Im ready to retire! Now what? Presented by: Deb Beckman, Benefits - - PowerPoint PPT Presentation

Presented by: Deb Beckman, Benefits Coordinator Marsha Yancy, Senior Advocate

I’m ready to retire! Now what?

Agenda

 Medical Insurance  HSA/HRA  Medicare Alphabet – Part A, B, C, D  Primary/Secondary payer  Social Security  PERA  Fire/Police – special considerations  Retirement Accounts through ICMA/MNDCP  Life Insurance Continuation

Medical Insurance

 Employees who retire under

PERA eligibility may continue medical insurance indefinitely.

 To cover a spouse for longer

than 18 months, the retiree must continue on the policy.

 Exception is 36 months from

employee’s eligibility for Medicare if the employee retires after Medicare eligibility.

 Cost of coverage is full cost

• f option for single or family.

Sick Leave Options

 Employees may choose a one-third cash payout of sick leave

balance or elect to convert 100% to an escrow account to pay for medical insurance.

 Escrow Option

 Employee must be PERA eligible  Taxes are based on the one-third cash equivalent and paid at the

time of retirement.

 Cannot change your election  Cannot be transferred to a spouse

HRA/HSA

 HRA – money remains tied to the medical

• plan. If employee leaves and does not

continue insurance, the money reverts to the plan.

 HSA

 Can continue to use for medical expenses for

self and qualified dependents.

 Cannot contribute once employee becomes

eligible for Medicare

 Spouse can open their own HSA and

contribute to the single maximum if they are not Medicare eligible.

The Medicare Alphabet

The Four Parts of Medicare

Part A Hospital Insurance Part B Medical Insurance Part C Medicare Advantage Plans (like HMOs and PPOs). Includes Part A & B and sometimes Part D coverage Part D Medicare Prescription Drug Coverage

 Has Part A – Hospital Insurance

• Hospital
• Skilled Nursing Facility
• Home health care
• Hospice care

 Has Part B – Medical Insurance

• Doctor’s visits
• Outpatient hospital services
• Clinical lab tests
• Durable Medical Equipment
• Preventive services

Original Medicare

 Should I keep/sign up for Part A?  Should I take Part B? When?  What about Part D?  Original Medicare or Medicare Advantage?  Do I need a Medigap policy?

Medicar dicare De e Decis cisions ions

 If enrollment is not automatic

• For instance, you’re still actively working
• You need to enroll with Social Security

 Visit local office in the Choate Bldg.  Call 1-800-772-1213  Online at www.ssa.gov

How to Enroll in Medicare

 Consider

 Get it automatically if getting Social Security/RRB  Free for most people

• Can pay if work history is not sufficient

 There may be a penalty if you delay

• If you/your spouse is actively working and covered by

employer plan

 Contact Social Security to sign up

Decision: Should I keep/sign up for Part A?

Part A enrollment while working for the city?

What changes?

 If you are 65, currently working, with city health

insurance – since the city has more than 20 employees, the city coverage remains primary.

 No longer may make tax free contributions to a

health savings account.

 If your spouse is under age 65 and covered by the

City plan, the spouse can open their own HSA and make contributions to the single maximum.

 Consider

• Automatic if getting Social Security/RRB benefits
• Pay a monthly premium

 Usually deducted from SS/RRB benefits

 If you are not receiving a cash benefit – they will send a

statement

 Amount depends on income – for many it is $105 in 2013

• It may supplement employer coverage

Decision : Should I keep/sign up for Part B before retirement ?

 If you don’t

’t have coverage from active employment

• Yours or your spouses
• Delaying Part B may mean

 Higher premiums  Paying for your health care out-of-pocket

 If you do

do have coverage through active employment

• You may want to delay Part B
• No penalty if you enroll while you have coverage or within

8 months of losing coverage

Decision: Should I keep/sign up for Part B?

If you delay Part B at age 65 – when can you enroll?

 Anytime while you are still working  For 8 months after your employment or group health

coverage ends – whichever comes first.

 Sometimes you must have Part B

• If you want to buy a Medigap policy
• If you want to join a Medicare Advantage Plan

Decision: Should I keep/sign up for Part B?

 You don’t have to be retired – Social

Security benefits are not tied to Medicare

 Your Initial Enrollment Period lasts 7

months

• Begins 3 months before your 65th birthday
• Includes the month you turn 65
• Ends 3 months after you turn 65

 There are other times you may enroll

• But you may pay a penalty if you delay

When to Enroll in Medicare

Supplemental insurance for Medicare?

 Medigap policies – true Medicare

supplements:

 standardized health coverage/ no Rx coverage

 Medicare Advantage plan – Part C

 May include prescription coverage  May have extra benefits

 Silver Sneakers  Vision/Hearing/Dental

 Medicare Prescription Drug Coverage –

Part D

 Not needed if you are covered by a creditable plan

such as the City group plan or VA.

