Retiree Health Benefit Changes: Answers
to Frequently Asked Questions (FAQ)
Q. Is it true that the University is doing away with Retiree health benefits?
A. No. Changes have been made to accommodate the increased future funding that is needed. The updated benefits schedule is applied to four separate groups:
1) Employees retired as of July 1, 2007;
2) Employees ELIGIBLE TO RETIRE as of July 1, 2007;
3) Employees not eligible to retire as of July 1, 2007; and
4) Employees hired on or after January 1, 2006.
Changes affect each group differently.
Q. Will I be forced to retire earlier than planned to enjoy a higher level of benefits?
A. No, current employees who are ELIGIBLE TO RETIRE on July 1, 2007 cannot benefit by retiring sooner versus later. The plan was designed such that current employees would not feel they need to retire before they may have planned on retiring simply because of retiree health care benefit changes.
Q. Has the “Age + Years of Service Rule” (Rule of 75) for early retirement changed?
A. The eligibility rule for early retirement has NOT changed. In order to be eligible for early retirement at UK, an employee’s age, plus the number of years of regular full-time service (with a minimum of 15 years of consecutive service at the time of retirement if hired after March 1, 1997) must total 75.
Q. Will the Retirement Plan matching funds change for regular employees (403b)?
A. No, the University Retirement plan contribution has not changed. Employees contribute 5% of their pay and the University contributes 10% of their pay amount toward the 403(b) plan. This money is still immediately vested.
Q. Will there still be a Surviving Spouse Credit?
A. For employees who were hired prior to January 1, 2006, yes. Surviving spouses receive one-half of the health credit their spouse was entitled to if they were covered on the health plan at the time of the retiree’s death.
Q. Can I retire and defer my health plan participation?
A. Yes, any retirees under age 65 with options for health insurance coverage through a current employer or a spouse’s employer may “defer” their UK retiree plan participation one time. Retirees can “defer” their UK benefit by contacting the UK Employee Benefits Office and completing a deferral form. Once your health plan coverage has been deferred, it can be reactivated one-time, meaning future deferrals are not possible. The deferral option was created several years ago to accommodate pre-65 retirees who continue to work for non-UK employers after their UK retirement.
Q. What incentive do employees have to stay at UK and retire?
A. There are many reasons to stay at UK and retire, including the retiree health benefit. It is understandable that some employees may initially be concerned about plan changes; however, employees must realize this is a change in the schedule of benefits, not an elimination of the retiree health benefit. More and more U.S. employers are dropping retiree health plans completely. The University has instead chosen to implement a plan that would preserve the retiree health plan for current and future retirees, while ensuring the retiree health benefits, and our institution, remain financially sound.
Q. Is the University cutting the retiree health benefit?
A. No, the coverage levels of the health benefit are not decreasing; only the employer funding to the retiree benefit is changing. Retirees under age 65 (EARLY retirees) will pay a slightly higher premium for health plan coverage, but significantly more for dependent coverage. Premiums for early retirees will decrease significantly upon their reaching Medicare eligibility (typically age 65). All Medicare-eligible retirees hired prior January 1, 2006 will pay the same amount for the short run ($25 per month) and 10% of the total premium in the long run. Post-65 retirees (Medicare eligible) will see an enhanced medical benefit: The $500 annual deductible has been eliminated for Medicare-eligible retiree health plan (previously known as the Medicare Carve-Out plan).
Q. What are the times, dates and locations of the information sessions?
A. Employees will be contacted via e-mail with dates for Open Forum events (Click here to view Open Forum dates, times and locations), while current retirees will receive a letter, along with this document, featuring dates, times and locations for retiree-focused events.
Q. An employee is on an employee plus spouse health plan. The employee retires and decides to defer the health benefit. The retiree then passes away before coming back onto the health plan. Will the surviving spouse be able to come back onto the UK health plan?
A. No. The retiree is the owner of the health plan and the retiree must be active on the health plan in order for the surviving spouse to be eligible to remain on the UK health plan.
Q. Two UK employees, husband and wife, are each regular full-time employees. If one spouse retires, can the retiree be added as a dependent on the current employee’s plan if the retiree defers their coverage?
A. Yes, if it is to the advantage of the retiree to do so, this may be done.
Have additional questions? E-mail us at benefits@email.uky.edu.
