RETIREMENT HEALTH BENEFITS

Transcription

1 RETIREMENT HEALTH BENEFITS Prepared t assist members in answering questins abut health benefits received during retirement. Educatin Assciatin

2 Table f Cntents Intrductin... 1 Sectin 513(b) f the Schl Cde... 2 Vested Retiree Health Benefits... 5 Cnslidated Omnibus Budget Recnciliatin Act (COBRA)... 8 Medicare Premium Assistance frm the Public Schl Emplyees Retirement System (PSERS) PSERS Health Optins Plan... 20

3 INTRODUCTION The purpse f this manual is t prvide general educatin and infrmatin n legal issues surrunding retiree health benefits. This dcument is nt a cmplete statement f the law r administrative rules, hwever. Mrever, there are numerus types f retiree health plans that have been bargained by PSEA lcal assciatins thrughut the state, and thus, results may differ frm thse indicated herein based upn particular factual circumstances. Fr this reasn, PSEA and PSEA-Retired are nt prviding any specific legal, tax, r financial guidance in this Manual. Rather, any questins pertaining t specific retiree health plans and their legal, tax, r financial impact shuld be directed t schl emplyers and members financial and tax advisrs. Any advice cntained in this presentatin is nt intended r written t be used, and cannt be used, t avid penalties under the Internal Revenue Cde r t prmte, market, r recmmend t anther party any transactin r matter addressed herein. There are n third party beneficiaries t this presentatin, and it shuld nt be relied upn by individual members fr advice r cunsel in any particular r specific factual situatin. Educatin Assciatin 1

4 SECTION 513(b) OF THE SCHOOL CODE THE LAW: Sectin 513(b) f the Public Schl Cde, 24 P.S. 513(b), requires schl entities t maintain retirees and their dependents n their grup health plan, at the emplyee s cst, until the emplyee turns sixty-five (65) years f age, prvided: (1) the emplyee has taken nrmal (i.e., superannuatin 1 ) retirement, has thirty (30) r mre years f service with the Public Schl Emplyees Retirement System (PSERS), r has taken PSERS disability retirement; (2) the emplyee is receiving a pensin frm PSERS; and (3) the emplyee is nt eligible as an emplyee r dependent under any emplyerprvided health plan. The cst that a retiree pays t maintain the emplyer s grup health plan must be equal t the cst f the health care ffered t active emplyees and their dependents, except that schl emplyers may charge t retirees an additinal tw percent (2%) administrative fee. Sme lcal assciatins have bargained that emplyers cntinue t prvide insurance t retirees and their dependents, at the emplyer s cst. The questin then becmes fr hw lng and fr what specifically the emplyer will pay. (See Vested Retiree Health Benefit discussin, at pp. 4-6.) ISSUES: Q: What happens t the health insurance that I receive by virtue f Sectin 513(b) nce I turn age sixty-five (65)? A: Review yur cllective bargaining agreement. If there is n cntract language granting yu the pprtunity t cntinue receiving benefits under yur emplyer s grup health 1 Superannuatin under the Public Schl Emplyees Retirement Cde, 24 Pa.C.S. 8102, is as fllws: (1) Fr thse with Class T-C r T-D Service: (a) 62 years f age and ne year f service; (b) 60 years f age and 30 years f service; r (c) 35 years f service at any age. (2) Fr thse with Class T-E r T-F service: (a) 65 years f age and three years f service r (b) a cmbinatin f age and service pints that is equal r greater t 92, with a minimum f 35 years f service. 24 Pa.C.S Educatin Assciatin 2

