The Kern County Retiree Health Supplement Plan opt-out period ends Monday, May 16, 2016. Make sure to fill out your form and turn it in before 5 p.m. that day.
What is the Retiree Health Supplement Plan?
The program provides health benefits for workers who retire between the ages of 50 and 65. The program is funded by contributions from both the employer and employee. When someone retires prior to Medicare age and meets the program criteria, s/he receives a monthly dollar amount to help offset the cost of continuing health coverage through the county.
How is the program funded?
The program is funded in the same way as pensions, with both employee and County contributions. Currently, employee contributions are 2.12% of salary and increases every year as the cost of healthcare benefits increases.
Why are we changing the program?
In practice, the program has not provided the best value to SEIU members for their contributions. In fact, many members leave county employment having contributed thousands and receive nothing in return. Similarly, many members cannot afford to retire early and are forced to work well into their 60’s which results in very little benefit, if any at all, despite having contributed into the program for decades.
Why do some workers contribute to the program and others don’t?
If you enter County employment prior to the age of 45, you are required to contribute into the plan and are eligible to receive the benefit if you meet additional criteria. If you entered county employment on or after the age of 45, you are NOT eligible and DO NOT make any contributions to the plan.
Why do I need to opt out to be reimbursed for my contributions? Can’t I still get reimbursed if I don’t end up using the benefit or if I leave County employment?
No. The program is structured so that you are only eligible to receive the monthly amount after at least 20 years of making contributions into the plan and you must be at least 50 but no greater than 64 when you retire. Once you turn 65 and are eligible for Medicare, the benefit expires and you no longer receive any benefits.
How much money would I get if I opt out?
The county will make a contribution to a Health Reimbursement Arrangement managed by the county when you retire. The amount will depend on how much you have contributed into the Retiree Health Supplement Plan program since payroll period 12-16 (Aug. 11-24, 2012). The amount each employee has contributed varies and depends on years of service, salary, and the corresponding contribution rate for that year. Employees retiring at or after age 70 will not receive a contribution.
What is a Health Reimbursement Arrangement?
A Health Reimbursement Arrangement plan is a flexible spending plan that will allow employees to pay for healthcare cost such as premiums for health insurance, dependent care costs and medical supplies on pre-tax basis.
How much would I get to help me pay for healthcare coverage if I stay in the program and retire early?
It depends on your years of service and the cost of the health plan you choose at the time of your retirement. It is important to note that the monthly amount you receive will be capped at $882.07 while health care plan costs can increase every year. Current costs range from $629/month for a single person on the Kern Legacy Plan to $3101.74/month for a family on the Point of Service (POS) plan. Only the POS and Kaiser plans operate outside of Kern County, so if you plan to move away when you retire, you will only be able to use the POS plan. REMEMBER: in order to qualify for the program, you must have contributed to the program for at least 20 years and all benefits end at age 65 no matter how much you contribute.
What about people who are close to retiring and plan to use this program?
With the voluntary op-out option, employees who are close to retiring and plan to use the program still have option to stay.
If I opt out of the program and then decide to retire early before I become eligible for Medicare, what are my options for healthcare coverage?
With the Affordable Care Act and Covered CA, those who retire prior to reaching Medicare age have other options for health care coverage and you might qualify for federal subsidies based on income level.
How many employees contribute right now to the health supplement program?
Currently 83% of SEIU-represented employees contribute 2.12% of their salary to the program.
How do I know if I should opt out?
Every situation is different. Generally, if you know you will not retire until you reach age 65 or will not have 20 years of service when you retire, you will receive no benefit from remaining in the plan.