Cost of Retiree Benefits

If you are eligible to retire with benefits, the university continues to pay a significant portion of the cost of your benefits. You may be eligible to continue health, prescription drug, dental, vision, legal, and life insurance coverage in retirement. Retirees pay the same premiums as employees for most benefits except the U-M health plans. You are responsible for any premium costs above the university contribution for yourself and your dependents as well as any out-of-pocket costs under your health plan.

The Estimated Retirement Eligibility Date program on Wolverine Access provides the percentage of the university contribution in effect for your estimated retirement eligibility date, or you can view retiree health plan rate charts.

University Contribution to Retiree Health Benefits

The university contribution for retiree health benefits is based on the average premium cost of the two least expensive health plans, weighted by enrollment. Your service date, age, and retirement date determine the maximum university contribution you are eligible to receive. Your choice of health plan, Medicare status, and coverage level also impact your costs. If you retire before age 62 and your date of service is on or after July 1, 1988, you will pay the full cost of all benefit plans through the month you turn age 62. If you retire under age 62, you may also choose not to pay for coverage because there is no university contribution until age 62. University retiree health plan coverage may be reinstated at age 62, provided you have maintained employer group health plan coverage through another source. For answers to questions about benefits and retirement, call the SSC Contact Center at 5-2000 from the Ann Arbor campus, (734) 615-2000 locally, or (866) 647-7657 toll free, Monday through Friday from 8 a.m. to 5 p.m. Be sure to have your UMID number available when you call.

Service Date Before July 1, 1988

If your service date is before July 1, 1988, you will receive the university contribution upon retirement regardless of your age at retirement.
Service Date On or After July 1, 1988

If your service date is on or after July 1, 1988, you may be eligible to receive a university contribution towards benefits beginning with the 1st of the month following your 62nd birthday.

Examples: Service Date

Janice is hired on 5/3/1986 as a Research Fellow. She becomes an Assistant Professor on 9/1/1989. Although her date of hire is previous to 7/1/1988, her date of service to accrue eligibility to retire with benefits is 9/1/1989 since a Research Fellow is not eligible to accrue service to retire. Janice would need to pay the full cost of benefits until age 62 if she were to retire prior to age 62.

John began to accrue service to retire with benefits after 7/1/1988. He retires but is under age 62 and needs to pay the full cost of benefits until he reaches age 62. John chooses not to pay the premium to continue the U-M retiree benefits. He transfers onto coverage through his spouse who has comparable health plan coverage at another employer. John may have his U-M retiree benefits reinstated at age 62 provided he had continuous group employer health plan coverage from the time of retirement until age 62.
Service Date Before 2013
If your service date is on or after July 1, 1988 and before January 1, 2013, and you are age 62 or older when you retire, the university contribution for retiree health benefits will be set by the year in which you retire from the university.

Retirement in 2019 or 2020: 80% university contribution (50% for dependents)

Retirement on or after January 1, 2021: maximum 80% university contribution (maximum 50% for dependents), based on years of service
View the university contribution toward retiree health benefits for retirement on or after January 1, 2021.

Understanding these changes will help you make the best decision about when to retire and how to budget for health care. If you are eligible and thinking of retiring before 2021 due to the change in health care contributions, carefully weigh any financial trade-offs involved. As a courtesy reminder, the University of Michigan Benefits Office sent communications to faculty and staff who may be eligible to retire. Review the letter sent to eligible employees.

If you retire under age 62 you will pay the full cost of benefits through the month you turn 62.
Service Date Before 2013 and Retire in 2021 or Later
If your service date is before January 1, 2013, and you retire on or after January 1, 2021, the university contribution for retiree health benefits will be based on years of service at retirement, in addition to the requirement of 80 points to be eligible to retire. View the health plan rates if you retire on or after January 1, 2021.

At least 10 but less than 12 years of eligible service: 40% university contribution (25% for dependents)

At least 12 but less than 14 years of eligible service: 48% university contribution (30% for dependents)

At least 14 but less than 16 years of eligible service: 56% university contribution (35% for dependents)

At least 16 but less than 18 years of eligible service: 64% university contribution (40% for dependents)

At least 18 but less than 20 years of eligible service: 72% university contribution (45% for dependents)

20 or more years of eligible service: 80% university contribution (50% for dependents)

If you retire under age 62 and you have a date of service on or after July 1, 1988, you will pay the full cost of benefits through the month you turn 62 in addition to the above schedule.

