example A (2010)

• Employee with 20 years of UCRP Employee with 20 years of UCRP service credit retires with Health Net service credit retires with Health Net (non-Medicare)(non-Medicare)

• Total Premium: $487.43Total Premium: $487.43

• Max UC contribution: $427.05Max UC contribution: $427.05

• Net cost to retiree: Net cost to retiree: $60.38$60.38

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Net cost

Net cost

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Example B (2010)Example B (2010)

• Employee with 10 years of UCRP service Employee with 10 years of UCRP service credit retires with Health Net (non-credit retires with Health Net (non-Medicare)Medicare)


• Max UC contribution: $213.53 (50% of Max UC contribution: $213.53 (50% of $427.05 = $213.53)$427.05 = $213.53)

• Net cost to retiree: Net cost to retiree: $273.90$273.90 ($487.43 - ($487.43 - $213.53)$213.53)

PremiumsPremiums●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●

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About Retiree Health PlansAbout Retiree Health Plans

• Same medical & dental plans as employeesSame medical & dental plans as employees

• May get termination letter when campus May get termination letter when campus coverage ends and UC Retirement System coverage ends and UC Retirement System coverage beginscoverage begins

• No “salary banding”No “salary banding”

• Open EnrollmentOpen Enrollment

• Period of Initial EligibilityPeriod of Initial Eligibility

• Can suspend medical coverageCan suspend medical coverage

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Health Plan PremiumsHealth Plan Premiums

• http://www.hr.ucdavis.edu/hcfhttp://www.hr.ucdavis.edu/hcf– Click on “Click on “Thinking About Retiring?Thinking About Retiring?””

• Determine which medical plans are Determine which medical plans are available by available by zip codezip code

• Premium estimator toolPremium estimator tool (MS Excel) (MS Excel)– Offers eligibility guidanceOffers eligibility guidance

– Estimates how much you will pay (based Estimates how much you will pay (based on 2010 premiums)on 2010 premiums)

MedicareMedicare●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●

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About MedicareAbout Medicare

• Medicare is the federal health insurance Medicare is the federal health insurance program for those over 65 and some program for those over 65 and some disableddisabled– Part APart A ( (premium-freepremium-free for most) for most)

– Part BPart B (costs (costs $110.50/month$110.50/month in 2010) in 2010)• Costs more if you make > $85,000Costs more if you make > $85,000

• UC relies on Medicare to offset the cost of UC relies on Medicare to offset the cost of insuranceinsurance

• Medicare-coordinated plans usually cost lessMedicare-coordinated plans usually cost less

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Part B reimbursement

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Example C (2010)Example C (2010)

• Employee with 20 years of UCRP service credit Employee with 20 years of UCRP service credit retires with Medicare and Health Netretires with Medicare and Health Net


• Part B premium: $110.50Part B premium: $110.50

• Max UC contribution: $400.48Max UC contribution: $400.48

• Part B reimbursement: Part B reimbursement: $96.40$96.40 ($400.48 - ($400.48 - $293.60 > $96.40)$293.60 > $96.40)

• Net cost to retiree: Net cost to retiree: $14.10$14.10 ($110.50 - $96.40) ($110.50 - $96.40)

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UC’s Medicare UC’s Medicare RequirementsRequirements

• RetireesRetirees and their family members and their family members must enroll in Medicare Part B:must enroll in Medicare Part B:– If they are enrolled in medical insuranceIf they are enrolled in medical insurance

– If they are eligible for Part A free of chargeIf they are eligible for Part A free of charge

• You can be eligible for Part A for free You can be eligible for Part A for free through a through a current or former spousecurrent or former spouse, , even if you didn’t pay in to Social even if you didn’t pay in to Social SecuritySecurity

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Medicare & HMOsMedicare & HMOs

• Medicare AdvantageMedicare Advantage plans plans

– If you have Medicare A & B, and you are If you have Medicare A & B, and you are enrolled in an HMO, you must enrolled in an HMO, you must assignassign your your Medicare benefits to the HMO (by form)Medicare benefits to the HMO (by form)

– Medicare pays a flat monthly fee to the Medicare pays a flat monthly fee to the insurance companyinsurance company

– Medicare cannot be used separately from Medicare cannot be used separately from the Medicare Advantage planthe Medicare Advantage plan

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Medicare Advantage PlansMedicare Advantage Plans

