Graded Premium Subsidy Guide

The graded premium subsidy benefit applies to Michigan public school employees who began working on or after July 1, 2008, and before Sept. 3, 2012, and did not elect the Personal Healthcare Fund.

The amount of your graded premium subsidy is determined by the number of years you work. The longer you work, the greater your premium subsidy will be, up to the maximum subsidy allowed by law, currently set at 80%.

• If you have less than 10 years of service (YOS), you will not qualify for a graded premium insurance subsidy.
• If you have 23 or more years of earned service at the time of retirement, you will be eligible for the maximum subsidy allowed by law.
• If you have 10 or more but less than 23 years of earned service and are at least 60 years old at the time of retirement, a graded subsidy will apply. With 10 YOS, your subsidy will be 30% of the premium. The subsidy will increase by an additional 4% of the premium for each additional YOS, up to the maximum subsidy allowed by law.

Insurance Subsidy Amounts

Retirement eligibility

As a graded premium subsidy participant, you, your spouse, and your eligible family members may enroll in the retirement system’s insurance plans at retirement.

• Defined Benefit (DB) Plan: You can enroll in the ORS retiree insurance when you’re eligible to retire and apply for your pension. The ORS website explains retirement eligibility for DB members in the MIP Plus 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 is based on DB retirement eligibility.
• Pension Plus: The earliest you’ll be eligible to retire and enroll in retiree insurance is at age 60 with 10 YOS.

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 Graded Premium Subsidy Insurance Rates (R0749C) form provides instructions on how to calculate the monthly cost for health, dental, and vision insurance plans using the amount of your graded subsidy. You can choose to enroll in health, dental, and vision coverages.
• 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.

Eligibility for ORS retiree insurance. If you’re in the Defined Benefit Plan or the Pension Plus Plan, you’ll be eligible to enroll in insurance coverage when you apply for your pension.

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 and vision coverage.

Paying for your coverage. If you enroll in the ORS retiree insurance, we will deduct your insurance premiums from your monthly pension payment. If 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’re 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.