Retiree Health Care Benefits

The health benefits offered to retired employees by the University are influenced by the cost of providing medical care, by the programs offered by health insurance industry, and by the regulations the federal government mandates for Medicare.  Each of these is subject to change, as is the University’s approach to meeting those changes.  The material which follows represents the authors’ understanding of the health benefits offered to retired employees in 2009.  We hope this information will give you an overall sense of the scope and the costs of the University’s retiree health program.  However, the details of that program will almost certainly be different in 2010 and in future years. 

When you enroll in the University’s retiree health program you will need to select from a number of different options.  Before you do you should become very familiar with the information available on the website of the Division of Human Resources.  In addition, you may find it useful to discuss the options with some of your retired colleagues already in the program to get their perspectives on the options available.

Health benefits for retired employees of the University of Pennsylvania currently are similar to those for full time employees.  The summary below includes information taken from the following sources, which can be accessed on the Penn Division of Human Resources website:  “Retiring from Penn” (September 2008), “University of Pennsylvania Benefits”, and “Faculty Income Allowance Plan” (September 2008).

The rules regarding the timing and conditions for enrollment for retiree health benefits are quite specific and should be examined well in advance of retirement.  You must complete an enrollment form electing or deferring University retiree medical coverage within the 90 day period prior to your last day of service or participation in the program will be permanently waived.  For more detailed and current information, please refer to plan descriptions and information available from the Division of Human Resources.

1.   Eligibility 

Health benefits are offered by the University to retired members of the faculty who meet certain requirements.  As of January 1, 2006 you are eligible to receive retiree health benefits if your age plus your years of service total at least 75, with a minimum age of 55 and a minimum of 15 years of service, or a minimum age of 62 and a minimum of 10 years of service.  Service must be full time and continuous.  If you met either of the age and service minimums by December 31, 2008, the total of your age and years of service is not required to be 75 years to be eligible for retiree benefits when you retire from Penn.

Eligible dependents include your spouse / same sex domestic partner and dependent children.  Note that if a child is disabled, the benefits may be extended past the age of 23.  In the event of your death, your surviving spouse may continue to receive medical coverage until remarriage or death.  Eligible unmarried dependent children may continue to receive coverage up to age 19 (up to age 23 for full time college students).
 

2.   Medical and Prescription Drug Benefits

a) Retirees Under Age 65

Medical - Retirees and their eligible dependents under age 65 can choose from the following  for medical plans in 2009:

·         Keystone / AmeriHealth HMO

·         Aetna HMO

·         PENN Care / Personal Choice Preferred Provider organization (PPO)

The details and comparison of these plans, which are published by the Division of Human Resources, may change from year to year.  If you plan to reside outside of the Philadelphia area, it is important that you check to see which of these plans will be available to you. 

Prescription Drug Coverage. - Retirees under age 65 who elect medical coverage through Penn will automatically be covered under Penn’s prescription plan through Caremark.  Prescriptions can be filled at a retail pharmacy or through the Caremark mail service program. 

For more information  For detailed information about medical and prescription drug benefits, go to the Division of Human resources website at  www.hr.upenn.edu/benefits/retireehealth.

b)   Retirees Age 65 and Older

Medicare:  All retirees and eligible dependents age 65 and over must be enrolled in Medicare Parts A and B in order to enroll in Penn’s Medicare-eligible retiree medical plans.  Medicare Part A covers inpatient stays in the hospital and certain nursing facilities.  Medicare Part B covers doctor services and certain other outpatient services and supplies.  You can enroll in Medicare Part A, which has no cost to you, any time after reaching age 65.  You should plan to enroll in Medicare Part B at least 90 days prior to your planned retired date to avoid a possible gap in your coverage

Medical:  You and your eligible dependents over age 65 may currently enroll in the following plans:

·         Keystone/AmeriHealth 65 Medicare Advantage (HMO)

·         Aetna Golden Choice Preferred Provider (PPO)

·         Independence Blue Cross 65 Special  (Traditional)

·         Aetna Indemnity Plan (Traditional)

The details and comparison of these plans, which are published by the Division of Human Resources, may change from year to year.  If you plan to reside outside of the Philadelphia area, it is important that you check to see which of these plans will be available to you.

Prescription Drug Coverage.  Retirees age 65 and older who elect medical coverage through Penn can either elect or waive prescription drug coverage through Penn (currently provided by Caremark).  If you waive Penn’s prescription drug coverage when you retire you will not be allowed to enroll in this plan in the future, and therefore you may want to enroll for coverage in Medicare Part D.  You cannot enroll in both Penn’s prescription drug plan and Part D.  Most retirees will wish to have prescription drug coverage under one of these two plans.  Note that you cannot elect Medicare Part D if you enroll in a Medicare-Advantage HMO plan.  The University has determined that the prescription drug coverage offered by the University is on average expected to pay as much as standard Medicare Part D prescription drug coverage will pay.

