Human Resources: Medicare Part D – Frequently Asked Questions

Retirees

Frequently Asked Questions on the Retiree Health Redesign

General Questions
New Plan Specifics
Credited Service Questions
Spouses and Dependents Questions
Medicare Questions

General Questions

Q: As an active employee, how long can I continue working and be covered by my current medical plan?

A: There is no mandatory retirement age. You will remain on the active medical plan until you choose to retire (assuming, of course, that you satisfy the applicable plan requirements for such coverages).

Q: I read in the newspapers that many industries are trying to terminate or diminish their medical offering to retirees. Why are we going in the opposite direction?

A: Prior to 2006, our plan offered extremely generous benefits for a limited period after retirement, and then no benefits beyond. With the 2006 Retiree Health Redesign, we are trying to achieve a more balanced approach. Those companies that seek to reduce or eliminate retiree benefits are doing so to reduce costs. The changes that we are making are intended to be cost-neutral.

New Plan Specifics

Q: Will I have University retiree medical coverage for life?

A: The University's new retiree medical coverage has been designed with the hope that you will be able to have coverage throughout your retirement years, but the University necessarily must reserve the right to modify or terminate such coverage from time to time. Such a right is necessary in order to help ensure that the University has the flexibility it needs to address future circumstances in ways that are in the best interests of the University and all of its constituents.

Q: What trade-offs were considered when considering this change to extended retiree medical coverage?

A: Eligible retirees are asked to pay a larger share of the premiums, and the prescription drug program generally is not as generous. Eligible retirees with more years of credited service after age 45 (up to a maximum of 20 such years) will receive a larger University subsidy.

Q: Can I select new benefit plans each year in Open Enrollment?

A: Not as a retiree.

Q: Does the University's retiree coverage include dental?

A: No.

Q: What does "oop" mean?

A: Out-of-pocket.

Q: Does the new retiree health structure suggest that we should work longer and later in life?

A: There is no intention to create a new retirement pattern at SU. There are many variables that affect the timing of an individual's retirement, and the new retiree health structure is just one of many variables an eligible employee should consider when deciding when to retire.

Q: How does the "moving ceiling" and "cap" on the University contribution work?

A: A limit, or a cap, on the University's financial liability was implemented as part of the plan. The cap is a rising ceiling indexing the initial University cost in 2006 to the general rate of inflation plus 3.0 percent in succeeding years. The University's share of the per capita costs in each succeeding year, then, would be incremented by the percentage increase in the actual medical cost trend, or to this ceiling, whichever results in the lesser increase. Under the assumptions currently being used, this approach generally would have the same projected cost to the University as an annual cap of 5.5 percent. The retiree will be responsible for any additional cost above the cap.

The offering of Medicare Part D on January 1, 2006 gave the Retiree Benefits Review Committee another savings option. Using Medicare Part D instead of our current post-Medicare retiree prescription drug coverage will save approximately $1 million a year.

Credited Service Questions

Q: Why did the University decide to start counting credited service at age 45?

A: If we had started counting credited service sooner (at age 40, for example), the whole subsidy structure would have had to be lower in order to be cost neutral. That would not have solved mid/late career hire issues that were raised by the Chancellor and the Vice Chancellor. The formula is a compromise with a single subsidy rate for eligible employees with 10 or more years of credited service after age 45, as favored by the Cabinet. Longer term employees would have fared far worse if credited service had been counted sooner.

Q: How does my length of service count if I am on disability?

A: You will be given credit for each year of service with the University after your 45th birthday that you are classified as a benefits eligible employee in the records of the University's Office of Human Resources.

Q: How does my length of service count if I am a part-time employee?

A: You will be given credit for each year of service with the University after your 45th birthday that you are classified as a benefits-eligible employee in the records of the University's Office of Human Resources.

Q: I see that for each additional year of credited service that I have after age 45 (up to a maximum of 20 total years of such service), I will gain 3.5 percent more subsidy (assuming, of course, that I satisfy the other plan requirements for such subsidy). How much is that in dollars?

