If you’re thinking about retirement, two upcoming changes to the university contribution to retiree health benefits may impact you. In addition, the number of points needed to retire will increase in 2019 and again in 2021. Understanding these changes will help you make the best decision about when to retire and how to budget for health care.
These changes are part of a series of gradual adjustments that began in 2013 to support the long-term sustainability of the U-M benefit programs.
Slight Health Plan Cost Increase for New Retirees in 2019
The university shares the cost of health benefits with eligible faculty and staff and retirees. The retiree portion of the cost will go up slightly for new retirees in 2019. The same percentage adjustment in 2017 increased costs as follows, depending on plan and Medicare status:
- $10-14 per month for single coverage
- $29-42 per month for two-person coverage
- $53-63 per month for family coverage
Note: These figures are based on past experience and provide no guarantee of future benefit plan rates. Rates are subject to change.
Keep in mind that if you retire before age 62 and your date of service is on or after July 1, 1988, there is no university contribution toward your benefits until age 62. You will pay the full cost of your benefits through the month you turn 62.
Years of Service Will Impact Costs for New Retirees in 2021
In 2021, the retiree portion of the cost of health benefits will begin to take years of service into account. The cost will go up for new retirees who have less than 20 years of service, with a sliding scale between 10 and 20 years.
The change will be largest for those with less service. If you will retire with 20 or more years of service, this change will not impact you.
Points Needed to Retire Increases in 2019 and 2021
In addition to these cost changes, the number of points needed to retire will increase in 2019 and again in 2021. Points toward retirement are calculated by adding your age plus your years of continuous eligible service at U-M. Starting in 2019, you will need 79 points to retire, and in 2021 and later, you will need 80 points to retire.
Putting It All Together
|Year of Retirement||Points Needed to Retire||Years of Service||Retiree Share of Health Plan Cost (Your Coverage)*||University Share of Health Plan Cost (Your Coverage)*||Retiree Share of Health Plan Cost (Dependent Coverage)*||University Share of Health Plan Cost (Dependent Coverage)*|
|2018||78||10 or more||17.5%||82.5%||45%||55%|
|2019||79||10 or more||20%||80%||50%||50%|
|2020||79||10 or more||20%||80%||50%||50%|
|2021 or later||80||10 or 11||60%||40%||75%||25%|
|2021 or later||80||12 or 13||52%||48%||70%||30%|
|2021 or later||80||14 or 15||44%||56%||65%||35%|
|2021 or later||80||16 or 17||36%||64%||60%||40%|
|2021 or later||80||18 or 19||28%||72%||55%||45%|
|2021 or later||80||20 or more||20%||80%||50%||50%|
*Approximate; actual costs vary by plan choice, Medicare status and coverage level. Assumes date of hire before 2013. If you were hired in 2013 or later, the same rules will apply starting in 2021, but the maximum university contribution you can receive will be lower.
Look Ahead and Plan for Your Retirement
To get an idea of what the retiree health plan options cost today, browse rate charts under U-M Retiree Health Plans.
If you’re thinking of retiring before 2021 due to the change in health care contributions, carefully weigh any financial trade-offs involved. These may include less time contributing to retirement accounts and Social Security, which will then have to cover a longer retirement period.