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Personal Healthcare Fund Guide

Personal Healthcare Fund Guide

The Personal Healthcare Fund (PHF) is a way for you to save money for your healthcare expenses in retirement with some help from your employer. The PHF is not a separate fund or account. Instead, a portion of the money you and your employer contribute to the State of Michigan 401(k) and 457 Plans is designated as PHF.

If you have at least 10 years of service (YOS) when you first terminate employment, the PHF will provide an additional one-time employer contribution of $2,000 into a Health Reimbursement Account.

When you retire, you’ll be responsible for the full cost of your healthcare insurance. So, it’s important to save for your future healthcare expenses now — while you’re working — by contributing to your pretax 401(k), pretax 457, or Roth 401(k) plans.

Retirement eligibility

You could begin receiving your pension at age 55 with 25 YOS or at age 60 with 10 YOS.

If you stop working as an enlisted officer before you’re old enough to draw your pension, but after you’re vested with 10 or more years of full-time Michigan State Police employment, you’ll be eligible to begin receiving your pension at age 60. If you have 25 YOS, you’ll be eligible at age 55. To remain vested and eligible for your deferred pension, you must leave any personal contributions on account where they will continue to earn interest.

Let’s begin by looking at the retiree insurance options offered by the Michigan Office of Retirement Services (ORS). Then consider some resources for shopping for insurance outside the retirement system.

ORS retiree insurance

Please keep in mind that the healthcare benefits provided in retirement will differ from what you received while employed. Because this information is updated regularly, be sure to review it when you’re close to retiring.

  • The Employee Benefits Division of the Michigan Civil Service Commission negotiates the carriers, coverage, and rates for retirees just as it does for enlisted officers. In addition to the State Health Plan PPO administered by Blue Cross Blue Shield of Michigan (BCBSM), some of the HMOs that offer plans for active employees also offer coverage for retirees. Because these things change fairly frequently, the best way to find out which providers participate, compare coverage, and check premium rates is by going to the Employee Benefits section of the Civil Service website.
  • Clarifying Medicare Benefits, a video from the ORS Ask Our Experts series, explains how Medicare works with your ORS retiree insurance.
  • Insurance Eligibility for Children, another video in the Ask Our Experts series, provides information on retiree insurance eligibility rules for adult children.

Health, dental, and vision coverage. ORS offers health (including prescription drug), dental, and vision insurance. You can enroll in all three, only the health coverage, or only the dental or vision coverage.
Paying for your coverage. If you enroll in the retiree insurance, ORS will deduct the cost of your insurance premiums from your pension payment. If your pension is less than your premium amount, you must pay for the remainder of the premium. ORS will bill you for the remainder of the premium. You can pay online in miAccount or by mail.

Timely insurance application. To ensure there is no lapse in insurance coverage, apply for ORS retiree insurance:

  • at least one month before you want your coverage to start.
  • at least two months before you want your coverage to start if you or anyone on your plan is enrolled in Medicare.

Medicare. Medicare is the federal health insurance program for people who are age 65 or older, or otherwise receiving Social Security disability benefits. If you’ll be eligible for Medicare when you retire, you should contact the Social Security Administration to enroll in both Medicare Part A (hospital) and Part B (medical) three months before your retirement effective date. You’ll get a Medicare number once you’re enrolled that you’ll need to provide to ORS when you enroll in a retirement system insurance plan.

Consider other insurance options

The ORS retiree insurance may not fit your budget or needs so you’ll want to consider other options. If you’ve never shopped for insurance before, the Michigan Department of Insurance and Financial Services website has information that can help you navigate the process. When you’ve narrowed down your choices, use the Health Insurance Plan Comparison Calculator to compare the features of several plans, including the cost of your routine medications, monthly premiums, deductibles, and coinsurance.

  • Employer insurance with you or your spouse’s employer. If you or your spouse will continue working, consider using insurance through that employer.
  • Medicare. When you retire, if you’ll be age 65 or older or qualify for Medicare because of a disability, visit the Medicare website to find health and prescription drug plans and providers who participate with Medicare.
  • Health Insurance Marketplace. Find out what your insurance options are on the Health Insurance Marketplace. See if you qualify for a special enrollment period, Medicaid, or the Children’s Health Insurance Program based on your income.