Transcript Agenda - Hennepin County, Minnesota

Pre-retirement planning seminar
Susan Hoel – Human Resources / Benefits
612-348-9075
12/2014
Agenda
County Benefits
•
Phil Coleman
10:15– 11:30 a.m.
Jason Ledermann
12:30 - 1:30 p.m.
Lunch: 11:30 a.m.– 12:30p.m.
Intro to Financial Planning
•
8:00 – 10:00 a.m.
Break: 10:00 – 10:15 a.m.
PERA
•
Sue Hoel
Break: 1:30 – 1:45 p.m.
Social Security/Medicare
Rhonda Whitenack
1:45 – 3:00 p.m.
Estate Planning
Bradley Frank
3:00 – 4:00 p.m.
Goals for today
Know county’s resignation process
Understand the county’s benefit continuation policy
Know where to find the county tools
Become more knowledgeable about:
PERA process
Social Security
Basics of financial planning
Estate planning process
The 6 steps of retirement
1.
2.
3.
4.
5.
6.
Determine retirement date
Fill out required county forms
Apply for PERA
What to do with severance payout
Determine which benefits to continue
Last paychecks
Step 1 – Determine retirement date
You need to determine when you will retire
– Last working date – Last day you are physically at work
– Termination date* – Last day on the county payroll
*Must be a scheduled work day
*Date used with PERA
• Minimum resignation notice time
• Exempt employees – 28 calendar days
• Non-exempt employees – 14 calendar days
Things to remember
• You can typically use vacation or PTO when retiring; check with
your supervisor/ manager first for approval
• When you are using vacation or PTO you are still earning
vacation or PTO
• You are still “active” in the APEX system
• You cannot run out sick time
Step 2 - County forms
2 county forms to complete:
1. Hennepin County Resignation Notice form –
give to your immediate supervisor
2. If you are age 50 or older, Request for
Benefits Eligibility Continuation Notification
form – send to Benefits
Resignation form
Benefits continuation form
If required,
please attach
proof to your
form when you
submit it.
Step 3 – Apply for PERA
• Apply for retirement benefits directly with PERA
Go to www.mnpera.org
• Go to forms and publications –
Retirement toolkit
For specific assistance, contact PERA directly.
PERA
You have 2 PERA forms to complete:
• Application for PERA Retirement Benefits –
send to PERA
• PERA Termination Verification form –
send to Benefits
PERA termination verification form
Fill out these lines
before sending to
Benefits
PERA - Phased Retirement Option (PRO)
• Must be age 62 and in Basic or Coordinated Plans
• Must reduce work hours a minimum of 25%
• Must be on PRO status prior to or the 1st of the month
you begin to receive your PERA pension
• Sunsets June 30, 2019
• If on PRO status as of that date, can continue
participation for up to 5 year maximum
PERA - Phased Retirement Option
Remember:
1. Your department decides if they want to
participate or not. Contract is with your
department.
2. PERA PRO form is online – go to PERA’s website –
www.mnpera.org
3. You must track your hours
4. If your standard hours in APEX are 20 or more per
week, still eligible for county medical, dental and
life insurance. No STD or LTD.
Step 4 - Severance
What is it?
• Calculated based on leave program you retained or elected
AND whether you have mandatory participation in the Health
Care Savings Plan (HCSP)
• Sick/vacation
• PTO
• Combination of both
• Unused vacation or PTO is always paid out. Work for the
county at least 8 years to receive sick leave payout.
• Important to resign in “good standing”
– Give advanced written notice as required
Severance
What is in my severance payout?
▶ Vacation/sick leave
▶Maximum of up to 800 unused hours combined vacation/sick
leave lifetime
▶ Converted vacation leave to Paid Time Off (PTO)
▶Maximum of up to 800 hours of unused sick leave lifetime PLUS
up to 480 hours of unused PTO
▶ New employees selecting/receiving
PTO
▶Maximum of up to 480 hours of unused PTO
• Contact your payroll contact for severance hours previously received
Severance
When is it paid out?