5 plan beynd the age f sixty-five (65) and yur eligibility fr Medicare, then the emplyer is authrized t discntinue yur health cverage, since Sectin 513(b) nly requires the ffering f cntinued health cverage until the age f sixty-five (65). Q: Can my dependents cntinue schl emplyer insurance after I turn age sixty-five (65)? A: Review yur cllective bargaining agreement. If there is n cntract language granting yur dependents the pprtunity t cntinue n yur emplyer s plan, yur dependents will then be entitled t cntinue the emplyer s insurance under COBRA fr a maximum f thirty-six (36) mnths r until they enrll in Medicare themselves. Q: What happens t my emplyer insurance if my spuse turns sixty-five (65) befre I d? A: Review yur cllective bargaining agreement t see if there is language that wuld allw dependents (i.e., yur spuse) t cntinue t receive yur emplyer s grup health benefits while n Medicare. If there is n cntract language granting yur dependent the pprtunity t cntinue receiving health insurance n the emplyer s grup health plan while als receiving benefits frm Medicare, then the schl emplyer will be authrized t terminate yur spuse s insurance. Q: What happens if I am eligible fr health cverage under my spuse s emplyer health plan such that I am taken ff my schl emplyer s plan, but then, my spuse lses her jb... May I be reinstated n my frmer schl emplyer s grup health plan? A: Yes. Sectin 513(b) explicitly states that a retiree can be reinstated n the emplyer s grup health plan if his/her alternative health cverage ceases. Q: What happens if I retire at the end f a schl year and my schl emplyer starts charging me fr my health insurance during the summer fllwing that schl year? A: Ntify yur lcal assciatin and then cntact yur PSEA UniServ Representative. Yur lcal assciatin may be able t file a grievance n yur behalf, arguing that yu wrked the entire schl year and thus, yu are entitled t all f the regular benefits affrded active emplyees fr that year which generally includes health insurance paid thrughut the summer. (NOTE: This issue is nt specifically addressed within Sectin 513(b) f the Schl Cde, but is included in this sectin s discussin anyway fr infrmatinal purpses. ADVICE: Retirees shuld clarify the type and the extent f health cverage that their schl emplyers will prvide under Sectin 513(b), bth in terms f themselves and any dependents. Retirees shuld request that the schl emplyer s infrmatin n retiree health benefits be placed in writing. Educatin Assciatin 3

6 Retirees shuld seek cnfirmatin f the infrmatin that they receive frm their schl emplyer with their lcal assciatin leaders and/r their PSEA UniServ Representative. Educatin Assciatin 4

7 VESTED RETIREE HEALTH BENEFITS THE LAW: T bargain a vested (i.e., guaranteed) retiree health benefit in cllective bargaining agreements, lcals must d s thrugh explicit cntract language. Internatinal Unin v. Skinner Engine C., 188 F.3d 130 (3d Cir. 1999). Many lcal assciatins have bargained a vested right fr retirees t cntinue t receive emplyer-prvided (i.e., emplyer-paid) health benefits beynd the cllective bargaining agreement under which the emplyee retires. In s ding, lcals have bargained explicit duratinal language within their cntract. Fr example (duratinal language in italics): Retirees will receive emplyer-prvided health benefits at the emplyer s cst until they are eligible fr ther gvernment-prvided r emplyerprvided health benefits. Retirees will receive emplyer-prvided health benefits at the emplyer s cst fr ten years. It is very difficult t bargain a vested benefit t a particular plan (e.g., indemnity) r level f retiree benefits (e.g., n c-pays, n deductibles, n premium-sharing). In fact, curts have been lathe t find that lcals have bargained a vested right fr retirees t a particular type r level f health benefits. See, e.g., Mars Area Educ. Ass n v. Mars Area Sch. Dist., 987 A.2d 231 (Pa. Cmmw. Ct. 2008), allcatur denied 997 A.2d 1180 (Pa. 2010); Byd v. Rckwd Area. Sch. Dist., 907 A.2d 1157 (Pa. Cmmw. Ct. 2006); Sharpsville Area Educ. Ass n v. Sharpsville Area Sch. Dist. (Arb. Newman 2006). PSEA recmmends that lcals bargain language that retirees receive the same health care benefits that active emplyees receive. With such language, retirees wuld receive any future enhancement in benefits, as well as any future increase in c-pays, deductibles, r premium-sharing that active emplyees may sustain. ISSUES: Q: D lcal assciatins have a duty t bargain retiree health benefits? A: N. Lcal assciatins we n duty t bargain n behalf f retirees since they are n lnger part f the bargaining unit. Allied Chemical and Alkali Wrkers f America Lcal Unin N. 1 v. Pittsburgh Plate Glass, 404 U.S. 157 (1971). As such, emplyers have n mandatry bligatin t bargain ver retiree benefits. Thus, the subject f retiree health Educatin Assciatin 5