For More information: For detailed information about medical and prescription drug benefits go to the Division of Human Resources website at www.hr.upenn.edu/benefits/retiring.  For more information regarding the current Penn sponsored prescription drug plan, call Retiree Assist at 1-866-789-7366.  For more information regarding Medicare prescription plans contact Medicare at 1-800-633-4227 or visit www.medicare.gov and request the handbook entitled “Medicare and You.”

c)   Split Family Coverage

Split family coverage occurs when one person is under age 65 and not eligible for Medicare and enrolled in a pre-65 medical plan, and one person is age 65 or older and is enrolled in a Medicare-eligible plan.  Specific rules apply: see the Division of Human Resources website for more information.

d)  Cost of Coverage

The move from active status to retiree status will change you from an older member of a relatively young and healthy group to a younger member of a relatively old and unhealthy group.  Unfortunately, the costs of providing medical services to this latter group are very high.  The University, in 2009, pays 60% of the premium for the least costly medical plan and 60% of the premium for prescription drug coverage.

Medical and prescription drug costs are subject to change from year to year.  The costs of premiums to retirees over age 65 for both medical and drug coverage from the University ranges from $120 to $201 per month per person in 2009.  In addition, the minimum costs for Medicare B, which are now indexed to total income, are $96.40 per person per month.  The costs for retirees under the age of 65, before support from Medicare is available, are considerably higher.  A complete chart of payments to the University can be found at: www.hr.upenn.edu/benefits/retiring.  (Choose “Retiree Medical and Prescription Drug Benefits” from the menu, then “Cost of Medical and Prescription Drug Coverage.”)

Note that medical insurance premiums paid directly to the insurance carrier on your behalf by the University are not considered taxable income, whereas premiums paid by individuals are not exempt from taxation and are paid with after-tax dollars.  Thus the actual additional cost of healthcare coverage after retirement could be substantial, since it will include the premium which you will be required to pay to the insurance carrier as well as the cost of Medicare Part B, both of which must be paid with after-tax dollars.

3. Dental Coverage

·       Vital Savings by Aetna  

A dental discount plan with Aetna has been available since January of 2006.  If you enroll for this coverage and visit a participating provider you will receive an average discount of 28%.  Contact Aetna at 1-866-368-4825 for more information.

·      MetLife Preferred Dentist Program (PDP)

This program provides coverage when you receive treatment from any dentist you wish, but you may save money by using a MetLife preferred dentist.  Contact MetLife at 1-800-438-6388 for more information

·      COBRA

When you retire, you may be eligible to continue your existing Penn Faculty Practice or MetLife dental benefit through COBRA for up to 18 months.  For more information on COBRA, review Penn’s online health and welfare summary plan description at:  www.hr.upenn.edu/benefits/spd/pdf or contact the Penn Benefits Center at 1-800-736-6236.

4.   Vision Coverage

·      Aetna Vision One

If you enroll in the Vital Savings by Aetna Dental Program you will automatically have access to the Aetna Vision One discount program.  You can use vision providers in nearly 13,000 participating Vision Centers through this program.  Contact Aetna at 1-800-793-8616 for more information.

·      COBRA

When you retire you may be eligible to continue your existing Davis Vision benefit through COBRA for up to 18 months.  For more information on COBRA, review Penn’s online health and welfare summary plan description at:  www.hr.upenn.edu/benefits/spd/aspx or contact the Penn Benefits Center at 1-800-736-6236.

5.  Other Benefits

a)  Life Insurance

\When you retire the University provides you with a life insurance benefit of $5000 at no cost to you.  You may also convert your existing group life insurance benefit at Penn to an individual policy provided you apply within 31 days of your retirement date.  For more information about converting your lilfe insurance coverage contact the Penn Benefits Center at 1-800-736-6236

b)  Pre-Tax Expense Accounts

Participation in the University’s Pre-Tax Expense Accounts ends when you retire.  If you incurred eligible expenses while you were actively employed you can continue to submit them through the grace period at the end of that year. For more information contact the Penn Benefits Center at 1-800-736-6236

c)  Long-Term Care Insurance

You and your eligible family members can apply for Long-Term Care insurance at any time before or after you retire,  For more information contact John Hancock at 1-800-711-2899.

d) Disability

Coverage under Penn’s disability programs ends when you retire.  However, if you are disabled on or before your retirement date Long-Term Disability benefits will continue for a specified period of time, depending on your age at the time your disability began.  For more information see the Division of Human Resources website at www.hr.upenn.edu/benefits/retiring.

6.  Health Benefits Under the Faculty Income Allowance Plan (FIAP)

Faculty who begin retirement with the Faculty Income Allowance Plan  receive the same benefits as other retired faculty members.  In addition, during the two-year period of payments from FIAP:

1. The cost of dental and vision insurance are fully paid by the University.

2.  Life insurance equivalent to your benefits base is provided by the University

More detailed information about the benefits provided under FIAP can be found in a brochure entitled “Faculty Income Allowance Plan” published by Penn’s Division of Human Resources.  This brochure is available on the Division of Human Resources website at www.hr.upenn.edu/benefits/retirement/fiap.asp.