• Paid out 2 weeks after last regular paycheck
• Taxable in the year received
Severance
Payout possibilities:
Cash – taxed at special higher federal tax rate for lump
sum payments
2. Defer into county’s deferred compensation plan(s) –
federal or state tax postponed*
3. Mandatory participation in Health Care Savings Plan
(HCSP)
1.
* Amount you can defer dependent upon annual plan
maximums from the federal government. Check with your
vendor 2 months prior to termination to determine the
amount you are able to defer.
Deferred compensation
• Hennepin County 457 Plans
– Fidelity
– MSRS – State Plan
– Voya (previously ING)
• Severance pay deferral
‒ Postpone payment of federal and state taxes*
– May elect to direct all or a portion into deferred
compensation, as allowed by annual plan maximums and
vendor calculation
*Federal and state tax will be assessed on the total amount of FICA
and Medicare tax charged.
Deferred compensation –
Severance pay deferral
If you have an account:
– Contact your vendor
• How much currently deferring
• Amount of severance payout – remember, you will pay FICA
and Medicare tax, plus federal and state tax on that amount
• Calculation of maximum amount
– Contact Cheryl Arntson at 612-348-7767 with amount to
defer
Deferred Compensation –
Severance pay deferral
If you don’t have an account
• Open an account just for severance payout – go to Checklist
for instructions
• Contact the vendor to set up the account
– Subject to plan maximums
– No need to designate a payout date
• Contact Cheryl Arntson at 612-348-7767 with amount to
defer
Deferred Compensation –
After termination
• Pay out options
‒Work with vendor
‒Withdrawal paperwork to Benefits
• Do not close account until all monies have been paid
out
• Required minimum payout must begin at age 70 1/2
Health Care Savings Plan (HCSP)
• Public employer-sponsored program
• Money goes in pre-tax and comes out pre-tax
• Use to pay eligible post-employment medical
expenses and/or health insurance premiums
• Administered by Minnesota State Retirement System
(MSRS)
Health Care Savings Plan (HCSP)
• Not every employee has the plan. If you don’t have it,
you can’t get it.
• You cannot contribute additional funds to your HCSP
• Not while working
• Not after leaving county employment unless you go to work
for another public sector employer offering the HCSP
• Not an Health Savings Account (HSA), Health
Reimbursement Account (HRA) or a flexible health
care expense account (FSA) – don’t get confused
Severance payout– scenario 1
• John Doe – 60 years old, 30 years
of service. John has never left
county employment.
Vacation
275 hours
Sick
482 hours
TOTAL
757 hours
Maximum paid out is 800 hours lifetime
Severance - 757 x $20/hour = $15,140
Severance payout- scenario 2
Vacation
275 hours
Sick
776 hours
TOTAL
1051 hours
Maximum paid out is 800 hours lifetime
Convert to PTO
Sick - Frozen
776 hours
Maximum paid out is 800 hours lifetime
PTO (Vacation hours)
275 hours
Maximum paid out is 480 hours
Severance - 1051 x $20/hour = $21,020
Severance payout- scenario 3
Vacation
Sick
TOTAL
275 hours
1045 hours
1320 hours
Maximum paid out is 800 hours lifetime
Convert to PTO
Sick - Frozen
1045 hours
Maximum paid out is 800 hours lifetime
PTO (Vacation hours)
275 hours
Maximum paid out is 480 hours
Severance - 1075 x $20/hour = $21,500 John loses 245 hours
Convert to PTO – What happens?
Sick leave
hour balance
Newly earned hours
each pay period
• County will pay up to 800 hours lifetime
• Still available to use for illness/injury
Convert to PTO
Vacation
hours
PTO
All newly earned hours
each pay period
County will pay up to 480 hours
How to convert to PTO
Stability pay
• Lump sum payment made to permanent employees with at least 5 years
of benefits eligible ( i.e. 20 hours per week or more) service
• Paid if eligible to receive annuity benefits under a county-approved
retirement program (e.g., PERA)
• Pro-rated for time worked
• Taxed at higher special federal tax rate for lump sum payments
• PERA is taken
• Cannot be deferred
• Paid out 2 weeks after last regular paycheck on a separate check
Payout questions
Will my severance include unused compensatory time?
