I’m ready to retire! Now what? Presented by: Deb Beckman, Benefits Coordinator Marsha Yancy, Senior Advocate
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 of 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 Part B Medical Part C Part D Insurance Insurance Medicare Medicare Advantage Plans Prescription (like HMOs and Drug Coverage PPOs). Includes Part A & B and sometimes Part D coverage
Original Medicare 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
Medicar dicare De e Decis cisions ions 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?
How to Enroll in Medicare 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
Decision: Should I keep/sign up for Part A? 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
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.
Decision : Should I keep/sign up for Part B before retirement ? 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? 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
When to Enroll in Medicare 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 65 th 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
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 ocia ial Securit ity B Benefit its 2 2
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 2 3
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. 2 4
Annual Earnings Limit 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. 2 5
Trivia 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. 2 6
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 2 7
PERA
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