Graded Premium Subsidy Guide

The graded premium subsidy benefit applies to State of Michigan employees who began state employment between March 31, 1997 and Dec. 31, 2011, and did not choose 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 27 or more years of earned service at retirement, you will be eligible for the maximum subsidy allowed by law.
• If you have 10 or more but less than 27 years of earned service at retirement, a graded subsidy will apply. With 10 YOS, your subsidy will be 30% of the premium. The subsidy will increase by an additional 3% of the premium for each additional YOS, up to the maximum subsidy allowed by law.

Health Insurance Subsidy Amounts

Retirement eligibility

As a State of Michigan employee in the Defined Contribution (DC) Plan, you are eligible for state-sponsored health, prescription drug, dental, and vision insurances upon terminating employment if you’re vested with the equivalent of 10 years of full-time service and have met age and service requirements. You, your spouse, and your eligible dependents have the option of enrolling in retiree group insurance plans.

If you leave state employment before you meet age and service requirements, you are deferred and can enroll in the retirement system’s insurance benefits at age 60.

Begin by looking at the Michigan Office of Retirement Services (ORS) retiree insurance options. 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. This information is updated regularly so be sure to review it when you’re close to retiring.

• The Insurance Option Sheet (R0423GH) outlines the insurance options available to participants. You’ll find links to the health, prescription drug, dental, and vision retiree health insurance plans. For detailed plan information, contact the insurance carrier directly.
• The Retiree Insurance Rates (R0749G) 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.
• The Retiree Information page on the Michigan Civil Service Commission website provides links to all plan descriptions and rates for health, dental, and vision insurance for DC Plan retirees.
• 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 ORS retiree insurance, ORS will bill you for the cost of 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 your 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. 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 outside the retirement system.
• 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.