– If you are an exempt, non-organized employee – No
– If you are non-exempt – You will receive a separate check
– If you are covered by a union contract – It is subject to the terms
and conditions of the contract
What about deferred holiday time and banked Special
Leave?
– All employees receive, but in a separate check from severance.
Payment sent at same time as severance payment.
After retirement pay outs
Federal
Tax
Severance
Compensatory
time
Holiday time
Banked Special
Leave
Stability Pay
Deferred
severance*
State
Tax
FICA
Medicare
Tax
PERA
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*Federal and state tax will be assessed on the total amount of FICA
and Medicare tax charged
1% Supplemental Plan
• Two options after retiring:
1. Apply for redemption
a) Lump sum
b) Partial payments
• Maximum payout period 5 years
• Taxable portion = county’s contribution and interest
earnings in the year in which it is received. Cannot
be rolled over to an IRA.
2. Leave 1% plan account intact
1% Supplemental Plan
• You must be totally off the county payroll to
receive and severance must be paid. Funds
available 30-45 days after severance is issued.
• Contact MSRS at msrs.state.mn.us
Step 5 - Benefits continuation
• You may continue these benefits if enrolled prior to
retirement date:
• Health
• Dental
• Life insurance
ﾝ Basic life insurance
ﾝ Supplemental life insurance
ﾝ Spouse and/or dependent life insurance
• Health Care Expense Account –
Flexible Spending Account (FSA)
Step 5 - Benefits continuation
• Health, dental, life insurance
– Coverage ends the last day of the month of your last day on payroll.
You are paying for the current month’s premium.
– Note: If you have health and/or dental coverage, the plan
administrator will send you letter indicating your coverage has
terminated as an “Active” employee.
• Health Care Expense Account (HCEA)
– Program ends on your last day on payroll
Benefits continuation questions
What if my covered spouse turns age 65 while I am covered by
the county?
• Both employee/retiree and over age 65 spouse can be covered
on the county active plan
• Covered spouse does not need to purchase Part B until
employee retires and is 65 and is no longer eligible to be on the
county active plan
• OR
Your covered spouse can enroll in the Hennepin County
HealthPartners Freedom Plan (contact Benefits) or another
Medicare supplement plan. If you are an employee, you must
fill out a Family Status Change form and provide proof in order
to drop coverage mid-year.
Benefits continuation questions
What if I continue to work past age 65 for Hennepin
County?
• Your benefits are the same of any other active
employee.
• You can choose not to sign up for Medicare Parts A and
B without penalty.
• When you do retire, the county will verify your coverage
on our plan for Social Security. Bring the Employer
Information form to Benefits or call for Benefits to send
you a completed form.
Benefits continuation questions
I am over age 65 when I retire
• Coverage ends on the last day of the month you
retire/terminate
• You are no longer eligible to stay on the county medical plan
(PreferredOne)
• Apply for Parts A and B of Medicare, if not currently enrolled,
3 months prior to termination date. You must go into a Social
Security office to apply.
• You can enroll in the county-sponsored HealthPartners
Freedom Plan or any other plan to supplement Medicare
coverage
Applying for Part B of Medicare –
Send form to Benefits for completion
Early Retiree Health Insurance Program
(ERHIP) – Category A
• County contribution toward employee only
coverage as though you are still working
• Program is approved annually by the Board
• You must be of under age 65, have specified
length of service with the county and satisfy 1of
the 3 requirements
Requirement 1 - Age and years of service
Age at
retirement
Full-time equivalent
years of county service
55
20
56
20
57
20
58
20
59
20
60
20
61
20
62
15
63
14
64
13
65 and older
Not eligible
Health insurance continuation
Early Retiree Health Insurance Program (ERHIP)
Category A
• Requirement 2 – Rule of 90. Qualify for and
applied for full, unreduced annuity (PERA) and
have 10 years of county service. Written proof
from PERA required.
