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Pre-retirement planning seminar Susan Hoel – Human Resources / Benefits 612-348-9075 12/2014.

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Presentation on theme: "Pre-retirement planning seminar Susan Hoel – Human Resources / Benefits 612-348-9075 12/2014."— Presentation transcript:

1 Pre-retirement planning seminar Susan Hoel – Human Resources / Benefits /2014

2 Agenda County BenefitsSue Hoel 8:00 – 10:00 a.m. Break: 10:00 – 10:15 a.m. PERA Phil Coleman 10:15– 11:30 a.m. Lunch: 11:30 a.m.– 12:30p.m. Intro to Financial Planning Jason Ledermann12:30 - 1:30 p.m. Break: 1:30 – 1:45 p.m. Social Security/Medicare Rhonda Whitenack 1:45 – 3:00 p.m. Estate PlanningBradley Frank3:00 – 4:00 p.m.

3 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

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9 The 6 steps of retirement 1. Determine retirement date 2. Fill out required county forms 3. Apply for PERA 4. What to do with severance payout 5. Determine which benefits to continue 6. Last paychecks

10 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

11 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

12 Step 2 - County forms 2 county forms to complete: 1. Hennepin County Resignation Notice form – give to your immediate supervisor Hennepin County Resignation Notice 2. If you are age 50 or older, Request for Benefits Eligibility Continuation Notification form – send to Benefits

13 Resignation form

14 If required, please attach proof to your form when you submit it. Benefits continuation form

15 Step 3 – Apply for PERA Apply for retirement benefits directly with PERA Go to Go to forms and publications – Retirement toolkit For specific assistance, contact PERA directly.

16 PERA You have 2 PERA forms to complete : Application for PERA Retirement Benefits – send to PERA PERA Termination Verification form – send to Benefits

17 Fill out these lines before sending to Benefits PERA termination verification form

18 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 1 st 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

19 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 – 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.

20 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

21 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

22 Severance When is it paid out? Paid out 2 weeks after last regular paycheck Taxable in the year received

23 Severance Payout possibilities : 1. 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) * 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.

24 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.

25 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 with amount to defer

26 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 with amount to defer

27 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

28 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)

29 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

30 scenario 1 Severance payout– scenario 1 John Doe – 60 years old, 30 years of service. John has never left county employment. Vacation275 hours Sick482 hours TOTAL757 hours Maximum paid out is 800 hours lifetime Severance x $20/hour = $15,140

31 Severance payout- scenario 2 Vacation275 hours Sick776 hours TOTAL 1051 hours Maximum paid out is 800 hours lifetime Convert to PTO Sick - Frozen776 hours Maximum paid out is 800 hours lifetime PTO (Vacation hours)275 hours Maximum paid out is 480 hours Severance x $20/hour = $21,020

32 Severance payout- scenario 3 Vacation275 hours Sick 1045 hours TOTAL 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 x $20/hour = $21,500 John loses 245 hours

33 Convert to PTO – What happens? Sick leave hour balanc e Newly earned hours each pay period County will pay up to 800 hours lifetime Still available to use for illness/injury

34 Convert to PTO Vacation hours PTO All newly earned hours each pay period County will pay up to 480 hours

35 How to convert to PTO

36 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

37 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.

38 After retirement pay outs Federal Tax State Tax FICAMedicare Tax PERA Severance √√√√ Compensatory time √√√√√ Holiday time √√√√√ Banked Special Leave √√√√√ Stability Pay √√√√√ Deferred severance* √√ * Federal and state tax will be assessed on the total amount of FICA and Medicare tax charged

39 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

40 1% Supplemental Plan You must be totally off the county payroll to receive and severance must be paid. Funds available days after severance is issued. Contact MSRS at msrs.state.mn.us

41 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)

42 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

43 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.

44 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.

45 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

46 Applying for Part B of Medicare – Send form to Benefits for completion

47 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 Early Retiree Health Insurance Program (ERHIP) – Category A

48 Requirement 1 - Age and years of service Age at retirement Full-time equivalent years of county service and olderNot eligible

49 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.

