saint paul public schools 2013. the retirement process is different for each individual. however, in...
TRANSCRIPT
Retirement BenefitsSaint Paul Public Schools
2013
Getting ready for retirement
The retirement process is different for each individual. However, in this presentation we present a broad overview of issues that you will want to think about as you prepare for retirement.
Retiree Medical Insurance
Early Retiree Medical Insurance
If you retire prior to reaching age 65, and meet the age and length of service requirements as defined in your bargaining unit contract, you would be eligible for the early retiree medical insurance.
Early Retiree Medical Insurance
Early retirees are enrolled in the same medical plans as active employees. If you meet the eligibility requirements in your contract, the District will contribute towards the monthly premium.
The amount that the District contributes is a FROZEN amount equal to the amount being contributed towards your medical insurance on the date that you retire.
If you switch between single and family coverage, or vice-versa, the FROZEN contribution amount will also change to the appropriate contribution for your coverage level.
Regular Retiree (65+) Medical Insurance
If you retire after age 65, and meet the age and length of service requirements as defined in your bargaining unit contract, you would be eligible for the regular retiree medical insurance. Also, those early retirees who are turning age 65 and have remained continuously enrolled in the early retiree medical insurance plan are also eligible to move into the regular retiree medical insurance plan.
Regular Retiree Medical Insurance
Regular retirees are enrolled in a Medicare supplement plan chosen by the District.
In general, if you were hired prior to 1996 and meet the age and years of service requirements in your contract, the District will provide a monthly payments up to the amount specified in the chart on the next page for the Medicare supplement plan chosen by the District. If and when the Medicare supplement plan premiums exceed the District contribution, you will be billed the difference.
Regular Retiree Medical Insurance
All regular retirees must enroll at their own expense in Medicare Part B (medical insurance) to remain in the regular retiree insurance plan sponsored by the District. Part A (hospital insurance) of Medicare is only required if you have earned the coverage by meeting the Social Security withholding requirements.
Coverage Type Single Contribution
Family Contribution
Medicare A Eligible $300 per month $400 per month
Non-Medicare A Eligible
$400 per month $500 per month
Dependents & Open Enrollment
Who Qualifies as a Dependent of a Retiree?
Spouse of a retiree (must be married to the retiree at time of retirement)
Children of a retiree, up to age 26
Grandchildren of a retiree, if they are dependents of the retiree at the time of retirement and are principally dependent upon the retiree for support.
Open Enrollment Early retirees may change medical plans (such as moving from the Empower HSA Plan to the Distinctions II or Empower HRA Plan)
Early retirees may add or remove qualified dependents (under age 65).
Regular retirees may not move between Medicare-supplement plans unless they move outside of the service area for their current plan.
Please note: once you or your spouse is 65 or older, they can only be added to your medical insurance plan within 30 days of loss of other GROUP medical insurance.
Continuous Coverage Rules
Prior to Retirement
Employees who are approved for a leave of absence are not required to continue group medical coverage during the LOA.
Employees who retire at the end of an approved LOA will be able to enroll in their retiree medical (but not dental or life insurance) plan without having continuous coverage prior to their retirement date. Enrollment in the retiree medical plan must be made within 30 days of retirement date.
Employees who retire at the end of an approved LOA will receive the frozen District contribution in effect at the date of retirement (if under 65).
After RetirementEmployees who retire and qualify for Early Retiree medical insurance may delay participation in the group medical plan if they are covered by another group plan. Proof of other coverage will be required.
Retirees who delay participation in the Early Retiree group plan may enter the plan upon one of the following events: Open Enrollment, Qualified Status Change (such as losing coverage), or turning 65.
Retirees who relay participation and enter the group plan upon one of these events will receive the frozen District contribution in place at the time of retirement (if under 65).
Retirees may only delay participation at the time of retirement. Once a retiree has enrolled in the retiree medical insurance, they must maintain enrollment.
Retiree Dental Insurance
Dental insurance for retirees
The District’s contribution towards dental insurance is terminated at the end of the month in which you retire.
You have the option to continue coverage at your own expense indefinitely provided you remain eligible for your public pension and pay the monthly premiums in a timely manner.
Dental coverage cannot be added after your retirement date, either for yourself or a dependent.