• Requirement 3 – 25 years of pension service, 10
years of which must be with county. Qualify for
and applied for full, unreduced annuity (PERA).
Written proof from PERA required.
Category A
• 2015 employee cost/month-Standard
•
•
•
•
Single:
Single + Spouse:
Single + Child/ren:
Family:
$75.00
$969.84
$605.28
$1235.00
• 2015 employee cost/month-Advantage – FV/NM/HE or HP/PN
•
•
•
•
Single:
Single + Spouse:
Single + Child/ren:
Family:
$41.86
$891.96
$545.62
$1143.86
• 2015 employee cost/month-Advantage – HCMC/NorthPoint
•
•
•
•
Single:
Single + Spouse:
Single + Child/ren:
Family:
$8.72
$814.08
$485.96
$1052.72
• Coverage ends on the last day of the month of your 65th birthday
Health insurance continuation
Category B
• You don’t qualify for Category A but do qualify for a PERA pension and are under age 65
• 2015 employee cost/month - Standard
• Single:
• Single + Spouse:
• Single + Child/ren:
• Family:
$662.88
$1557.72
$1193.16
$1822.88
• 2015 employee cost/month – Advantage – FV/NM/HE or HP/PN
• Single:
$629.74
• Single + Spouse:
$1479.84
• Single + Child/ren:
$1133.50
• Family:
$1731.74
• 2015 employee cost/month-Advantage – HCMC/NorthPoint
• Single:
$596.60
• Single + Spouse:
$1401.96
• Single + Child/ren:
$1073.84
• Family:
$1640.60
• Coverage ends on the last day of the month of your
65th birthday
Retire at age 65 and older Medicare basics
• Part A
• Hospital insurance: Covers most inpatient hospital expenses. No
monthly premium.
• Part B
• Supplementary medical insurance: Covers doctor bills & other
outpatient medical expenses.
• Standard 2015 premium - $104.90 per month
• Part D
• Prescription drug coverage
• Not Medicare, but Medicare-approved Private Drug Plan companies
Remember
• When you are retired, you are covered until the end of the
month of your 65th birthday
• Example:
65th birthday is March 24
Medicare is effective March 1
Covered under PreferredOne until March 31
• sign up for Part B effective April 1
• HealthPartners Freedom Plan or other Medicare
supplement plan is effective April 1
Health insurance – Age 65 or older
Hennepin County sponsors two HealthPartners® Freedom Plans
• Need Parts A and B of Medicare to enroll
Group plans with comprehensive coverage
No “donut hole” in Part D prescription drug coverage – you only pay
copays
• ALL INDIVIDUAL PLANS IN THE MARKET HAVE THE DONUT HOLE
2015 cost:
• Freedom Plan 1 -$241.70
• Freedom Plan 2 - $212.60
Part D coverage – “Donut hole”
Applies to all individual Medicare plans
2015
Annual deductible
Initial coverage limit
Coverage gap –
“donut hole”
Definition
$320
$2,960
Prescription drug costs
from $320 to $2,960:
Plan pays 75%
$2,960 to $6,680
(Your costs are $4,700 = $320
deductible + $660 initial
coverage + $3720 donut hole )
During this time, you
receive a 55% discount
on brand drugs/ 35%
discount on generics
Catastrophic coverage
Begins after $6,680 in total
prescription drug costs
Catastrophic coverage costsharing
You pay $2.65 per generic/
$6.60 per brand OR 5%
whichever is higher
Freedom Plan
• HealthPartners will send materials to you 3 months
prior to your 65th birthday. If you are working past
age 65 and want to enroll, call HealthPartners at
952-883-7428.