View the university contribution toward retiree health benefits for retirement on or after January 1, 2021.

Examples: University Contribution Based on Years of Service

Pam was hired on October 1, 2001 at age 40 as an administrative assistant working full time. She retires with benefits on October 1, 2021 since she accumulated the necessary 80 points (she will be age 60 and have 20 years of service) assuming she always worked full time in a job title eligible to accrue service to retire. Pam will need to pay 100% of the premiums for all benefit plans until age 62 since her date of service is after July 1, 1988 and she retired under age 62. Once Pam reaches age 62, the university contribution toward her health care will be the maximum of 80% since she accumulated 20 years of eligible service.

Karen is age 60 and is hired on March 1, 2011 as a manager working full time. Karen retires with benefits on March 1, 2021 since she accumulated the necessary 80 points (she will be age 70 and have 10 years of service) assuming she always worked full time in an eligible job title. The university contribution toward Karen’s retiree health care will be 40% since she only has 10 years of service at retirement.
Service Date During or After 2013
The maximum university contribution for health benefits for faculty and staff with a date of service on or after January 1, 2013 will be 68% for the retiree and 26% for the dependent until the end of 2020.

If your service date is on or after January 1, 2013, and you retire on or after January 1, 2021, the university contribution for retiree health benefits will be based on years of service at retirement as follows, in addition to the requirement of 80 points to be eligible to retire.

At least 10 but less than 12 years of eligible service: 34% university contribution (13% for dependents)

At least 12 but less than 14 years of eligible service: 40.8% university contribution (15.6% for dependents)

At least 14 but less than 16 years of eligible service: 47.6% university contribution (18.2% for dependents)

At least 16 but less than 18 years of eligible service: 54.4% university contribution (20.8% for dependents)

At least 18 but less than 20 years of eligible service: 61.2% university contribution (20.8% for dependents)

20 or more years of eligible service: 68% university contribution (26% for dependents)

If you retire under age 62 you will pay the full cost of benefits through the month you turn 62 in addition to the above schedule.

View the university contribution toward retiree health benefits for retirement on or after January 1, 2021

Examples: University Contribution Based on Years of Service

John is age 60 and is hired on March 1, 2013 as an accountant working full time. John retires with benefits on March 1, 2023 since he accumulated the necessary 80 points (he will be age 70 and have 10 years of service) assuming he always worked full time in an eligible job title. The university contribution toward John’s retiree health care will be 34%. John would need to work until March 1, 2033 in order to accumulate the necessary 20 years of service for the university to contribute the maximum university contribution of 68%.

Pam was hired on October 1, 2015 at age 40 as an administrative assistant working full time. Pam retires with benefits on October 1, 2035 since she accumulated the necessary 80 points (she will be age 60 and have 20 years of service) assuming she always worked full time in an eligible job title. Pam will need to pay for all benefit premiums until age 62. Once Pam reaches age 62 as a retiree, the university contribution toward her retiree health care will be 68%.

Questions About Your Benefits?

Submit your questions to the SSC Contact Center. You can also call the SSC at 5-2000 from the Ann Arbor campus, (734) 615-2000 locally, or (866) 647-7657 toll free, Monday through Friday from 8 a.m. to 1 p.m. and 2 p.m. to 5 p.m..

Limitations

The University of Michigan in its sole discretion may modify, amend, or terminate the benefits provided with respect to any individual receiving benefits, including active employees, retirees, and their dependents. Although the university has elected to provide these benefits this year, no individual has a vested right to any of the benefits provided. Nothing in these materials gives any individual the right to continued benefits beyond the time the university modifies, amends, or terminates the benefit. Anyone seeking or accepting any of the benefits provided will be deemed to have accepted the terms of the benefits programs and the university's right to modify, amend, or terminate them. Every effort has been made to ensure the accuracy of the benefits information in this site. However, if any provision on the benefits plans is unclear or ambiguous, the Benefits Office reserves the right to interpret the plan and resolve the problem. If any inconsistency exists between this site and the written plans or contracts, the actual provisions of each benefit plan will govern.

Cost of Retiree Benefits

University Contribution to Retiree Health Benefits

Examples: Service Date

Examples: University Contribution Based on Years of Service

Questions About Your Benefits?

Limitations

Benefits Office

Thinking About Working as a Temp at U-M After Retirement?

Your Benefits and Medicare

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