Insurance to supplement Medicare in Minnesota

 18 companies sell Medigap plans (statewide)

• Costs range from $115 lowest basic to $512

extended basic coverage – never Rx coverage

 3 companies sell 17 Medicare cost plans

• Costs range from $29 (noRx)- $343 (Rx)
• Enrollment is usually open

 4 companies sell 14 Medicare Advantage plans

• Costs range from $0 - $146 (enhanced Rx)
• Enrollment in the fall of every year

You always have to pay the Part B premium as

well

Many plans change every year

Medicare Prescription Drug Plans in MN (regional)

 32 options in 2013  The least expensive plan is $15/month with $325 deductible  Least expensive plan with no deductible is $27.10/ month  The most expensive plan is $110.20/month Plans change every year Plans have different levels of coverage for different drugs Our insurance has ‘creditable coverage’ so no penalty if you

enroll soon after you leave group coverage

How do I find plans?

 Online at www.MinnestoaHelp.info or

www.mnaging.net and click on the link for Health Care Choices for the publication.

 Use www.medicare.gov to search for plans specific

to your medication list

 Contact the Senior Advocates at the Friendship

Center – they have lists compiled or copies of the Health Care Choices for Minnesotans on Medicare (usually updated every November for the next year). 454-7369 if you want to set up an appt. to talk

Soc

• cia

ial Securit ity B Benefit its

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Retirement Benefits

 Are payable at full retirement age for anyone with enough credits.  Full retirement age is 65 for

persons born before 1938.

 Age gradually increases to

age 67 for persons born in 1960 or later.

 People who delay retirement beyond their full retirement age get

special credit of 6.5% a year for each year they delay receiving benefits up to age 70

Calculation of Benefits

 Social Security has been sending out annual statements.  Statements can be requested at any time either online or in

writing.

 Visit Social Security’s website at www.ssa.gov/retirement to

get your statement online after creating an account.

 The website has a retirement

planner and a benefit calculator – they will calculate benefits by the months.

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 No earnings limit for individuals at full retirement age. You

can work full time and receive your social security benefits.

 If under full retirement age for all of 2013, the limit is

$15,120. Offset is $1 for every $2 over.

 If you reach full retirement age in 2013, you can earn

$40,080 for the period of time prior to you attaining your full retirement age. Offset is $1 for every $3 over.

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Annual Earnings Limit

 Social Security Benefits are tax free for a majority of beneficiaries.

However, those with high total incomes must include up to 85% of their benefits as income for federal tax purposes. Special thresholds determine these amounts.

 COLAs are established each December and are payable in January.

They are not automatic, Congress must act. The Part B Medicare premium changes each year as well. (You can’t go backward. )

 Generally, the day in the month that you receive your benefit depends on

the birth date of the person on whose record you receive benefits.

 General rule of thumb – don’t have anything deducted from your Social

Security benefit if you have the choice.

 Bank accounts with only Social Security deposits cannot be garnished.

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Trivia

When to Apply for Retirement Benefits

 You should apply three months

prior to date you want benefits to begin.

 You can apply online or in

person at local office

 Provide the following to enroll

 Soc sec number for each applicant  Proof of age = birth certificate  Latest w-2 or self employment tax return  Earnings estimate  Bank info for direct deposit  Information about marriages/divorces  Information about military or railroad

service

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PERA

Understanding PERA

 The options

 Full Retirement

 Coordinated = 65 or rule of 90 if hired before 7/1/89  P&F = 55 with three years, 65 with one year, or rule of 90

 Early Retirement

 Coordinated = 55 with 5 years of service after 6/30/10 hire or rule of 90  P&F = 50 with 3 years of service after 6/30/10 hire or 30 years of service

 Combined Service

 www.mnpera.org offers answers to all the basic questions of how

your benefit are calculated. Use the resources section to learn

• more. There are videos in the Viewing Room.

 Meet with PERA within three to six months of retirement for final

estimate and to enroll for benefits.

 Benefits are taxable.

Police and Fire – Special Tax Consideration

 The Pension Protection Act of 2006  Pay premiums directly from PERA benefits for health, dental

and long-term care insurance.

 Up to $3,000 annually are state and federally tax free.  This option is also available through ICMA.

Retirement Accounts

Retirement Accounts

 ICMA/MNDCP and any personal accounts you have  Are your investments where you need them to be?  Withdrawing money from ICMA or MNDCP

 Contact the company directly to get paperwork  You can do lump some payments  You can leave money in accounts until age 70 ½

 457 accounts will be considered taxable income

Life Insurance

Life Insurance

 PERA Life

 Continue indefinitely  Payments made directly from your PERA payments

 MN Life

 Continue for 18 months at current employee rate  Convert to whole life policy directly with MN Life after 18

months