Insurance Subsidy Eligibility

Glossary of Terms

Delayed Subsidy Graded Premium

Whether or not the state helps cover insurance premium costs, as well as how much is covered, depends on when membership with the Michigan Public School Employees Retirement System began as well as other factors.

Membership Begins Before July 1, 2008 (Basic Plan, MIP Fixed, and MIP Graded members)

If you began working for a Michigan public school reporting unit before July 1, 2008, your eligibility for an insurance premium subsidy depends on if you are an active member or deferred member at the time of your retirement. You may be subject to a delayed subsidy if you initiated a service credit purchase on or after July 1, 2008.

Active member at time of retirement.

If your pension is effective the first of the month after you terminate employment with a Michigan public school, you will go directly from active member status to retiree status.

You will be considered an active member for the purpose of the premium subsidy if you earned one-tenth (0.1) or more years of service in each of the five school fiscal years immediately before your retirement effective date, or at least one-half (0.5) years of service within the two school fiscal years immediately before your retirement effective date (click here for details on how service credit is earned). In either case, you must be employed in the month before your retirement effective date unless the summer birthday provision applies or your employer granted you an unpaid leave of absence due to a mental or physical disability supported by your personal physician.

When you retire, you will become eligible for the maximum premium subsidy allowed by statute as of your retirement effective date (unless you're subject to a delayed premium subsidy). The maximum subsidy is 80 percent beginning January 1, 2013; 90 percent for those Medicare eligible and enrolled in the insurances as of that date.

Deferred member at time of retirement.

If you are deferred - meaning you are vested but leave public school employment before you meet the age requirement for retirement - the amount of the subsidy will depend on when you terminated your public school employment and how many years of credited service you have.

• Terminated after October 31, 1980, with at least 21 years of service. Your subsidy will be 10 percent for each year of credited service you have over 20 years. With 21 years of service, you get 10 percent of the full subsidy. With 25 years the subsidy increases to 50 percent. If you retire with 30 or more years of service, you're entitled to the maximum premium subsidy allowed by statute as of your retirement effective date (unless you're subject to a delayed premium subsidy). The maximum subsidy is 80 percent beginning January 1, 2013; 90 percent for those Medicare eligible and enrolled in the insurances as of that date.
• Terminated after October 31, 1980, with less than 21 years of service. You may enroll for the health, prescription drug, and dental/vision insurance, but you must pay the full premium.
• Terminated on or before October 31, 1980. You're eligible for the maximum premium subsidy allowed by statute as of your retirement effective date. The maximum subsidy is 80 percent beginning January 1, 2013; 90 percent for those Medicare eligible and enrolled in the insurances as of that date.

Delayed insurance subsidy.

If a delayed insurance subsidy applies, your subsidy will begin at age 60 or when you would otherwise be eligible to retire without making the purchase, whichever occurs first. You can still enroll in the health, prescription drug, and dental/vision insurances before your subsidy is available; however you will have to pay the full premium until the premium subsidy begins.

A delayed subsidy will apply if you meet all the following conditions:

• You became a member of the retirement system before July 1, 2008.
• You are applying for full retirement under the MIP 46 with 30 or Basic 55 with 30 provisions or for early reduced retirement (described in Qualifying for Your Pension).
• You initiated a service credit purchase on or after July 1, 2008, that allows you to qualify for your pension earlier than if you did not make the purchase.
• You are not qualifying under a disability or duty-related death provision

 Click here for examples of delayed subsidy situations.

Membership Begins On or After July 1, 2008, but Before July 1, 2010 (MIP Plus members)

If you first began working for a Michigan public school reporting unit on or after July 1, 2008, but before July 1, 2010, your eligibility for the plan's health, prescription drug, and dental/vision insurances can begin as of your retirement effective date. However, the amount the system will pay toward your insurance premiums depends on which provision you are retiring under (see Qualifying for Your Pension).

• MIP 46 with 30. If all of your service credit is earned (not purchased), you will be eligible for the full insurance subsidy as of your retirement effective date. If you have earned at least 25 years of service credit, and have purchased service to reach 30 years of service, you will have a delayed subsidy. The subsidy will begin when either the number of years equal to your purchased time used to qualify has passed, or, if sooner, when you reach age 60. 
• MIP 60 with 10. If, as of your retirement effective date, you have between 10 and 23 total years of service, a graded premium applies. With 10 years of service, a 30 percent subsidy is available. The subsidy increases by an additional 4 percent for each additional year of service.

INSURANCE SUBSIDY RATES MIP 60 with 10
Years	Subsidy	Years	Subsidy	Years	Subsidy
10	30	15	50	20	70
11	34	16	54	21	74
12	38	17	58	22	78
13	42	18	62	23	80
14	46	19	66

 

• MIP 60 with 5. The health insurance premium subsidy is not available to retirees with less than 10 years of service credit.

• Early Reduced Provision . You will qualify for the full premium subsidy if you have at least 25 years of earned (not purchased) service credit as of your retirement effective date. If you have less than 25 years of earned service credit as of your retirement effective date, you will qualify for the graded premium subsidy when you reach age 60 .

Note: Graded Premiums and delayed subsidies do not apply if your pension eligibility is based on a disability or a duty-related death.