- Health Benefits Advisor
Retiree Health Benefits
Retirement does not always mean a loss of group health benefits. Even though employers are not required to provide retiree health benefits, under some group health plans health coverage is carried over to retirement. Such benefits can be invaluable to retirees and their families. But there are considerations which you should keep in mind about retiree group health plans.
To understand the terms of retiree group health benefits, you should review the SPD (summary plan description) of the plan. The SPD that was in effect when you retired is usually the controlling document. You should save a copy of it. There are also other plan documents which outline how your health plan is operated, such as the collective bargaining agreement or the insurance contract, if applicable. You should request copies of such documents from the plan administrators and review those as well.
In reviewing the plan documents, you should consider many of the same factors that you considered important prior to retirement, i.e., benefit levels, cost of coverage, deductible amounts, co-payments, exclusions, limitations in benefits, etc. In addition, you should see whether the plan promises that health benefits after retirement will continue at a specified level for a certain period of time. If a specific promise is made, you should look for language that gives your former employer the right to change or terminate that specific promise. Generally, the employer (plan sponsor), plan administrator or other designated persons may amend the plan at any time. If your employer has reserved the right in the SPD or other controlling plan documents to change the terms of the plan, you may lose coverage at any time during your retirement. Generally, if your employer made a clear promise to provide you with specific health care benefits for a definite amount of time or for life, and did not reserve the right to change the plan, then you should be covered. For more information, see Can the Retiree Health Benefits Provided by Your Employer be Cut?
You should also keep in mind that if after you retire with retiree group health coverage and your former employer files for bankruptcy which results in a termination of your retiree group health coverage, you and your family members (who were covered under the retiree group health plan) may have a right to elect COBRA continuation coverage as a result. The decision to elect COBRA continuation coverage may affect the rights of you and your family to future health care benefits or coverage that you may obtain outside of employment. Therefore, additional information should be considered before you decide to elect COBRA continuation coverage. For more information, see Deciding Whether to Elect COBRA Health Care Continuation Coverage After Enactment of HIPAA.
Depending on your circumstances, you and your family members may have health care options available other than a retiree group health plan, including coverage through a plan sponsored by your spouse's employer, employee organization (such as a union), or both.
In choosing among the options available to you, you should review the SPD for each available group health plan to determine which plan best meets your needs. You should also review and compare the information on the other coverages for which you are eligible. In making your decision, you may want to consider such things as:
- Any waiting period (or affiliation period) imposed under the plans;
- Types of benefits offered (Is dependent coverage available? Do the benefits cover your family's medical needs?);
- Cost of coverage (premiums, co-payments and deductibles for prescription drugs and doctor visits);
- Limitations on coverage (annual or lifetime dollar limits, visit limits, pre-existing condition exclusion periods, prescription drug coverage limits or limits on the availability of doctors and hospitals); and
- Any exclusions from coverage (treatments, procedures, conditions or prescription drugs).
Whatever coverage you choose, you should try to avoid incurring a significant break in health coverage, especially if you or a family member has a medical condition that requires regular medical attention. A significant break in coverage is a period of 63 consecutive days (longer in some states) during which you have no health coverage. Depending on the circumstances, avoiding a significant break in coverage may help you and your family shorten or eliminate any pre-existing condition exclusion period or to qualify for certain coverage with special protections described under other health coverage.