FAQ on retiree health
What are UC’s retiree health benefits and why should I care about them?
When you retire, you may be eligible to keep your UC benefits, such as medical, dental, vision, legal and AD&D insurance.
Depending on the age at which you retire and how many years of UC service you have, the university currently pays from 5% to 100% of these benefits for the rest of your life.
Also, when you become eligible for Medicare, if UC’s contribution to your plan is greater than the premium, UC reimburses you each month for a portion of your mandatory Medicare premium. That reimbursement can be from a few dollars to over $300, essentially raising your income in retirement. As you can see, all of this amounts to a very valuable benefit.
What will my retiree health benefits cost?
The cost ranges from $0 per month for the most basic “core” plans for single people, to thousands per month for more robust medical plans covering more family members (see , for example). Each year, UC has increased the employee cost. Figuring out exactly what your retiree health benefits will cost can be very challenging because there are many different factors that affect the cost, including the plan chosen, and how many years of service you have.
As a UC employee, I already pay for parking, pension and health care. Why should I pay more?
UC promises employees retiree health benefits, but sets aside no money for those benefits. That is why UC can unilaterally cut or even end them.
Because there are no employee contributions, there are no guarantees and UC can slash benefits whenever it wants, and has done so regularly in the past two decades. If employees plan ahead with a modest contribution to a retiree health benefits fund (more on that below), we will be “co-owners” of the UC retiree health system and be able to afford health care that is, at least in part, guaranteed when we retire.
The current suggested contribution if we establish a Retiree Health Care Fund would amount to $10 per month for an employee making $4000 per month.
What does bargaining for a retiree health benefit trust fund mean?
Right now, UC has no fund to pay retiree health benefits and covers the cost out of its current operating income. This is a lot like not having a pension fund and expecting to pay for it after you retire.
Not surprisingly, this lack of pre-funding means that management has been trying to cut or eliminate these benefits for nearly every UC retiree under 65.
However, if UC retiree health benefits are pre-funded through contributions, and the savings are institutionally invested, the returns may outpace the contributions and provide a significant resource to offset health care costs for UC retirees.
Why should I care if I will probably not stay long at UC?
UPTE-CWA has set a goal to bargain retiree health benefits for everyone. Even if you leave the university, you could get UC’s retiree benefits later or receive your contributions back with interest.
Also, if we cannot preserve quality retiree health benefits at the University of California – the state’s second largest employee -- it is unlikely that you will get them at any other job in California in the future.
Retiree health benefits cost more than most of us expect. For those under 65, the monthly premiums will soon exceed $300 for couples. For anyone, just the co-pays can add up to hundreds of dollars a month. These costs can erode 33 to 50 percent of a typical UC pension.
But by planning ahead, these costs can become affordable. If a fund similar to our pension fund were available that accrued investment income, small contributions now could largely offset future health care costs, when we can least afford them. UC has setup such a fund called the Retiree Health Benefit Trust Fund. The problem is that UC hasn’t put any money into it except to pay the ongoing costs of those who are already retired.
If modest contributions were made to the fund by both UC employees and management, the benefits could become an entitlement – that is, they would become guaranteed. The current inadequate benefits program could potentially be eliminated.
Do I have to take my retiree health benefits when I leave the university?
Yes, it is to your advantage to do so. You must claim the benefits within 120 days of your retirement separation date from the university.
If, at the time of your retirement, you have health benefits through another source (a new employer, a partner/spouse, etc.), you are allowed to defer UC’s retiree health benefits by filling out a form with Human Resources. If you take your UC retirement as a lump sum cash out, you lose your retiree health benefits entirely.
Does the Affordable Care Act (ACA), also known as Obamacare, impact our health care?
Not directly. The ACA has provided millions of uninsured with health insurance. That means the public will not be paying as much for emergency care of the uninsured. In addition, the University of California, as a medical provider itself at its 5 teaching hospitals, will not be engaging in as much uncompensated care.
So overall, the ACA will probably bring down costs, but there is no direct impact on coverage for UC employees.
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