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 the 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 2012. We hope this information will give you an overall sense of the scope and costs of the University's retiree health program. However, the details of that program will almost certainly be different in 2013 and in future years.
Unfortunately changes incur the risk of errors and omissions, and the University, as it has reacted to the rapidly evolving healthcare legislative environment, has committed its share. Consequent problems have included: rejection of valid claims for reimbursement due to unannounced changes of account numbers, overcharging for prescription drug coverage, difficulties setting up automated premium payments, and confusingly shoddy documentation. Retirees should be wary and vigilant for unexpected changes and unexplained problems, and should not hesitate to question them.
When you enroll in the University's retiree health program you will need to select from a number of different options. Before you do so 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" (January 2012), "University of Pennsylvania Benefits", and "Faculty Income Allowance Plan" (January 2011).
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.
The University offers health benefits 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 minima by December 31, 2008, you are not required to meet the "rule of 75" to be eligible.
Eligible dependents include your spouse/same sex domestic partner and children up to age 26. The eligibility of children is now unconditional. Note that if a child is disabled, the benefits may be extended past the age of 26. In the event of your death, your surviving spouse may continue to receive medical coverage until remarriage or death.
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 2011:
. Keystone / AmeriHealth HMO
. Aetna HMO*
. PENN Care / Personal Choice Preferred Provider Organization (PPO)
*This plan is scheduled to be discontinued in 2013.
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/retiring.
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 retirement 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 Medicare Plan (PPO)
. Medigap Security 65 Standard Plan (Medicare Supplement)
. Medigap Security 65 Premium Plan (Medicare Supplement)
. Independence Blue Cross 65 Special (Traditional)*
*This plan is not accepting new enrollees and seems likely to be phased out.
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 opt out of prescription drug coverage through Penn. The current plan is provided by SilverScript, a division of Caremark, and is a Medicare Part D employer group plan. It has been tailored to differ in several desirable ways from a standard Medicare Part D plan, including an expanded formulary and elimination of the "doughnut hole". If you opt out of 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 individual Medicare Part D. Note that you cannot elect a non-Penn Medicare Part D plan if you enroll in a Medicare-Advantage HMO or PPO 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.
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 or call the Penn Benefits Center at 1-888-736-6236. For details of the SilverScript prescription plan go to upenn.silverscript.com . 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. In 2012 the University pays 60% of the premium for the least costly medical plan and 60% of the minimum premium for prescription drug coverage for those hired before January 1, 2006 and their dependents; for those hired subsequently the support for dependents drops to 30%.
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 range from $141 to $226 per month per person in 2012. In addition, the minimum cost for Medicare B in 2012, which is indexed to total income, is $99.90 per person per month. Those with income above the threshold for the minimum Medicare B premium also pay an income-related adjustment for Medicare D. 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 "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 paid with after-tax dollars. Thus the actual additional cost of healthcare coverage after retirement could be substantial, since it will include the premium that you will be required to pay to the insurance carrier as well as the cost of Medicare Part B, both paid with after-tax dollars.
3. Dental Coverage
The Penn Faculty Practice dental plan is not available to retirees.
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. Mention that you are a Penn retiree and give the Promotional Code Number 882016015.
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.
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/ or contact the Penn Benefits Center at 1-888-736-6236.
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.
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/ or contact the Penn Benefits Center at 1-888-736-6236.
1. Life Insurance
When you retire the University provides you with a life insurance benefit of $5,000 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 life insurance coverage contact the Penn Benefits Center at 1-888-736-6236.
2. 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 1-888-736-6236.
3. 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.
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.
Benefits Under the Faculty Income Allowance Plan (FIAP)
Faculty who begin retirement with the Faculty Income Allowance Plan (see II.B on the next page) receive the same benefits as other retired faculty members. In addition, during the two-year period of payments from the FIAP:
1. The costs 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 the 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_Benefits_Summary.pdf