Question: I understand that the University provides certain benefits when you retire. What are they?

Answer: Currently, faculty and staff members who meet the age and service requirements for retirement are eligible for:

Medical Benefits: Staff and faculty who retire between the ages of 55 and 64 are eligible to continue medical coverage under any of the University's current medical plans for the retiree and all eligible dependents. At age 65 the staff or faculty member must apply for Medicare benefits, and the University will provide supplemental Medicare coverage. The employee is responsible for all co-payments and deductibles associated with this coverage. Life Insurance: $2,000 term life-insurance policy.

Tuition Benefits: Remain the same as an active faculty or staff member.

Note: Dental coverage is not provided to retirees. Currently, retirees may continue coverage at full cost plus a 2 percent administrative fee for a period of up to 18 months.

Question: What are the age and service requirements to be eligible for retiree benefits?

Answer: Currently, faculty and staff must be at least 55 years of age with 15 years of full-time service or be at least 62 years of age with 10 years of full-time service to be eligible for retiree benefits. On July 1, 1996, all full-time service must be continuous uninterrupted service.

Modifications were made to retiree benefits on July 1, 1993. These changes will begin to take effect for faculty and staff who retire on or after July 1, 1996. (See below.)

Question: Do I have to pay a portion of the cost of these benefits after retirement?

Answer: Depending on when you choose to retire, you may have to pay a portion of the cost of your medical coverage. Currently, faculty and staff who retire prior to July 1, 1996, will receive retiree medical benefits at no cost other than Medicare premiums, co-payments and deductibles. (Please note that the University reserves the right to make changes to your retiree benefits in the future.) Staff and faculty who retire after July 1, 1996, will be responsible for sharing the cost of retiree medical benefits.

Question: Are there other changes to retirement benefits that will be effective on July 1, 1996?

Answer: Yes. As of July 1, 1996, two other changes will be made: To be eligible for retiree benefits, your minimum full-time service must consist of 10 to 15 years of continuous uninterrupted full-time service. The number of years required is dependent upon your age at retirement. For example: Until July 1, you could link together two or more periods of full-time employment with the University to meet the 10- to 15-year minimum full-time service requirement. After July 1, 1996, you must have 10 to 15 years of continuous uninterrupted full-time service prior to the date of retirement. No newly eligible dependent can be covered after an employee retires. For example: If you marry or adopt a child after you retire, your new dependents will not be covered under your retirement benefits.

Question: Will I lose my retiree medical benefits if I do not retire by June 30, 1996?

Answer: No. If you do not retire by June 30, 1996, you will not lose your retiree medical benefits. However, retiree benefits have never been guaranteed, and the University reserves its right to make changes in the future. Further, if you choose to retire after June 30, you will share in the cost of your University-sponsored retiree medical coverage.

Question: Does cost-sharing mean that I will pay all of the cost of my retiree medical coverage?

Answer: No. Cost-sharing means that you will pay some portion of the medical premium, but not all. Currently, the majority of the cost is paid by the University. For example: Based on current premiums, if you retire at age 65, your cost for supplemental Medicare benefits for single coverage will be $41.10/month for the Blue Cross 65 Special Plan and $7.83/month for the Key Care 65 plan (an HMO Medicare plan with prescription benefits).

If you retire before age 65, under the current Medicare rules, your retiree medical coverage until age 65 must be through one of the active University medical plans. Your cost for this medical coverage will be the amount being paid by an active staff or faculty member plus approximately an additional 3 percent for each year you retire before age 65.

Question: Will I pay the same amount each year, or can it increase?

Answer: Each year the University receives new premiums from each health plan. If there is an increase in the premium, your share would increase just as it does for active employees. There is also the possibility of the cost decreasing.

Question: Why are changes in the benefits happening now? Is cost-sharing of retiree medical benefits part of the University's restructuring and cost-containment efforts?

Answer: No. The changes are the result of the July 1, 1993, changes in an accounting rule known as Financial Accounting Standard (FAS) 106. As a result of these changes, a University task force re-evaluated Penn's retiree benefits program. In preparation for the July 1, 1996, changes, the University provided a three-year window for faculty and staff to retire and receive the current retiree benefits package. This window closes on June 30, 1996.

Question: If I do retire by June 30, 1996, does that mean that I will never have to pay for my University-sponsored medical coverage?

Answer: The University cannot guarantee that the cost for your retiree health benefits will not change in the future. There may be factors such as changes in the health-care delivery system and legislative reform that may effect your cost for medical benefits in the future.

Question: If I am 65 years of age and retire now, do I receive medical benefits?

Answer: Yes. Currently, retirees age 65 or over are eligible for Medicare benefits from the U.S. government. The University provides retirees with retiree medical coverage that supplements Medicare benefits.

Question: Is there a cost for Medicare?

Answer: Yes. Medicare consists of two parts. Part A provides for hospital insurance and does not cost you anything. Part B provides for medical insurance. There is a cost for the Medicare Part B premium. The cost is currently $42.10 per month and is automatically deducted from an individual's monthly Social Security payment. This cost is the responsibility of the retiree no matter when one retires. All retirees and their covered dependents age 65 and over are required to enroll in Medicare Part A and B coverage upon retirement.

Question: If I continue to work past age 65, do I have to apply for Medicare Part A or Part B?

Answer: No. Under the current Medicare payer rules, you do not need to apply for Medicare while you are still a full-time employee. The University will continue to be your primary medical-insurance carrier while you remain in active full-time employment. However, Medicare does assess penalties for not applying for Medicare Part B at the time that you become eligible. Therefore, if you retire at or after age 65, you must complete a Medicare Special Enrollment Form to ensure that the penalty is waived. You can obtain this form from the Benefits Office.

Question: Do the changes in retiree medical benefits affect my pension benefits with the University?

Answer: No. The changes to the retiree medical benefit do not change the pension benefits for faculty and staff at the University.

Question: I'm not sure what to do about retirement. Whom do I contact for additional information?

Answer: The Benefits staff in Human Resources is available to answer any questions you may have about retirement, retiree medical benefits or your benefits. They can be reached at 898-7282. Or you can e-mail them at: askhr@pobox.upenn.edu.

Return to Compass Features for March 26, 1996