8 benefits is nly a permissive subject f bargaining. Allied Chemical; Fraternal Order f Plice v. City f Reading, 30 PPER (F.O. 1999). Caveat: If lcal assciatins undertake the effrt t bargain n behalf f retirees and, in s ding, bargain vested health benefits, lcals then we the duty f fair representatin t retirees t refrain frm bargaining t eliminate r alter thse vested benefits. Nedd v. United Mine Wrkers f America, 556 F.2d 190 (3d Cir. 1977), cert. denied 434 U.S (1978); Tensing v. Brwn, 528 F.2d 69 (9 th Cir. 1975); Hendricks v. Airline Pilts Ass n Int l, 696 F.2d 673 (9 th Cir. 1983). Q: Why des PSEA advise its lcals t nly bargain vested rights as t the duratin f retiree health benefits, but nt as t the type r level f retiree health benefits? A: Once a lcal assciatin bargains a vested right f a retiree t health insurance, it must enfrce thse vested rights r risk a duty f fair representatin claim. As such, there are significant liability, plicy, and plitical cncerns fr lcals that bargain vested rights t retiree health benefits. Thus far, there have nt been liability, plicy, r plitical cncerns that have arisen when lcal assciatins have bargained a vested right t a particular duratin f emplyerprvided (i.e., emplyer-paid) retiree health benefits. Examples wuld be bargaining language creating vested rights t emplyer-paid health insurance until retirees becme eligible fr ther gvernment-prvided cverage (e.g., Medicare) r fr a particular perid f time (e.g., ten years). It is fr this reasn that PSEA des nt ppse lcal assciatins bargaining vested rights t the duratin f retiree health benefits. By cntrast, there have prven t be legal and rganizatinal cnflicts if lcal assciatins bargain a vested right f retirees t a particular type f benefits (e.g., an indemnity plan) r a particular level f benefits (e.g., n c-pays, n c-premiums, ndeductibles), but then are unable due t pr ecnmic circumstances t bargain salary increases fr active emplyees r even health insurance that is similar t what prir retirees are getting because f the lcal assciatin and emplyer s prir cntractual bligatin creating vested rights t a particular plan r level f benefits fr retirees. This is especially true given the rapidly-changing health insurance marketplace and the cst f maintaining the special cverage fr a small grup f retirees, which, in turn, wuld inhibit the emplyer frm bargaining salary increases and/r benefits fr current emplyees. If a lcal assciatin ut f desperatin wuld attempt t alter these vested benefits, the lcal culd be subject t a lawsuit alleging that it breached its duty f fair representatin. Fr this reasn, PSEA has cnsistently recmmended that retiree health insurance may be bargained t vest fr a particular duratin f time, but that vested rights t a particular type r level f cverage shuld nt be bargained. Educatin Assciatin 6

9 Q: What is PSEA s advice n bargaining health care benefits fr retirees as cmpared t active emplyees? A: PSEA advises that lcal assciatins shuld bargain that retirees receive the same health care cverage as that cverage may change as active emplyees. Thus, if active emplyees receive increased c-pays r deductibles, s will retirees. Q: Hw d I plan fr retirement if PSEA will nt bargain vested rights t a particular plan (e.g., indemnity) r level f retiree health benefits (e.g., n c-pays, n premiumsharing)? A: PSEA advises that, when individuals cntemplate retirement and make plans with their financial cunselrs tward that gal, they shuld assume that their health benefits may increase especially in terms f c-pays, deductibles, r pssibly premium-sharing and allw fr enugh cushin in their finances t accunt fr these ptential cntingencies. Q: What happens if my lcal assciatin has bargained a vested right t a duratin f retiree health benefits and my schl emplyer breaches my vested right? Can my lcal assciatin assist me by filing a grievance n my behalf? A: Yes, prvided that there is language within the cllective bargaining agreement that refers t retirees and/r retiree benefits. United Steelwrkers v. Canrn, 580 F.2d 77 (3d Cir. 1978); Greene Cunty, 20 PPER (Prp. Dec. & Order 1989). If the benefit is nt enfrceable thrugh the cllective bargaining agreement, it may be enfrced thrugh litigatin in cunty curt. ADVICE: Retirees shuld clarify the type and the extent f health cverage that their schl emplyers will prvide, bth in terms f themselves and any dependents. Retirees shuld request that the schl emplyer s infrmatin n retiree health benefits be placed in writing. Retirees shuld seek cnfirmatin f the infrmatin that they receive frm their schl emplyer with their lcal assciatin leaders and/r their PSEA UniServ Representative. Unless retirees are tld therwise by bth their schl emplyers and their lcal assciatins and/r PSEA, they shuld assume that they d nt have vested rights t a particular type f insurance plan r a particular level f benefits. Put yet anther way, they shuld assume that their health care cverage will change in the future in the same manner that health cverage fr active emplyees may change. Retirees shuld base their retirement and financial determinatins n that presumptin and allw fr their financial ability t pay increased health care csts in the future. Educatin Assciatin 7