50 Category A 2015 employee cost/month-Standard Single: $75.00 Single + Spouse: $ Single + Child/ren: $ Family: $ employee cost/month-Advantage – FV/NM/HE or HP/PN Single: $41.86 Single + Spouse: $ Single + Child/ren: $ Family: $ employee cost/month-Advantage – HCMC/NorthPoint Single: $8.72 Single + Spouse: $ Single + Child/ren: $ Family: $ Coverage ends on the last day of the month of your 65 th birthday

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52 Health insurance continuation Category B You don’t qualify for Category A but do qualify for a PERA pension and are under age employee cost/month - Standard Single: $ Single + Spouse: $ Single + Child/ren: $ Family: $ employee cost/month – Advantage – FV/NM/HE or HP/PN Single: $ Single + Spouse: $ Single + Child/ren: $ Family: $ employee cost/month-Advantage – HCMC/NorthPoint Single: $ Single + Spouse: $ Single + Child/ren: $ Family: $ Coverage ends on the last day of the month of your 65 th birthday

53 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 - $ per month Part D Prescription drug coverage Not Medicare, but Medicare-approved Private Drug Plan companies

54 Remember When you are retired, you are covered until the end of the month of your 65 th birthday Example: 65 th 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

55 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 - $ Freedom Plan 2 - $212.60

56 Part D coverage – “Donut hole” Applies to all individual Medicare plans 2015Definition Annual deductible$320 Initial coverage limit$2,960Prescription drug costs from $320 to $2,960: Plan pays 75% Coverage gap – “donut hole” $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 coverageBegins after $6,680 in total prescription drug costs Catastrophic coverage cost- sharing You pay $2.65 per generic/ $6.60 per brand OR 5% whichever is higher

57 Freedom Plan HealthPartners will send materials to you 3 months prior to your 65 th birthday. If you are working past age 65 and want to enroll, call HealthPartners at Enroll in Parts A and B of Medicare 3 months prior to your 65 th birthday Send your enrollment to HealthPartners not more than 3 months before the effective date

58 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

59 HealthPartners Freedom Plan Premiums for Freedom Plan are sent directly to HealthPartners Go to healthpartners.com/hennepin for details or call HealthPartners at  Our plan is not the same as the HealthPartners individual supplement plans

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61 Other options for coverage Retired and age 65+ For assistance finding an individual plan-

62 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 - $ per month Advantage - $ per month OR $608.53

63 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.

64 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

65 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 ‾ OR eidebailly.com/hennepin

66 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 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.

67 Important to know - APEX

68 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

69 Eide Bailly Home pag e

70 The county processes your final payroll APEX file gives Eide Bailly the demographic & benefit information Eide Bailly sends a packet with information on how to elect to continue any benefits Retiree completes & sends the election form with payment through the current month Eide Bailly sends a Welcome Letter with yearly coupons & login information for the website Future payments are due on the 1 st of the month with a 30 day grace period Eide Bailly process Moving from active to retiree coverage

71 Notifying Eide Bailly of changes Address, phone, changes  Send them in writing to: Faxed to Mailed to 808 Nicollet Mall, #1350, Minneapolis MN 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

72 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 1 st 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

73 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

74 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

75 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

76 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

77 How to save money after retirement Enrolled in PreferredOne Use the Be Well Clinic for office visits - $0 copay through PreferredOne th Avenue South Six exam rooms Chiropractic Acupuncture Full pharmacy

78 How to save money after retirement HealthWorks is located in the Be Well Center on the southwest street level (7 th Street side) of the Government Center Health coaching 2 computer kiosks Employee Assistance Use Fitness Advantage - gym discount

79 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 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.

80 Retirement process - REVIEW Complete the PERA application. If you need assistance, call PERA at Send completed form to PERA at: 60 Empire Drive Suite 200 St Paul, MN Your first pension check will come on the 15 th 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 23 rd of the month prior to leaving.

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82 County resources Website tools – Retirement Preparation HR Service Center at or

83 Retirement Staff in Benefits can only offer general information about retirement and can not provide advice or counsel

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