Health Insurance Options at Retirement

At retirement there are many different options for health insurance. How do you decide which insurance program or health plan is best for you?

The PERS Health Insurance Program is available to all PERS retirees and dependents who meet the eligibility criteria. However, the PERS Health Insurance Program may not be the best option if you are retiring before Medicare eligibility. Doing some information gathering may take time, but will be very helpful in making your decision about health insurance at retirement. The options available to Oregon public employees at retirement are discussed below.

Four points to consider when deciding which health insurance option to choose at retirement
Insurance for Retirees Not Yet Medicare Eligible
Insurance at Medicare Eligibility
Frequently Asked Questions

Note: Medicare eligibility occurs at age 65, however, if you are close to 65 and aren't yet receiving Social Security benefits, you must apply for Medicare Parts A & B. You will need to contact Social Security 3 months prior to your 65th birthday to ensure your Medicare is effective the first of the month in which you turn 65. If you should become disabled prior to age 65 Medicare coverage becomes effective 24 months after the date disability has been approved by the Social Security Administration.

Four points to consider when deciding which health insurance option to choose at retirement:

Cost
Consider the cost of the various plan options available to you compared to the benefits offered. Keep in mind that the cost of any health plan will increase annually.

Health Plan Type
Decide what type of health plan works best for you and your family. Options include a managed care plan, preferred provider organization (PPO) plan, Point of Service Plan (POS), and indemnity plan. Keep in mind, where you live will determine the plan or plans you are eligible for. Managed care plans or preferred provider plans work through specific networks of physicians and hospitals and usually have limited geographic coverage areas.

Coverage
Be sure to check how long the plan option you choose will be available to you and/or your family members and what your options would be if or when that coverage terminates. Example, if you are considering insurance through your spouse’s employer plan, does that plan cover children who are in college?

Options
Understand the options available through the PERS health insurance program. Non-Medicare retirees usually find better coverage at a lower cost by remaining insured through their employer plans following retirement. Even though the PERS health insurance program is available to all eligible PERS retirees and dependents, the non-Medicare plans may not offer benefits comparable to your employer retiree plans.

Note: At the time you or your spouse becomes Medicare eligible is when you most likely will seek enrollment in the PERS health insurance program. The PERS Health Insurance Program requires members and eligible dependents who are entitled to Medicare due to age or disability, be enrolled in Parts A and B of Medicare to be eligible for a PERS sponsored health plan.

Insurance for Retirees Not Yet Medicare Eligible

There are generally five options available for Oregon public employees who are not yet eligible for Medicare Benefits:

1) Oregon Revised Statute 243.303 requires Oregon public employers to make their group insurance plans available to retirees and dependents until the retiree or dependent is Medicare eligible. These plans typically offer comprehensive benefits and rates similar or equal to those available to active employees, and are usually the most ideal option for retirees. These plans are only available at retirement, and retirees who do not choose this option at retirement are not allowed to enroll in the employer plans at a later time. Check with your current employer prior to retirement for information about this option.

2) COBRA coverage is offered to employees any time their insurance coverage as an employee is terminating. At retirement continuation of coverage under COBRA is available through COBRA for 18 months for the retiree, spouse and/or dependents. Check with your employer benefits office for the COBRA premium cost, and compare that cost to your insurance options under the retiree program noted under [1] above. If you choose coverage under COBRA, remember to plan for health insurance coverage at the termination of your COBRA, because COBRA coverage will terminate at the end of 18 months.

3) Portability plans are also available for retirees who are not Medicare eligible and are terminating from employer group coverage. There are specific rules of eligibility for these plans. Portability plans are offered by the health plans covering employees, and information is available by contacting your current health insurance carrier. Portability plans that are typically offered are a Low-Option Plan, and a High-Option plan. You will have higher out-of-pocket costs in the Low-Option plan, but a lower monthly premium.

4) As a retiree, you may be eligible to enroll in your spouse’s employer sponsored health plan. This could be a good option for you as the employer may cover the additional premium as an employee benefit. Check with your spouse’s employer for eligibility requirements, but also consider your options for insurance if your spouse should quit working and/or loses his/her coverage due to some unexpected event. Your spouse’s employer plan will have COBRA coverage available. In the event of disability, COBRA coverage extends for up to 29 months.