10 CONSOLIDATED OMNIBUS BUDGET RECONCILIATION ACT (COBRA) THE LAW: COBRA amended the Emplyee Retirement Incme Security Act (ERISA), the Internal Revenue Cde, and the Public Health Service Act t prvide cntinuatin f grup health cverage that therwise wuld be terminated. 2 Specifically, COBRA guarantees emplyees and their families wh lse health benefits due t certain qualifying events the right t chse t cntinue qualified grup health benefits prvided by qualified emplyers fr limited perids f time. Emplyees have the bligatin t pay the full cst f health cverage, including a tw percent (2%) administrative charge, during the applicable time perid. COBRA applies t all grup health plans maintained by private-sectr emplyers (with at least 20 emplyees) r by state and lcal gvernments. Qualifying events allwing fr qualified beneficiaries (i.e., emplyees, spuses, r dependent children) t be eligible fr COBRA include the fllwing: Qualifying Events fr Emplyees: (1) Vluntary r invluntary terminatin f emplyment fr reasns ther than grss miscnduct (which, bviusly, includes an emplyee s retirement); and (2) Reductin in the Hurs f Emplyment. Qualifying Events fr Spuses: (1) Vluntary r invluntary terminatin f the emplyee s emplyment fr any reasns ther than grss miscnduct (which, bviusly, includes an emplyee s retirement); (2) Reductin in the hurs wrked by the emplyee; (3) Cvered emplyee becming eligible fr Medicare; (4) Divrce r legal separatin f the emplyee; and 2 The amendments t the Public Health Services Act apply t gvernment emplyees. The amendments under ERISA (29 U.S.C ) and the Public Health Services Act (42 U.S.C. 300bb-1-300bb-8) parallel each ther and prvide the same benefits. Educatin Assciatin 8

11 (5) Death f the emplyee. Qualifying Events fr Dependent Children: (1) Lss f dependent child status under the health plan rules; (2) Vluntary r invluntary terminatin f the emplyee s emplyment fr any reasn ther than grss miscnduct; (3) Reductin in the hurs wrked by the emplyee; (4) Cvered emplyee becming entitled t Medicare; (5) Divrce r legal separatin f the emplyee; and (6) Death f the emplyee. The maximum COBRA cntinuatin cverage, as it may impact retiree health cverage, is as fllws: (1) Initial Retirement Retiring Emplyee/Spuse/Dependent Child Eighteen (18) mnths (2) Retiree Enrllment in Medicare Spuse/Dependent Child Thirty-six (36) mnths (3) Death f Retiree Spuse/Dependent Child Thirty-six (36) mnths (4) Lss f Dependent Child Status under Plan Dependent Child Thirty-six (36) mnths NOTE: In certain circumstances, the abve cverage perids may be extended. Examples are (i) eligibility fr scial security disability (which qualifies ne fr an additinal eleven (11) mnths f cverage, which, with the riginal eighteen (18) mnths, results in a ttal f twenty-nine (29) mnths f cverage); and (ii) the ccurrence f a secnd qualifying event, which wuld entitle ne t an additinal eighteen (18) mnths f cverage, fr a ttal f thirty-six (36) mnths. NOTE FURTHER: Fr thse receiving an additinal eleven (11) mnths f COBRA cverage due t disability, the amunt f administrative cst fr the health benefits may be increased frm 2 t 50 percent. Thse entitled t COBRA cntinuatin cverage must receive a ntice frm their emplyer advising them f their pprtunity fr COBRA cverage within thirty (30) days f the emplyee s death, terminatin, reduced hurs f emplyment, r entitlement t Educatin Assciatin 9

12 Medicare. This ntice shuld include all f the infrmatin necessary t understand the applicable COBRA premiums (e.g., the amunt f premiums; when the premiums are due; and the cnsequences f late r nn-payment). Qualified beneficiaries f COBRA cntinuatin cverage must be given sixty (60) days t make an electin t take advantage f the COBRA benefits. The sixty (60) days is measured frm the date the COBRA electin ntice is prvided. Qualified beneficiaries f COBRA cntinuatin cverage must ntify their emplyer plan administratr f a qualifying event within sixty (60) days after divrce r legal separatin r a child s ceasing t be cvered as a dependent under the plan rules. Once such ntificatin is prvided t the emplyer, the emplyer has furteen (14) days t send a COBRA electin ntice, and the qualified beneficiary then has sixty (60) days t elect COBRA cntinuatin cverage. ADVICE: Ntify yur lcal assciatin and then cntact yur PSEA UniServ Representative if yu d nt receive a COBRA ntice t which yu r yur dependents are therwise entitled. Cntact yur PSEA UniServ Representative with any ther questins pertaining t COBRA. Surce: U.S. Department f Labr, An Emplyee s Guide t Health Benefits Under COBRA: The Cnslidated Omnibus Budget Recnciliatin Act (2012). Educatin Assciatin 10

