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 chose to switch to the PHF in 2012, your 3% healthcare fund contributions were transferred to your 401(k).

If you were hired on or after Sept. 4, 2012, and you have at least 10 years of service (YOS) when you first terminate employment, the PHF provides an additional one-time employer contribution into a Health Reimbursement Account (HRA). If you’re age 60 or older when you first terminate employment, the PHF provides a $2,000 contribution to an HRA with no annual interest. If you’re younger than age 60, you’ll be eligible for a $1,000 contribution to an HRA with no annual interest. You’ll be able to apply for reimbursement of qualified medical expenses through the Michigan Office of Retirement Services (ORS), up to the amount of the credit.

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 457 Plan.

Retirement eligibility

You may qualify to enroll in the retirement system’s insurance plans based on eligibility requirements detailed below.

• Defined Benefit (DB) Plan: You can enroll in the ORS retiree insurance when you’re eligible to retire and apply for your pension. Your eligibility to retire and enroll in the retiree insurance depends on whether you’re in the Member Investment Plan (MIP) or the Basic Plan. (The MIP and Basic Plan are part of the DB Plan.) If you were in the DB Plan and chose to convert to the Defined Contribution (DC) Plan in 2013 or when you had earned 30 YOS, your eligibility to retire also depends on if you were originally a MIP member or a Basic Plan member.
• DC Plan, Pension Plus, or Pension Plus 2 Plan: The earliest you’ll be eligible to retire and enroll in retiree insurance is at age 60 with 10 YOS. If you leave employment before age 60, you won’t be eligible to enroll in retiree insurance.

As a PHF participant, you, your spouse, and your eligible family members may enroll in the ORS retiree insurance plans immediately upon retirement. If you don’t enroll immediately upon retirement, you cannot enroll later. If you disenroll from the plan at any time, you and anyone on your insurance will not be able to reenroll.

This is an unsubsidized insurance plan, meaning you’re responsible for the cost.

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

ORS retiree insurance

Start your planning by reviewing information on ORS retiree plans. Please keep in mind that the healthcare benefits provided in retirement will differ from what you received while employed in the public schools. This information is updated regularly so be sure to review it when you’re close to retiring.

• The Insurance Options Summary (R0379C) form compares the ORS retiree health insurance plans. You’ll find comparisons of Blue Cross Blue Shield of Michigan and participating HMOs, including descriptions of what’s covered, your deductibles and copays. For more detailed plan information, contact the insurance carrier directly.
• The Insurance Information (R0058C) form explains who can be covered on your retiree insurance, how to enroll, how to prove eligibility for coverage, and what to do when you become eligible for Medicare.
• The 2025 Monthly Personal Healthcare Fund Insurance Rates shows the monthly cost for health, dental, and vision insurance plans.
• 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.

Available 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 and vision coverage.

Paying for your coverage. If you’re receiving a pension payment and you enroll in ORS retiree insurance, we will deduct your insurance premiums from your monthly pension payment. If you aren’t eligible for a pension or your pension doesn’t cover the full cost of your insurance premiums, ORS will bill you for your insurance premiums. You can pay online in miAccount or by mail.

Timely insurance application. To ensure there is no lapse in insurance coverage, apply for the ORS retiree insurance at least one month before you want the coverage to start. If you or anyone on your plan is enrolled in Medicare, apply at least two months before you want your coverage to start.

Medicare. Medicare is the federal health insurance program for people who are 65 or older, or otherwise receiving Social Security disability benefits. How Medicare Affects Your Coverage explains timelines for enrolling in the ORS retiree insurance if you or anyone you enroll in your insurance plan will be eligible for Medicare when you retire. 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 are enrolled that you’ll need to provide to ORS when you enroll in an 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 your or your spouse’s employer. If you or your spouse will continue working, consider using insurance through the 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.