A: In 2005 the full premium for two-person BluePoint coverage is $556.35 per month. Each percentage point is worth $5.56 per month, so 3.5 percent per month would be $19.46 per month or $233.52 per year. However, future retiree premiums probably will be higher than the current premiums so the dollar value of the subsidy will also be higher.

Q: If I retire next year with ten years of credited service after age 45, I think I will be able to afford to pay 70% of the premiums at that time. By what rate are the premiums projected to increase in future years?

A: The medical plan premiums are based on medical expenses from the previous year, and therefore it isn't possible to project premiums in future years.

Q: I plan to retire in five years but I will not have ten years of credited service after age 45. What will the full retiree medical premium be with no subsidy?

A: It is too early to project what the premium will be at that time.

Spouses and Dependents Questions

Q: Are eligible dependents covered under the current and new retiree medical coverages?

A: Eligible dependents of an eligible retiree generally may receive the same coverage as the retiree receives, for such period as the retiree receives such coverage (assuming, of course, they continue to satisfy the plan's requirements for being an eligible dependent and the plan's coverage requirements).

Q: If something happens to me, does my retiree coverage continue for my surviving eligible dependents under the old/new plan structure?

A: If an eligible retiree dies, his or her dependents who are covered by the retiree medical plan and the retiree prescription drug plan will be eligible to continue to receive the same dependent coverage they would have received had the eligible retiree continued to live (assuming, of course, the applicable requirements in the plans are satisfied).

Q: If I retired in 2005 at age 67 under the old retiree plan and have ten or more years of credited service, I understand that my current coverage continues until I am 72 (assuming, of course, that I satisfy the applicable requirements for such coverage). My wife will only be 63 at that time. What will her coverage be, and at what cost?

A: Your wife will remain in her current plan until age 70 and then will be eligible for extended coverage at full cost, non-subsidized rates.

Medicare Questions

Q: When am I considered eligible for Medicare retiree health coverage?

A: You are eligible for Medicare at age 65 if you are a retiree and satisfy the applicable Medicare requirements.

Q: What is Medicare "carve-out"?

A: The University medical plan is referred to as a carve-out plan since Medicare coverage is primary and pays first, and the University plan pays thereafter.

Q: What is Medicare Part D? How do I enroll?

A: Medicare Part D is the new Medicare prescription drug program, effective January 1, 2006. Those eligible may enroll on the web site at medicare.gov, or by calling their office for information and assistance.

Q: How much will my Medicare Part B and Medicare Part D premiums be in five years when I'm 65?

A: In 2007 the Medicare Part B premium is $93.50 per month, and it is estimated that the Medicare Part D premium will be an average $35 per month in 2007. These amounts are likely to increase annually.

Q: If Medicare becomes primary at age 65, how can my premiums cost more then than they do now?

A: The new retiree health structure provides for extended retiree medical coverage. In order to be able to provide this extended coverage, an increase in premiums will be necessary (this is true even though the extended coverage will be coordinated with Medicare).

Q: What are some of the other options for medical plans for retirees who are no longer covered under the University's medical plan?

A: There are various supplemental Medicare plans offered by insurance carriers. Information about some of these carriers is available from the Medicare Advantage website (please note that the University does not sponsor or endorse any of these carriers, and that no University contributions will be made with respect to such supplemental plans).

Questions? Call the HR Service Center at 443-4042 or email hrservic@syr.edu.

As is the case with all of the University's employee benefit plans, the University reserves the right to modify or terminate the benefits and requirements described in these FAQ's from time to time. An individual only will be eligible for the coverages described in these FAQ's if the requirements of the Syracuse University Retiree Medical Benefits Plan and the Syracuse University Retiree Prescription Drug Plan are satisfied, and the terms of the Plans will control if there are any inconsistencies with these FAQ's.