13 MEDICARE THE LAW: Medicare is health insurance fr the fllwing individuals: (1) Peple age sixty-five (65) r lder; (2) Peple under age sixty-five (65) with certain disabilities; and (3) Peple f any age with End-Stage Renal Disease (ESRD) (i.e., permanent kidney failure requiring dialysis r a kidney transplant). Medicare has fur parts: (1) Part A: Hspital Insurance (2) Part B: Medical Insurance (3) Part C: Medicare Advantage (4) Part D: Prescriptin Drug Cverage There are tw main ways t btain Medicare cverage: (1) Original Medicare (i.e., Parts A and B) r Medicare Advantage (knwn as Medicare Part C, which generally cmbines Parts A and B, and usually Part D). Medicare Part A (1) Cvers inpatient care in hspitals, as well as skilled nursing facilities, hspice, and hme health care services (NOTE: Part A des nt cver custdial r lng-term skilled nursing services); and (2) Generally has n mnthly premium (i.e., mst peple have paid fr Part A thrugh payrll taxes that they r their spuse paid while wrking), althugh ne may pay cpays, c-insurance, and deductibles fr Part A-cvered services. Medicare Part B (1) Cvers dctrs and ther health care prviders services, utpatient care, durable medical equipment, and hme health care, as well as sme preventive care services; (2) Has a mnthly premium which will be deducted frm ne s scial security r disability retirement checks if such are being received (NOTE: Fr thse nt yet n either scial security r disability retirement, they will receive a bill fr their Part B premiums.); and (3) Enrllment in Part B is vluntary. Hwever, enrllment in Part A is required unless ne wishes t frfeit ne s entitlement t scial security. Educatin Assciatin 11

14 Medicare Part C (1) Is als called Medicare Advantage and includes different ptins f medical plans, including HMOs, PPOs, Private-Fee-Fr-Service (PFFS) plans, Specialized Needs Plans (SNP), HMO Pint-f-Service (HMOPOS) plans, and Medical Savings Accunt (MSA) plans. Essentially, fr thse pting fr Medicare Part C (i.e., Medicare Advantage plans), Medicare pays a fixed amunt fr care t private cmpanies ffering Medicare Advantage plans. These cmpanies must fllw Medicare rules, althugh each Medicare Advantage plan may charge different ut-fpcket csts and have different rules fr hw ne receives services (e.g., whether ne needs a referral; whether ne may nly g t service prviders within the plan); (2) Offers extra health cverage, such as visin, hearing, dental and/r health and wellness prgrams. Mst als include Medicare Part D (i.e., prescriptin drug cverage); (3) Offers all f the services that Original Medicare cvers, except hspice care. (NOTE: Thse nt receiving Medicare under Part C, knwn as the Medicare Advantage Plan, receive what is knwn as Original Medicare i.e., Parts A and B). (4) Charges a mnthly premium, in additin t the mnthly premium that ne will receive fr Medicare Part B; and (5) Includes services that wuld, therwise, be cvered by Medicare Supplement (i.e., Medigap) plans fr thse n Original Medicare. Thus, thse n Medicare Advantage Plans need nt purchase Medicare Supplemental insurance. Medicare Part D (1) Offers prescriptin drug cverage t everyne with Medicare; (2) Prvides tw ways t btain Medicare prescriptin drug cverage: (1) thrugh Medicare Prescriptin Drug Plans (PDPs), which add drug cverage t Original Medicare, sme Medicare Cst plans, sme Medicare Fee-fr-Service plans (PFFS) and sme Medicare Medical Savings Plans (MSA); and (2) Medicare Advantage Plans; (3) Requires enrllment in a plan fr the calendar year. Hwever, there are certain cntingencies that can give rise t the ptin t switch prescriptin drug cverage, including (a) ne mves frm the plan s service area; (b) ne lses ther creditable prescriptin drug cverage; r (c) ne starts t reside in an institutin (e.g., a nursing hme); (4) Charges a mnthly fee that varies by plan. Fr thse n Original Medicare, the cst is in additin t the Part B premium. Fr thse n Medicare Advantage Plans that Educatin Assciatin 12

15 includes Medicare prescriptin drug cverage, the mnthly premium may include an amunt fr prescriptin drug cverage; and (5) Mnthly premiums fr Medicare Part D Prescriptin Drug Cverage may be higher based upn incme levels. Medicare Supplemental Insurance (i.e., a Medigap Plicy) is prvided thrugh private insurance cmpanies t assist in the payment f health care csts that are nt cvered by Medicare. Deciding What Medicare Path t Take Step #1: Hw d yu wish t btain yur cverage? Original Medicare OR Medicare Advantage Plan (Parts A and B) (Part C, cmbining Parts A, B, and usually Part D) Step #2: Decide if yu need t add prescriptin drug cverage. Original Medicare OR Medicare Advantage Plan (wuld add Part D) (Mst Medicare Advantage Plans cver prescriptin drugs. Yu may be able t add sme drug cverage in sme plans if nt already included.) Step #3: Decide if yu need t add supplemental cverage Original Medicare OR Medicare Advantage Plan (recmmended t add Medicare Supplemental cverage, i.e., Medigap plicies) (Yu d nt need and cannt be sld Medicare Supplemental cverage, i.e., Medigap plicies) Enrllment in Medicare Parts A and B (1) Initial Enrllment Perid This perid begins three (3) mnths befre the mnth ne turns sixty-five (65) and ends three (3) mnths after the mnth ne turns sixtyfive (65). If n scial security disability, the initial enrllment perid begins fllwing the twenty-furth (24 th ) mnthly scial security disability payment. (2) General Enrllment Perid Thse wh fail t enrll fr Parts A and B during the Initial Enrllment Perid and fail t qualify fr the Special Enrllment Perid may enrll between January 1 and March 31 each year. Medicare cverage wuld then begin as f July 1. Premiums will be increased, hwever, as a penalty due t late Educatin Assciatin 13