Health Care Flexible Spending Account
Health Care Flexible Spending Account Your contributions into the Health Care Flexible Spending Account end with your employment. You can be reimbursed for expenses incurred up through your last day of employment. If you wish to be able to make claims for expenses incurred after your date of retirement, you will need to arrange to increase your contributions so that you can reach your annual pledge prior to retirement. Your other option would be to pay into the account through COBRA on an after-tax basis. If there are funds left in the account after you retire, and you do not have eligible expenses, the money is forfeit, as it is a “use it or lose it” account.
Retiree Life Insurance
Life Insurance for Early RetireesIf you meet the eligibility requirements for early retiree insurance as specified in your contract, the District will continue to pay the premium for the basic $5,000 life insurance policy until you turn age 65. At age 65 you will have the option to convert the basic life insurance policy to an individual policy through Minnesota Life.
The additional life insurance policy, as well as any optional life insurance that you have purchased, is terminated at the end of the month in which you retire. You can continue these policies for up to 18 months at your own expense. At the end of the 18 month period, you will have the option to convert to an individual policy through Minnesota Life.
Life Insurance for Regular Retirees
If you retire at 65 or older, your basic, additional, and any optional life insurance policies are terminated at the end of the month in which you retire.
You may continue the life insurance policies at your own expense for up to 18 months. At the end of the 18 month period, you may convert the policy to an individual policy through Minnesota Life.
Severance Pay
Severance Pay Severance pay is payment for unused sick and vacation leave accumulated throughout your employment with the District.
Severance pay is paid into a tax-deferred 403(b) account with ING. This allows retirees to tax shelter their severance pay and also exempts them from paying the FICA tax of 7.65% .
Severance pay issued within 60 days of your retirement date and within the same calendar year as your retirement date.
Severance Pay Since severance payouts are tax sheltered we watch that employees do not go over the maximum that can be sheltered in a year. The max for 2013 is $23,000 for an employee aged 50 or over. If you had payroll deductions going into a 403(b) account while you were employed, your severance pay may be paid out in two payments, in separate tax years, to avoid going over the IRS-set limits.
Please check your contract for specific qualifications for severance pay as well as for information on how your pay for unused sick leave will be calculated. Unused vacation is paid out at the straight hourly wage per unused hour.
Please note that some bargaining units may have increased severance payouts for employees who give three or six months notice prior to retirement.
Pensions and Tax-Deferred Savings Accounts
Pensions PERA is the pension plan for those SPPS employees who are not licensed by the Minnesota Dept. of Education.
SPTRFA is the pension plan for those SPPS employees licensed by the Minnesota Dept. of Education, such as teachers.
You will want to contact your pension plan 1 to 3 months prior to your retirement date. They will be able to help you choose your payment options.
Pension eligibility
In general, you may be eligible to draw your pension at age 55 with at least 3 years of service, or at any age with 30 years of service.
If you begin drawing your pension prior to full retirement age, it may be reduced.
Contact PERA or SPTRFA for more information and pension estimates.
Note for PERA members
Beginning January 1, 2014, PERA’s Pre-Age 62 Pension Increase will cease to exist. The option temporarily increases an individual’s retirement benefit from the time of retirement until age 62. However, at age 62, the supplemental payment is replaced by a permanent $100 reduction. In addition, any post retirement increases applied to the temporary increase are also deducted from the benefit at age 62.
For anyone contemplating retirement before December 31 for the sole purpose of applying the Pre-Age 62 Pension Increase, we urge you to consider that decision carefully. In addition to the issues mentioned above, also consider that for each month you retire early, you are accepting a permanently reduced base pension amount. If you were hired before July 1989, retirement before you reach Rule of 90 often means you are accepting a substantially reduced benefit. It’s an issue you may wish to explore by contacting PERA.
Note for SPTRFA members
Please note that SPTRFA starts your pension payments based on 1 of 2 retirement dates during the month – the 1st of the month or the 16th.
Please choose your retirement date carefully in order to maximize your pension benefits. For further questions, please contact SPTRFA for assistance.
Tax-Deferred Savings Accounts : 403(b) and 457 Plans
In addition to contacting your pension plan, if you participate in one of the Tax-Sheltered Accounts offered by SPPS –the 403(b) and 457 plans, you will want to contact ING, Fidelity, or MN Deferred Comp to select your income options, or defer your income to a later date.
