Health Notes
Retiree health insurance critically important
By LORRAINE SIMPKINS Health benefits can be a major factor
in the decision to retire. The risk of expensive health problems
increases with age. Without affordable, employer-sponsored health insurance, poor health can result in large out-of- pocket expenses and threaten a retiree’s economic security. Eligible PEF-represented employees
on the payroll and covered by the state Health Insurance Program (NYSHIP) have the right to retain health insurance coverage after retirement. To be eligible to retire with health
insurance you must: • be eligible for a pension from a
retirement system administered by New York State (It’s not necessary to actually collect a pension.); • have been eligible to participate in
NYSHIP for a minimum of 10 years (if you were last hired on or after April 1, 1975); and • be enrolled in NYSHIP or be a
covered dependent of a NYSHIP enrollee when you leave state service. As a retiree, you must pay the same
percentage of your health insurance premium you would pay as an active employee. Currently, for Empire Plan individual
coverage, a retiree pays 10 percent and the state pays the other 90 percent. For dependent coverage, a retiree pays 25 percent and the state pays 75 percent. The 2011 Empire Plan requires
retirees to pay $59.23 monthly for individual coverage and $250.12 monthly for dependent coverage. The state will pay only as much
toward an HMO as it does for The Empire Plan. HMO members, including retirees, pay the difference.
Sick-leave credit If you are 55 or older, you can reduce
the cost of health insurance as a retiree through the use of sick-leave accruals remaining at the time of your retirement. Up to a maximum of 200 days of
unused sick leave is converted to a credit by dividing the total dollar value of the sick-leave accruals by the actuarial life expectancy of the employee in months. The result is called a “lifetime monthly
credit” that’s applied to the insurance premium each month for as long as you are enrolled in NYSHIP. If you are not yet 55 when you retire
and you are “vested for health insurance purposes,” you may continue coverage by paying the full health insurance
www.pef.org
premium until you are 55, when you may “retire for health insurance purposes.” Once you reach age 55, the
percentage you must contribute decreases to 10 percent for individual coverage and 25 percent for dependent coverage. Sick-leave credit may not be applied toward health insurance premium costs, either while you are in vested status or after retiring from vested status.
Dual Annuitant Credit When you retire, you may specify you
want your dependent survivors to be able to use your monthly sick-leave credit toward their NYSHIP premium if you die before they do. This is called the “Dual Annuitant Sick Leave Credit.” If you choose this option, 70 percent
of your sick-leave credit will be used to offset your premium for as long as you live. After you die, your surviving
dependents may continue to use the same monthly credit to offset their NYSHIP premium for as long as they are eligible to continue coverage.
Option to delay pension If you are eligible to retire when you
leave state service, but postpone filing for your pension until you are older, you still may have NYSHIP retiree health insurance coverage. Ask your agency health benefits
administrator about “constructive retirement.” If you choose this option, you may use your unused sick-leave accruals to offset the cost of your retiree health insurance.
Deferred coverage If you have other health insurance
when you retire, you may delay the start of your retiree health insurance coverage and the use of your sick-leave credit indefinitely. If you want this option, you must
choose it before your last day on the payroll. Delaying the start of your NYSHIP
coverage will increase the value of your sick-leave credit when you begin your retiree coverage because your life expectancy will be shorter when you begin coverage.
Medicare Part B Most individuals become eligible for
Medicare at age 65. Medicare Part A is available at no cost, and covers hospital services, skilled nursing, hospice and home health care. Medicare Part B covers
physician services, durable medical equipment and other services. If you reach age 65 in 2011, the
Medicare Part B monthly premium is $115.40, or more if your income is above a new federal threshold. Once you’re eligible for Medicare as
primary coverage, NYSHIP requires enrollment in Parts A and B. When Medicare is your primary insurance, the state reimburses you for the Medicare Part B premium, as well as that of your eligible NYSHIP dependent who is also enrolled in Medicare. You are entitled to this benefit unless
the Part B reimbursement is received from another source, and as long as you do not return to work. Once eligible for Medicare, it is your primary insurance and NYSHIP is your secondary insurance if you are not actively employed.
Dental, vision benefits After retirement, coverage for dental
and vision care services ends 28 days from the last day of the final payroll period in which you work. For the options available to obtain
dental and/or vision benefits at your own expense, contact the PEF Retirees Program at (518) 785-1900 or 1-800- 342-4306, ext. 289.
moms The
IRS has good news for
Internal Revenue Service (IRS) announced recently breast pumps and lactation supplies may be tax- deductible as medical expenses. However, no medical expenses are
tax deductible until the eligible total exceeds 7.5 percent of your adjusted gross income. The pumps and supplies also now
qualify for reimbursement through flexible-spending accounts such as the Health Care Spending Account (HCSAccount). You can’t do both: pay for them with
pre-tax income and claim them as a deductible expense. The ruling is effective immediately
for expenses incurred on or after January 1, 2011. —Deborah Stayman
The Communicator April 2011—Page 9
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