16 enrllment. 3 (3) Special Enrllment Perid Thse wh fail t enrll fr Parts A and B when first eligible (i.e., during the Initial Enrllment Perid) because they are cvered under a grup health plan frm an emplyer r unin based upn their current emplyment may enrll during the Special Enrllment Perid withut having t pay the increased premium penalties. The Special Enrllment Perid applies during the first eight (8) mnths fllwing the mnth that the emplyer r unin grup health cverage ends, r when the emplyment ends, whichever cmes first. The Special Enrllment Perid als applies t individuals wh receive health cverage thrugh an emplyer r unin grup health plan due t their spuses emplyment. NOTE: COBRA and retiree health plans are nt cnsidered current emplyment fr individuals and/r their spuses. Thus, t avid having t pay the increased premium penalties, individuals shuld enrll fr Medicare during the Special Enrllment Perid, ntwithstanding their cntinuatin f benefits with their frmer emplyer due t COBRA r a cntracted retiree health benefit. Enrllment in Medicare Part C may take place during the Initial Enrllment Perid fr Parts A and B r during the perid between Octber 15 and December 7 f each year. NOTE: Between January 1 and February 14, thse n Medicare Advantage Plans may switch t Original Medicare. Enrllment in Medicare Part D can be accmplished at the fllwing times: (1) during the Initial Enrllment Perid fr Parts A and B; r (2) during the perid between Octber 15 and December 7 f each year. (Prescriptin drug plans may als be switched r drpped during this Octber 15 thrugh December 7 perid.) Crdinatin f Benefits (1) If yu have retiree insurance (i.e., insurance frm frmer emplyment)... Medicare pays first. 3 These penalties are as fllws: Fr Part A, the penalty premium is 10 percent f the current Part A premium charged t thse wh d nt have a lng enugh wrk histry t qualify fr free Part A cverage. This 10 percent premium will last fr twice the number f twelve-mnth perids that ne was eligible fr Part A cverage but did nt enrll fr it. Fr Part B, the penalty is a mnthly penalty added t the mnthly premium that ne pays fr Part B cverage. The penalty is 10 percent f the mnthly Part B premium, fr each twelve-mnth perid that ne culd have enrlled in Medicare Part B, but did nt d s. This penalty will last fr as lng as ne has Medicare Part B cverage. Fr Part D (prescriptin drug cverage), there is a penalty f 1 percent f the average mnthly prescriptin drug premium fr every mnth that ne is late. This penalty will als last fr as lng as ne has Medicare Part D cverage. One is late in enrlling fr Part D cverage if ne did nt enrll fr Part D cverage within three mnths after enrlling fr Medicare Part A r B cverage. Educatin Assciatin 14

17 (2) If yu are age sixty-five (65) r lder and have grup health care cverage based upn yur r yur spuse s current emplyment, and the emplyer has mre than 20 emplyees... (3) If yu are age sixty-five (65) r lder and have grup health care cverage based upn yur r yur spuse s current emplyment, and the emplyer has less than 20 emplyees... Yur grup health care pays first. Medicare pays first. Educatin Assciatin 15