Other Things to Think About
Other Things to Think AboutSocial SecurityContact Social Security at age 65 and then three months prior to retirement date.Complete the paperwork to apply for benefits and set up withholding, if desired.Medicare Parts A and BContact Social Security at age 65 and then three months prior to your retirement date.Complete paperwork to apply for coverage.Tax PlanningDiscuss your plan with your tax advisor prior to retirement.Have taxes withheld from pension and 403 (b) or 457 retirement plan benefits.Have taxes withheld from other income sources or pay quarterly estimated taxes.Estate PlanningReview your will, trusts, beneficiaries, etc.
Frequently Asked Questions
What if I am 65+ and my spouse is under 65?
If you are 65+ and your spouse is under 65, you would be enrolled in the HealthPartners Freedom plan while your spouse remained in the early retiree insurance plan. The District’s contribution towards the premium is based on the retiree’s age, so in this case, the contribution would be the $400 for family Medicare coverage (if retiree was hired prior to 1996)
If you are under 65 and your spouse is over 65, the reverse would be true. You would remain in the early retiree plan, while your spouse would enroll in the HealthPartners Freedom plan. The District’s contribution would be the FROZEN contribution rate for family coverage.
What is the process to retire?
First, check your contract language and with your pension plan for your retirement eligibility. Then, once you have decided on a retirement date, you will want to submit the online resignation form available at http://hr.spps.org/Resignation_Form.html .
When your resignation is received, a packet of retiree benefits information will be sent out to your home. This packet will include information on the cost of benefits, enrollment forms, and an estimate of your severance pay.
The completed paperwork would be sent back to Human Resources, and we would work with the insurance plans to enroll you in the retiree coverage.
What are the payment options for the retiree insurance?
You can set up automatic withdrawals from a checking or savings account to pay for your retiree insurance. The authorization form to do this will be included in the retiree benefits packet.
You can also set up ongoing credit card payments using the https://stpaul.thatscommunityed.com/ website.
Payments can also be made by check or money order.
What about the Wellness Initiative?
Early retirees also participate in the Wellness Initiative. Completing the health assessment and a wellness program earns lower copays, deductibles, and annual out-of-pocket maximums.
If the retiree is over 65 and the spouse is under 65, the spouse would not be eligible to participate in the Wellness Initiative. Eligibility is based on the retiree’s eligibility.
The HealthPartners Freedom plan for retirees 65 and over includes the Silver & Fit program designed for Medicare enrollees.
Questions???
Helpful Contacts
Contact InformationSaint Paul Public Schools
Megan Jones Arko – Retiree Benefits Technician
651-767-8227 [email protected] Human Resources360 S. Colborne St.Saint Paul, MN 55102
Bargaining Unit Contractshttp://hr.spps.org/Labor_Agreements
Contact InformationPERA (Public Employees Retirement Association)
60 Empire Drive #200, St Paul MN 55103-2088
Phone #: 651-296-7460Fax #: 651-297-2547http://www.mnpera.org/
SPTRFA (St. Paul Teachers Retirement Fund Association)
1619 Dayton Av #309, St Paul MN 55104
Phone #: 651-642-2550Fax #: [email protected]
http://www.sptrfa.org/
Contact InformationMinnesota Deferred Compensation Plan (457)
60 Empire Drive #300, St Paul MN 55103-000Phone #: 1-877-457-6466 or 651-284-7723http://www.mndcplan.com/
ING – Capital Street Financial Services (403b)85 E 7th Place #275; St Paul MN 55101Phone #: (651) 665-4300http://www.capitalstreet.biz/
Fidelity Investments (403b)Phone #: 1 (800) 343-0860http://www.mysavingsatwork.com/
Contact InformationSocial Security Administration
800-772-1213http://ssa.gov/
Medicare800-772-1213 or 800-MEDICARE (800-
633-4227)http://medicare.gov/
Contact Information Minnesota Senior Linkage Line
The Senior LinkAge Line® is the Minnesota Board on Aging's free statewide information and assistance service. Senior LinkAge Line® help simplify the complex issues and decisions you face every day as a senior, Baby Boomer, Medicare beneficiary, caregiver or someone trying to reduce prescription drug costs.
(800) [email protected]://www.mnaging.org/Advisor/SLL.aspx
Thank you
We are glad that you were able to attend this seminar and hope that you found it helpful.