• Enroll in Parts A and B of Medicare 3 months prior
to your 65th birthday
• Send your enrollment to HealthPartners not more
than 3 months before the effective date
Freedom plan coverage
• 9 month travel benefit out of area at in-network benefits;
worldwide coverage for emergencies
• “Silver and Fit” program – gym membership
‾ $25 per year
‾ No number of required visits per month
• Virtuwell
– Online convenience care
– Unlimited free visits
• 2 national plans for retirees who permanently reside outside
Minnesota
HealthPartners Freedom Plan
• Premiums for Freedom Plan are sent directly to
HealthPartners
• Go to healthpartners.com/hennepin for details or call
HealthPartners at 952-883-7428.
Our plan is not the same as the HealthPartners
individual supplement plans
Other options for coverage
Retired and age 65+
• For assistance finding an individual plan-
Benefits continuation question
What if I am a retiree over age 65 and have an under
age 65 covered spouse?
• Retiree (former county employee) must be enrolled in a
Hennepin County Freedom Plan to keep spouse covered to age
65
• If retiree does not enroll in a Freedom Plan
Under age 65 spouse can stay on county active plan for up to a
total of 36 months
• 2015 premium cost for spouse:
Standard - $676.14 per month
Advantage - $642.33 per month OR $608.53
Dental insurance continuation
• Must have coverage at time of retirement in order to be
able to continue HealthPartners Distinctions Dental
• May continue dental coverage indefinitely (including past
age 65)
• 2015 Cost:
– Single: $33.07 to
$33.73 per month
– Family: $80.66 to
$82.27 per month
• Delta Dental is not a
county-sponsored benefit; contact your union for
continuation information.
Life insurance continuation
• Maximum continuation - 18 months
– After that time, can convert to individual policy
• Basic Life
• $30,000 – 2015 retiree
– $3.67 per month
• Supplemental & spousal/dependent life
– Cost based on age; can change
‾ Accidental death and dismemberment coverage is not
eligible for continuation
Health Care Expense Account (HCEA)/
Flexible Spending Account (FSA)
• Reimbursement will be made only for expenses incurred before your
termination date
‾ Can submit through the end of the year – there is no grace period
‾ Debit card is turned off
OR
• Continue to contribute on after-tax basis through end of calendar year
‾ Can incur and submit through the end of the year
• Administration is through Eide Bailly
‾ 612-253-6633 OR eidebailly.com/hennepin
How will I know what I can continue?
• You will receive a Benefits Eligibility Confirmation Letter
from Benefits outlining benefits you can continue
• Eide Bailly will send a COBRA/ Continuation Election Letter
and Form for eligible benefits
Approximately 2 - 3 weeks after retirement
Timing is based on when your status changes in APEX and
submission of files to Eide Bailly
• Complete the Eide Bailly Benefits Continuation Offer Letter
and return the letter (and payment) to Eide Bailly. Your
coverage is not reinstated until payment is received.
Important to know - APEX
Eide Bailly LLP
Our retiree administrator
• Service – Eide Bailly delivers premier customer service to retirees
• Experienced Administrators – Staff averages over 10 years retiree
administration experience
• Valuable Resources – Get your questions answered about payments,
continuation periods and coverage issues
Eide Bailly
Home page
Eide Bailly process
Moving from active to retiree coverage
The county processes your
final payroll
Future payments are due
on the 1st of the month
with a 30 day grace period
APEX file gives Eide Bailly
the demographic & benefit
information
Eide Bailly sends a packet
with information on how
to elect to continue any
benefits
Eide Bailly sends a
Welcome Letter with
yearly coupons & login
information for the
website
Retiree completes & sends
the election form with
payment through the
current month
Notifying Eide Bailly of changes
• Address, phone, email changes
 Send them in writing to:
[email protected]
Faxed to 612-253-6622
Mailed to 808 Nicollet Mall, #1350,
Minneapolis MN 55402-7033
• Other changes
 Dependents can be dropped at the first of any month
 Dependents can be added if within the first 18 months of coverage if there
is a Qualifying Event or open enrollment
 Second qualifying events (i.e. divorce or child losing dependent status)
need to be communicated to Eide Bailly within 60 days of the event
Remember
• You have 60 days to elect benefits
• Coverage not reinstated until election form & payment is received;
information is sent electronically to the carrier
• Coverage is reinstated back to the 1st of the month after your
retirement date. No coverage gap.