18 ISSUES: Q: I am sixty-seven (67) years ld, but I am still emplyed as a custdian with my schl emplyer. Hw will my schl emplyer s insurance crdinate with Medicare? A: Yur schl emplyer s insurance will be primary (prvided that yur schl emplyer has 20 r mre emplyees), and Medicare will be secndary. Q: I am a sixty-six-year-ld (66-year-ld) retired schl emplyee, but I am still listed as a dependent n my wife s schl emplyer s grup health plan. My wife is sixty-six (66) years ld and is still wrking. Hw will my wife s schl insurance crdinate with Medicare? A: Yur wife s schl emplyer s insurance will be primary fr bth yu and she (prvided that her schl emplyer has 20 r mre emplyees), and Medicare will be secndary. Q: I am sixty-eight (68) years ld and am still eligible fr retiree health insurance frm my schl emplyer because the emplyer bargained with my unin t prvide five (5) years f retiree health insurance upn retirement. I retired at age sixty-five (65) and thus, I am eligible fr retiree health insurance until the age f seventy (70). Hw will my retiree health insurance crdinate with Medicare? A: Medicare will be primary, while yur schl emplyer s health insurance will be secndary. Even then, yur schl emplyer s grup health plan may nt allw thse eligible fr Medicare t be included in the grup health plan. In such cases, the schl emplyer will have t secure a Medicare-supplement-type plicy fr thse Medicareeligible retirees fr whm the emplyer is cntractually-bligated t prvide retiree health insurance under the cllective bargaining agreement. Q: I am a fifty-tw-year-ld (52-year-ld) and have suffered a permanent disability as a result f a car accident that I was invlved in when I was fifty (50). Tw (2) years ag, I qualified fr bth scial security disability as well as disability thrugh the Public Schl Emplyees Retirement System (PSERS). Since tw (2) years have passed since I qualified fr scial security disability, I am nw eligible fr Medicare. I als am eligible t cntribute t my frmer emplyer s grup health plan by virtue f Sectin 503(b) f the Schl Cde, as well as a prvisin in the cllective bargaining agreement that mirrrs the Schl Cde. Hw des my retiree health insurance crdinate with Medicare? A: Individuals are eligible fr Medicare in tw (2) years fllwing eligibility fr scial security disability. Since yu are nw eligible fr Medicare, Medicare will be primary, and the schl grup health plan will be secndary. Educatin Assciatin 16

19 ADVICE: Questins cncerning Medicare in general r regarding varius Medicare and Medicare Supplemental (i.e., Medigap) plans may be answered by calling MEDICARE ( ) r by accessing Surce: Centers fr Medicare & Medicaid Services (CMS), Medicare & Yu (2012). NOTE: Infrmatin abut Medicare changes n an annual basis. The infrmatin cntained abve is based nly upn 2012 infrmatin. CMS prints its Medicare & Yu publicatin n an annual basis and thus, any infrmatin pertaining t Medicare fr years ther than 2012 shuld be verified with the publicatin pertinent t the year in questin. The Medicare & Yu publicatin may be btained by calling MEDICARE ( ) r by accessing Educatin Assciatin 17

20 THE LAW: PREMIUM ASSISTANCE FROM THE PUBLIC SCHOOL EMPLOYEES RETIREMENT SYSTEM (PSERS) Sectin 8509 f the Public Schl Emplyees Retirement Cde, 24 Pa.C.S. 8509, ffers eligible public schl retirees wh participate in medical plans f Pennsylvania public schl emplyers r f the PSERS Health Optins Prgram (HOP) mnthly premium assistance in the amunt f $100 per mnth. Public schl retirees eligible fr premium assistance include the fllwing: (1) Public schl retirees with at least 24 ½ years f credited service regardless f age; (2) Public schl retirees with Class T-C r T-D service wh terminate schl emplyment at r after reaching age sixty-tw (62) with at least 15 years f credited service; (3) Public schl retirees with Class T-E r T-F service wh terminate schl emplyment at r after reaching age sixty-five (65) with at least 15 years f credited service; r (4) Any individuals receiving PSERS disability retirement. Thse wh receive $100 in mnthly premium assistance will receive the premium assistance as an added amunt t their mnthly retirement benefit. Premium assistance is nt taxable incme. Premium assistance fr eligible public schl retirees will nly be paid if they incur an ut-f-pcket expense. (NOTE: If the ut-f-pcket expense is less than $100, the eligible retiree will nly receive the actual ut-f-pcket expense.) ISSUES: Q: Are retirees wh live utside f Pennsylvania eligible fr premium assistance? A: Yes, prvided the retiree has an ut-f-pcket premium expense frm HOP r a Pennsylvania schl emplyer health plan. Educatin Assciatin 18