5) Individual insurance plans are also available through most health insurance carriers. These policies are issued directly to an individual, and the premiums are age rated. Applicants may be rejected due to pre-existing medical conditions. Most plans do not include prescription drug coverage.

Insurance at Medicare Eligibility

PERS is usually the best option for Medicare eligible retirees and dependents if they are enrolled in Medicare Parts A & B or becoming eligible soon. Medicare eligibility is generally the last enrollment opportunity to enroll into the PERS Health Insurance Program for PERS retirees and/or dependents. If you are entitled to Social Security benefits, you and/or your spouse become entitled to Medicare the first day of the calendar month in which you and/or your spouse turn 65 years old. If your birthday falls on the first day of the month, you will be entitled to Medicare the first of the previous month. Normally Medicare information is sent approximately three (3) months prior to your birthday. You can also become entitled to Medicare due to an early disability. In this event, coverage will occur 24 months from the date your disability began as determined by the Social Security Administration. There are three parts to Medicare:

Medicare Part A is the benefit you are automatically entitled to and the cost for Part A is covered entirely by Medicare. Under traditional Medicare, Part A pays for all of in-patient hospital services. There is a deductible if you are admitted to the hospital, which changes annually.

Medicare Part B is optional, but is required for you to purchase any Medicare supplement plan. It is also required to enroll in any Medicare supplement program through PERS. The ONLY time it would be beneficial to delay enrollment in Medicare Part B is if you continue to work past age 65, or are covered under a spouse’s employer group plan and he/she is still employed. This can be tricky, so always check with Social Security before opting out of Part B. There is a premium cost to enroll in Part B Medicare that will be deducted directly out of your monthly Social Security check. There is a monthly premium for Part B, which changes annually. Medicare Part B covers outpatient services, such as doctor visits, labs, diagnostics and x-rays. There is an annual deductible for Part B services, which also changes annually.

Medicare Part D is the prescription drug benefit that was incorporated into Medicare beginning January 1, 2006. This is optional, and is offered through private insurance companies. Failing to enroll in a Part D plan when eligible will result in a 1% premium penalty per month for the months in which you were not enrolled in a Part D plan. You are not required to enroll in a Part D plan if you are covered under employer sponsored group insurance that has a prescription drug benefit that creditable, even if you are already entitled to Medicare. Any penalty would be waived if you immediately enroll in a Part D plan when your employer coverage ends.

If you are enrolling in a PERS sponsored plan when becoming Medicare eligible you will AUTOMATICALLY be enrolled in Medicare Part D. No action on your part in necessary. The PERS Health Insurance Program has incorporated Part D into all Medicare plans offered. The Part D premium is included in the premiums you pay for your medical coverage.

Under traditional Medicare you can see any licensed provider that accepts Medicare anywhere in the United States. The rules related to managed care do not apply as there are no service area limitations, and you can see a specialist without seeing a primary care provider first or obtaining a referral. This plan works well for those who travel or retirees who are accustomed to directing their own health care without getting referrals to see a specialist for care.

Medicare Advantage plans are usually managed care plans. Medicare Advantage plans have a designated service area. Members must live in the health plan’s service area, and use the plan’s contracted physicians and facilities. You must select a primary care physician and obtain a referral for most specialist care. Instead of an annual deductible there are co-payments for certain services. Generally, only urgent and emergency care is covered if you are outside of the health plan’s service area. These plans work well for members who do not travel extensively or are accustomed to working through their primary care physician before seeking specialist care.

Advantage PPO plan is another option. This is a Medicare Advantage plan, but you are not required to select a primary care physician or obtain a referral or preauthorization to see a specialist. You must have a residence in Oregon to be eligible for this plan however you can receive care from any provider in the USA that accepts Medicare. There is a list of contacted providers under this plan, which makes finding a provider easier when moving to a different area or those who are accepting new patients. You are not required to use contracted providers.

Please contact the PERS Health Insurance Program website at www.pershealth.com or call 1-800-768-7377 for eligibility and enrollment information.