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Medicare & Anthem Blue Medicare & Anthem Blue CrossCross

• Medicare primaryMedicare primary; Anthem Blue Cross ; Anthem Blue Cross plan secondaryplan secondary

• Medicare-certified providers must be usedMedicare-certified providers must be used

– 96.5% of U.S. physicians participate in 96.5% of U.S. physicians participate in Medicare as of 2009Medicare as of 2009

– Ask if accepting new Medicare patientsAsk if accepting new Medicare patients

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Medicare & CIGNAMedicare & CIGNA

• Employees who retire with CIGNA Choice Employees who retire with CIGNA Choice Fund PPO can keep it into retirement Fund PPO can keep it into retirement until/unless they are eligible for Medicareuntil/unless they are eligible for Medicare

• CIGNA Choice Fund PPO is not offered to CIGNA Choice Fund PPO is not offered to retireesretirees

• Stand-Alone Health Reimbursement Stand-Alone Health Reimbursement AccountAccount

– Claim $$ left over after you lose eligibility due to Claim $$ left over after you lose eligibility due to MedicareMedicare

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Medicare Part DMedicare Part D

• Prescription drug benefit started in 2006Prescription drug benefit started in 2006

• Subsidizes medical plan premiumsSubsidizes medical plan premiums

– Part D is a Part D is a payment mechanismpayment mechanism

• The RThe Rxx coverage of UC medical plans (except coverage of UC medical plans (except Core) is equivalent to or better than Part DCore) is equivalent to or better than Part D

– Considered Considered creditable coveragecreditable coverage

• Formulary may differ from non-Medicare planFormulary may differ from non-Medicare plan

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More on Part DMore on Part D

• Retirees with Medicare must Retirees with Medicare must complete a formcomplete a form

• No additional Part D premiumNo additional Part D premium

• Complicates or prevents double Complicates or prevents double coveragecoverage

• Enrollment in another Part D plan Enrollment in another Part D plan may result in may result in lossloss of UC coverage of UC coverage

The FutureThe Future●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●

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What does the future hold?What does the future hold?

• Premiums continue to Premiums continue to riserise

– Since 1999, the cost of family coverage has Since 1999, the cost of family coverage has increased by 131%.*increased by 131%.*

– The average cost of family coverage is $13,375 The average cost of family coverage is $13,375 a year.*a year.*

• As of 2009, As of 2009, 29%29% of large firms (200+ of large firms (200+ employees) offered retiree health insurance*employees) offered retiree health insurance*

– Down from Down from 66%66% in 1988* in 1988** Source: Kaiser Family Foundation Employer Health Benefits 2009 Annual Survey* Source: Kaiser Family Foundation Employer Health Benefits 2009 Annual Survey

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Funding health insuranceFunding health insurance

• UC’s contribution to health insurance is UC’s contribution to health insurance is not guaranteednot guaranteed to employees or retirees to employees or retirees

• Employee premiums: paid by departmentEmployee premiums: paid by department

• Retiree premiums:Retiree premiums:

– Campus assessment fee: Campus assessment fee: 3.12% of 3.12% of employee covered compensation for FY 2009employee covered compensation for FY 2009

– Not funded by the UC Retirement PlanNot funded by the UC Retirement Plan

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Future of insurance through UCFuture of insurance through UC

• The University intends to The University intends to continue retiree health insurancecontinue retiree health insurance

– Helps us recruit and retain employeesHelps us recruit and retain employees

– As a socially responsible institution, we As a socially responsible institution, we don’t want to add to the uninsureddon’t want to add to the uninsured

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Future of insurance through UCFuture of insurance through UC

• Task Force on Post-Employment Task Force on Post-Employment BenefitsBenefits

– To make recommendations to the To make recommendations to the President in June 2010President in June 2010

– Recommendations which allow the Recommendations which allow the Regents to meet:Regents to meet:

•Fiduciary ObligationsFiduciary Obligations

•Educational ResponsibilitiesEducational Responsibilities

ConclusionConclusion●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●

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ConclusionConclusion

Whether you’re an Whether you’re an employeeemployee or a or a retireeretiree::

The Health Care The Health Care Facilitator Program Facilitator Program

is here to help!is here to help!

Health InsuranceHealth Insurance

AfterAfterYou RetireYou Retire

●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●

Presented by Guerren SolbachPresented by Guerren Solbach

Health Insurance After You Retire Presented by Guerren Solbach.

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