21 Q: What if I retire under an early retirement incentive that requires my schl emplyer t prvide paid health insurance t me until I qualify fr Medicare? Wuld I have an utf-pcket cst that wuld qualify me fr premium assistance? A: Ask this questin f yur schl emplyer, as it will be the entity that verifies an ut-fpcket cst t PSERS. Nte, hwever, that there has been at least ne case that has held that an individual wh received emplyer-paid health cverage did, indeed, have an utf-pcket expense when she pted fr the emplyer-paid health insurance ver the lump sum payment that she culd have received if she did nt pt fr the paid health insurance. PSERS held that the lump sum payment that the retiree frfeited in favr f the health insurance was the ut-f-pcket expense. In re McCleary, Swansn & Wd, Ns , , (PSERS Bd. Op., March 5, 1999). Q: I am being cntinued as a dependant n my spuse s plan since he is still actively emplyed by the district. The additinal cst fr my dependant cverage exceeds $100 a mnth. Can I submit it fr reimbursement t my spuse s Sectin 125 Plan? A: The rules gverning what cnstitutes a legitimate ut-f-pcket expense are determined by the IRS. They d nt cnsider any payment frm a pre-tax incme surce such as a Sectin 125 Plan r a Health Savings Accunt funded by an emplyer as a qualifying expense. T get arund this rule, an individual will need t make sure that $100 f their ttal payment cmes frm after tax incme. Any additinal amunt ver the $100 can then be cvered by anther surce. ADVICE: When seeking retirement estimates frm PSERS in planning fr retirement, ensure that yu are an eligible public schl retiree that qualifies fr premium assistance (e.g., ensure that PSERS has recrded sufficient years f service). Als, ensure that there is an ut-fpcket expense that the schl emplyer will cnfirm with PSERS when PSERS sends an annual verificatin f the ut-f-pcket expense. Attempt t btain clarificatin frm the schl emplyer f the ut-f-pcket expense and eligibility fr premium assistance in writing. If a Health Retirement Accunt (HRA) is established fr yu with emplyer funds at the time f retirement, and yu use the HRA t pay fr yur full health insurance csts, yu will nt qualify fr premium assistance because the emplyer is deemed t be paying fr the cverage. If, hwever, yu persnally pay $100 fr the cverage and use funds frm the HRA t cver the remaining cst, yu will be deemed as having an ut-f-pcket cst qualifying yu fr premium assistance. Ntify yur lcal assciatin and then cntact yur PSEA UniServ Representative if yu believe that yu are eligible fr premium assistance payments and yur schl emplyer advises that yu are nt. Surce: Premium Assistance, PSERS-HOP, Educatin Assciatin 19

22 PSERS HEALTH OPTIONS PROGRAM (HOP) THE LAW: The Public Schl Emplyees Retirement Insurance Act, Pa.C.S et seq., prvides fr the PSERS HOP Medical Plan. Enrllment in the HOP Medical Plan is available fr Pennsylvania public schl retirees and their surviving spuses, as well as spuses r dependent children f retirees r survivr annuitants. The HOP Medical Plan cntains tw types f cverage: (a) a plan fr thse under age 65 and (b) a Medicare Supplement plan. Enrllment in the HOP Medical Plan may take place within ne hundred eighty days (180) days f a qualifying event, as listed belw: (1) A public schl emplyee s retirement; (2) A public schl retiree lses health care cverage under the schl emplyer s health plan (as prvided fr under Sectin 513(b)). (NOTE: Cverage under a schl emplyer s health plan includes COBRA cntinuatin f the schl emplyer s health plan. Thus, within ne hundred eighty (180) days f the cmpletin f the COBRA cverage, ne may enrll in the HOP medical plan.); (3) A public schl retiree lses health care cverage under a nn-schl emplyer s health plan, including any COBRA cntinuatin cverage elected under that nnschl emplyer s health plan; (4) A public schl retiree r his/her spuse reaches age 65 and becmes eligible fr Medicare; (5) A public schl retiree has a change in family status (e.g., divrce; death f the retiree r the retiree s spuse; additin f a dependent thrugh birth, adptin r marriage; dependent lses eligibility); (6) A public schl retiree becmes eligible fr premium assistance due t a change in legislatin; and (7) A health plan apprved fr premium assistance terminates r a public schl retiree mves ut f the plan s service area. Educatin Assciatin 20

23 THE LAW: If ne member f a public schl retiree s family has ne f the abve qualifying events, all members may enrll in the HOP Medical Plan r change their ptin if already enrlled. Fr example, if a public schl retiree s spuse turns age sixty-five (65) and becmes eligible fr Medicare, that is a qualifying event fr all eligible family members. ISSUES: Q: If I elect Original Medicare, may I still enrll in the HOP Medical Plan? A: Yes. The HOP Medical Plan can be yur Medicare Supplemental Plan (i.e., Medigap). The HOP Medical Plan cvers many f the deductibles, c-premiums, and ther expenses that yu are required t pay under Original Medicare. Q: Des the HOP Medical Plan have prescriptin drug plans? A: Yes. The HOP Medical Plan has Medicare Part D plans that are specifically designed fr HOP participants and their dependents. ADVICE: Cntact the HOP Medical Plan Unit at PSERS fr assistance with any questins. The custmer service number is Surce: Frequently-Asked Questins, PSERS-HOP, Educatin Assciatin 21

24 Educatin Assciatin 22