Retiree health insurance benefit

[eryx]

Just received this today (see picture). First time in my career (age 45) I've ever heard of possibly having retiree health insurance. Therefore it's not something I'm too familiar with.

I'm speculating this benefit was added to keep us mid-career folks around since tech is so hot right now. Certainly never had this benefit at any other time.

Anyway, if I'm reading this correctly, it is saying that health insurance is provided once the rule of 76 is achieved, and then I'll have to pay a graduating percentage of the premiums? Up to age 65 when medicare takes over, and even then there will be a small yearly payout.

This certainly would keep me around for a few more years.
View attachment 40638

 

[Romer]

thats great. I think you linked the wrong picture though

 

[eryx]

thats great. I think you linked the wrong picture though

Fixed it thanks [emoji1745]

 

[Sunset]

^^^^ still not linked properly.

Employer sponsored health plans for retired folks are great, as long as the company is around and keeps it.
The rule of 76 means employees will want to stay around for a long while.

 

[eryx]

Image posted again.

 

[Act2]

I have a retiree health insurance benefit at work, too. It is an increasingly rare benefit. And it does motivate people to stay employed until they reach the highest level of employer reimbursement, which I believe in our case tops out at 20 years service for 80%.

 

[euro]

Yes, it is nice benefit. I have benefitted (and still am) greatly from it, but it is very common for companies to re-neg and pull the plug if it becomes too expensive. So, I happily use it but have always budgeted for premium increases or complete loss. So far, so good for me.
It is definitely a retention measure and for the company it may not be that costly as fewer and fewer people actually reach the age+service = 76 (or whatever the number chosen). Job hopping is a lot more common now than it used to be, so it is increasingly rare for someone to reach 20+ years of service.
I particularly liked this benefit in the pre-Obamacare area because it eliminated worries about insurability.
All that said, it can be a valuable benefit, so enjoy it!

 

[CRLLS]

As has been mentioned in other threads, companies are generally under no obligation to continue this benefit. I would consider it a nice thing to have in your retirement plan, but in no way would I manage my career based on having it. I believe it is just as likely it would be discontinued before you get to use it.

If you are actually using this in your planning, I would recommend you get the full set of documents as the letter you posted is just a summary. There is a lot more detail to discover with the real documents.

I would also suggest that you compare this against available policies under the ACA with and without subsidies and cost sharing to see just how much of a benefit it actually might be.

I would think that it might be more of a carrot for staying to those who are deciding whether to FIRE within the next year or so. 10-20 years out, not so much IMO.

 

[jfn111]

Mega Corp just ended their retiree healthcare for people age 65 or over. The plan originally was to remain a supplement to Medicare once we turned 65 but of course 3 months after I turned 65 they ended it.
What they are doing now is contributing to a HRA (Health Reimbursement Account) $2,800 per year which is enough to pay for a Medicap plan, Plan D and a Vision Plan.
I'm guessing in a few years this will be reduced or eliminated.

 

[kyzymurgist]

Mega Corp just ended their retiree healthcare for people age 65 or over. The plan originally was to remain a supplement to Medicare once we turned 65 but of course 3 months after I turned 65 they ended it.

What they are doing now is contributing to a HRA (Health Reimbursement Account) $2,800 per year which is enough to pay for a Medicap plan, Plan D and a Vision Plan.

I'm guessing in a few years this will be reduced or eliminated.

This and similar changes were a very common occurrence a decade or two ago. My company created three tiers when they changed the retiree medical benefits:

A - Younger employees with little time with the company got nothing of course.
B - Older employees with more seniority got $800/year of service into a MSA available after retirement. I fell into this class.
C - The "lucky" older employees with decades of service kept their retiree medical benefits. I missed the cutoff by a few years.

Turns out group C ended up much worse off than group B. I retired early with a decent MSA balance while those who retained the medical benefit ended up with surprisingly high premiums when the company ended all subsidies. Much higher than available on the Marketplace with no opportunity for tax credits.

Apparently, when your group plan consists of all old members the cost is quite high.

Moral is don't value that retiree medical benefit very highly unless it is guaranteed. Read the fine print. Same goes for pension promises and any other benefit.

 

[Lienlord]

I work for a public school district, and if you retire/resign after 10 years of service you can stay on the group health plan. They pay $100/month toward your premium; not much but overall still a good value for the coverage received.
I hit 10 years next July 31st, so that has become my new FIRE goal! I will be 57.

 

[badatmath]

I am amazed it so easy for some of you to qualify. I have 31 years in and still not qualified! Obamacare caused them to drop it for after 65. Something about the plans could no longer have lifetime limits so even if people were on Medicare apparently it was too much for our decision makers. My eyesight is too bad to read your attachment, sorry.

 

[jollystomper]

This is great, but I would still plan for what you would do if this goes away. I do not know how close you are to the rule of 76. When I was 41, 10 years from retirement eligibility, my Megacorp dropped retiree insurance for those who were not yet eligible for retirement. ACA did not exist then. In retrospect I was glad they did it at that stage in my life, as that gave me time to plan for an alternative.

 

[CardsFan]

OP:

If I read the summary correctly, there is a cap of $4,900. Company subsidizes under the cap, per the formula. You pay everything over the cap. You should find out the actual current, unsubsidized, cost of your plan for comparison.

Also, almost always these caps are fixed (not inflation adjusted), so 10 years from now that will still be the cap, even if healthcare costs have gone up 50%.

Bottom line: It might be a nice little perk, but I would not plan for it, or stay in a toxic environment for it.

FWIW, I did have subsidized retiree health care when I retired at 60, 6 years ago. Costs (for 2) ranged from $500 to $900/month. Now on Medicare and get a similar HSA boost.

Personal opinion: I see these types of plans having more longevity than the old retiree plans, because, with the cap, the costs are fairly fixed for the company (or are at least limited to x% of 4,900).

 

[eryx]

This is great feedback everyone! Thanks.

I'll try to get ahold of the plan to see details.

I'm 4 years from meeting the 76 rule, so that's the minimum I'd need to stay to qualify at the first tier of benefit.