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 were hired on or before Dec. 31, 2011, and you have at least 10 years of service (YOS) when you first terminate employment, the PHF provides an additional one-time employer contribution to your 401(k) Plan account. The amount of the additional contribution will be based on your YOS, the value of your retiree health benefits as of March 31, 2012, and an annual interest adjustment based on the medical care component of the Consumer Price Index (not to exceed 4%). To get 100% of the calculated amount, you must be at least age 60 with 10 YOS or at least age 55 with 30 YOS when you first leave employment.
If you have at least 10 YOS but don’t meet the age requirements when you first leave employment, you’ll receive 50% of the calculated amount. If you have less than 10 YOS, you will not be eligible for any portion of the amount. The additional contribution will be distributed to your 401(k) Plan account. However, if the contribution amount causes you to exceed the IRS limits, the amount in excess of the limits will be placed in your 457 account, and any remaining amount above the 457 Plan limit will be available to you in a Health Reimbursement Account (HRA). Annual interest will be applied to the lump-sum contribution.
If you were hired on or after Jan. 1, 2012, and you have at least 10 YOS when you first terminate employment, the PHF provides an additional one-time employer contribution into an HRA. If you are 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 are younger than age 60, you will be eligible for a $1,000 contribution to an HRA with no annual interest.
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 after tax Roth 401(k) plans.
The Retiree Insurance Rates (R0749G) form provides the insurance rates for retirees with the PHF.
As a State of Michigan employee in the Defined Contribution (DC) Plan, you may be 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.
|
Position |
Age and Service Requirement |
|
Regular State Employee (Classified and unclassified service not otherwise listed) |
Age 60 with 10 years of service Age 55 with 30 years of service |
|
Covered Employees (Employees in covered positions responsible for the |
Age 56 with 10 years of covered service Age 51 with 25 years of covered service The 3 years immediately before termination must be in a covered position |
|
Conservation Officers |
Any age with 25 years of service You must have 23 years as a conservation officer, and |
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.
Let’s 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.
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.
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 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.
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.