• Recommend having your prescriptions filled and any pressing
appointments made before your active coverage ends
• You have the option of having premiums pulled directly from your bank
account each month. Eide Bailly does not take credit cards
What happens to my other county benefits?
• Bus/Rail cards
– Continues up to last paycheck
– Fill out MetroPass cancellation form and return to Benefits by 10 am on
the 23rd of the month; return the card prior to last day or mail back to
Benefits OR
– Cancel your GoTo card in APEX
• Pre-Tax Parking and Van Pools
– Ends at midnight on termination date
– Any excess funds are forfeited
What happens to my other county benefits?
• Long and/or Short Term Disability
– Ends at midnight on termination date
• Credit Union
– Contact credit union if you have personal payroll deductions
• Charitable contributions
– Continue through last paycheck
– If wish to discontinue, must send written request by Wednesday
before contributions would stop
• Voluntary Benefits – contact directly
– College Savings Plan
– Minnesota Business Association
Step 6 - Last paycheck, severance, PERA pension
Pay date in which your last day on payroll occurred
Example:
• Last day worked – August 21, 2015
• Termination date - Last day on payroll (including vacation
time)– August 28, 2015
• Last regular paycheck – September 11, 2015
• Severance and other pay outs – September 25, 2015
• PERA check – September 15, 2015
How to save money after retirement
Enrolled in PreferredOne
• Earn the health incentive on the active plan by
completing the health incentive requirements
annually
– go to hennepin.us/retirees for information
• Remember - Plan benefits and premiums can
change each year; read all your open enrollment
materials from Eide Bailly
• Mail order prescriptions
How to save money after retirement
Enrolled in PreferredOne
Use the Be Well Clinic for office visits - $0 copay through PreferredOne
701 4th Avenue South
• Six exam rooms
• Chiropractic
• Acupuncture
• Full pharmacy
How to save money after retirement
HealthWorks is located in the Be Well
Center on the southwest street level (7th
Street side) of the Government Center
• Health coaching
• 2 computer kiosks
• Employee Assistance
• 612-348-7855
Use Fitness Advantage - gym discount
Retirement process - REVIEW
 Complete the Resignation form. Give to supervisor.
 Complete the Benefits Continuation form and send to Hennepin
County Benefits (MC 040).
• You will pay the same as any single active employee for your health insurance
choice if you qualify for ERHIP.
• You can continue on the county’s health insurance plan until the end of the
month you turn 65 years old.
• You can continue your basic life insurance for 18 months; county dental
indefinitely.
 If you wish to put your severance payout in your deferred
compensation account, contact Cheryl Arntson at 612-348-7767.
• Severance will be paid out two weeks after your final paycheck.
• If you do not put your severance in your deferred compensation account, the
amount will be taxed at a higher federal tax level.
Retirement process - REVIEW
 Complete the PERA application.
• If you need assistance, call PERA at 651-296-7460.
• Send completed form to PERA at:
60 Empire Drive
Suite 200
St Paul, MN 55103-1855
• Your first pension check will come on the 15th of the month. All other checks
will come on the first of the month.
 Complete the top section of the PERA Termination Verification form
and send to Hennepin County Benefits (MC 040).
 Respond to letter from Eide Bailly about your benefit continuation.
• Send election form and check to Eide Bailly to reinstate your benefits.
 Fill out Metropass form to cancel card. Send to Hennepin County
Benefits (MC 040) by the 23rd of the month prior to leaving.
County resources
• Website tools – Retirement Preparation
• HR Service Center at 612-348-7855 or
[email protected]
Retirement
• Staff in Benefits can only offer general information about
retirement and can not provide advice or counsel