Going Part Time – Health Insurance Options

[Flsail]

I was planning on retiring this summer but my employer has asked me to consider staying on part-time, around 2 days per week. As part of my compensation I was going to negotiate for continued healthcare insurance since I am still years away from Medicare.
My question is, would I be better off asking to stay on the group plan or would it be more prudent to go to a private plan now, while my wife and I are both healthy, and simply ask for my employer to pay the premiums?
Does anyone know if there is a minimum number of hours that I would need to work to remain eligible for the group plan and is that something that is set by my employer or by our health care provider?
Any thoughts on the subject would be welcome.

 

[MichaelB]

Flsail, an individual policy is usually less expensive. That said, check to see if the group plan is real insurance or self-insured. You can always move from a group policy to Cobra to an individual plan. Once you enroll in an individual plan you cannot get back into a group plan and you can be denied a new policy.

The insurance company will only require that you be a legitimate group member. It is the employer that determines if you qualify and what your premium will be.

Remember that when the employer pays the premium the company takes the full deduction. When you pay the premium you can only deduct the cost that exceeds 7.5% of your adjusted gross income (beginning next year that will be 10%).

I would say stay in the group plan and wait to see the evolution of the PPACA but access to coverage is a higher priority for me than for others.

 

[scrabbler1]

I was planning on retiring this summer but my employer has asked me to consider staying on part-time, around 2 days per week. As part of my compensation I was going to negotiate for continued healthcare insurance since I am still years away from Medicare.
My question is, would I be better off asking to stay on the group plan or would it be more prudent to go to a private plan now, while my wife and I are both healthy, and simply ask for my employer to pay the premiums?
Does anyone know if there is a minimum number of hours that I would need to work to remain eligible for the group plan and is that something that is set by my employer or by our health care provider?
Any thoughts on the subject would be welcome.

Back in 2007, in my final months of working before I ERed in late 2008, I switched from working 3 days a weel to 2 days a week, reducing my weekly hours worked from 20 to 12. This made me ineligible to remain in my company's group health plan because the plan required a minimum of 20 hours worked per week to be in it. I offered to pay 100% of the premiums (instead of the 50% I had been paying when I switched from working FT to 20 hours per week back in 2001) and thought it would be a no-brainer for the company to accept but they instead turned me down.

I was able to switch to COBRA and pay 100% (actually 102%) of the group health premiums for 18 months and asked the company if they could extend COBRA beyond the 18 months (which was permissible under COBRA) but the company rejected that, too. Paying 100% of the premiums (or 102% under COBRA) was a great deal for me so I would have liked keeping it.

I asked them why they would not allow me to stay in their group plan and they told me it was because I was now lumped into a group of risks (those who worked less than 20 hours per week) who tended to be high-risk because they also tended to be in their late 50s and early 60s, not old enough for Medicare, and it was not fiscally wise to insure them.

I replied that the company already provided subsidized HI coverage to retirees and to spouses and children of covered employees. I also mentioned that if I left the company and married another employee I could maintain group coverage but working 12 hours per week for them did not allow me group health coverage.

With my ER plans greatly taking shape, I had already anticipated losing my group health coverage (or COBRA) 18 months later so the last thing I wanted to do was to keep working there yet still have to shop around and find my own, costlier (here in NY, individual health insurance is far costlier and less available than elsewhere) HI policy. Just before COBRA expired, I left, making sure to tell them that this issue was a secondary reason for my leaving (the damn commute was the first).

MichaelB is right about the different tax treatment between being in a group plan versus not. In a group plan, the employer contribution is tax-free while the employee contribution is pretax even if the employee doesn't itemize his deductions. In an individual plan, only part of the entire premium can even be tax-deductible while the rest of it requires after-tax dollars to pay for it.

MichaelB - I have heard of the 7.5% threshhold being raised to 10% (making an already inequitable situation worse). Is this part of the PPACA or is it going up anyway?

 

[ziggy29]

I was planning on retiring this summer but my employer has asked me to consider staying on part-time, around 2 days per week. As part of my compensation I was going to negotiate for continued healthcare insurance since I am still years away from Medicare.
My question is, would I be better off asking to stay on the group plan or would it be more prudent to go to a private plan now, while my wife and I are both healthy, and simply ask for my employer to pay the premiums?
Does anyone know if there is a minimum number of hours that I would need to work to remain eligible for the group plan and is that something that is set by my employer or by our health care provider?
Any thoughts on the subject would be welcome.

Your chances of getting your employer to pay some or all of a premium for your individual health insurance plan are approximately zero.

You'd have to check with your own HR folks as to what is required to stay on the employer group plan. There is no law that says how many hours you have to work to have access to the group plan. Some places require full time status. Some might extend partial coverage to part-timers (with some sort of prorated amount the employer will pay). But usually you need to be classified as full time. And different employers have different definitions of "full time" but the most common I see specify 30-32 hours a week as a minimum.

If your boss wants you to stick around badly enough, it would probably be easier to negotiate additional compensation to buy your own health insurance. At the very least, enough to pay a prorated portion of it.

 

[MichaelB]

MichaelB - I have heard of the 7.5% threshhold being raised to 10% (making an already inequitable situation worse). Is this part of the PPACA or is it going up anyway?

It is part of the PPACA. Per KFF Implementation Timeline - Kaiser Health Reform

Increases the threshold for the itemized deduction for unreimbursed medical expenses from 7.5% of adjusted gross income to 10% of adjusted gross income; waives the increase for individuals age 65 and older for tax years 2013 through 2016.

 

[Flsail]

Thanks for the insight. I will let you know how it all turns out.