Guide to Retirement

Congratulations on your upcoming retirement from Penn State! The Employee Benefits Division would like to provide you with the most current information for a smooth transition into retirement and outline your benefits that you may retain upon your retirement. We have prepared the following resources in an effort to help you understand the benefits you have after retirement, as well as alleviate some of the uncertainty during this important decision-making process. 

Retirement Resources
Retiree Kit 65+ and Medicare Disability Info & Forms Additional Resources
2018 Rates Retiring and Medicare-eligible Checklist Retiree Summary Plan Document
Frequently Asked Questions Freedom Blue Informational Packet Phased Retirement Policy
Retiree Programs & Privileges  2018 Freedom Blue Summary of Benefits Phased Retirement Application
COBRA Rates for Dental and Vision Freedom Blue Application  
Highmark Freedom Blue 1-866-918-5285 Request for Employment Information CMS-L564 (for retirees already over the age of 65) Lifetime Benefit Solutions
Stepping Stones: By Matt Kaplan   2018 Highmark Freedom Blue Network Sharing Highmark Freedom Blue for Non-Members: 1-866-456-7739; Reference Code: 18FB8428
Non-Medicare Summary of Benefits
2018 PPO Summary of Benefits
2018 PPO Savings Summary of Benefits
Aetna Concierge Team: 1-855-878-4197

Active employees, also have the ability to utilize Penn State's Employee Assistance Program, HealthAdvocate, to have them help review your specific options.

Medicare Basics Flyer by HealthAdvocate.

Retirement Process

Step 1: Review Income

Employees should start by meeting with a retirement planning specialist from TIAA or SERS to review income projections and income options. Many facing retirement underestimate their net retirement income by overlooking items currently deducted from their paycheck that will no longer be withheld in retirement.

Taking these withholding items into account can significantly increase an employee’s projected spendable income. For instance, in retirement, employees will no longer have Social Security and Medicare taxes withheld from their retirement checks.

In addition, the following will not be withheld from retirement checks:

  • Unemployment Insurance
  • Long-Term Disability (if currently participate)
  • Parking
  • SERS or TIAA Monthly Contribution
  • Life Insurance (if currently participate)
  • State & Local Tax

Step 2: Review Personal Information in Workday

Employees should review their covered eligible dependents, as well as benefits in which they are currently, enrolled to determine if those benefits are applicable after retirement. You should also ensure your time and attendance is up to date.

If you were hired prior to January 1, 2010 you are eligible to retire with medical benefits if:

  • At least 60 years of age you have 15 years of continuous full-time service in addition to being enrolled in a Penn State sponsored medical plan for 15 years immediately preceding retirement.
  • Eligible at any age if you have 25 years of regular full-time service and have been enrolled for the past 10 years in a Penn State sponsored medical plan immediately preceding retirement.
  • Enrollment in the Penn State sponsored medical plan is either as the primary subscriber or via a spouse as a dependent.

If you were hired after January 1, 2010 you are eligible to access your Retirement Health Savings Account if:

  • At age 60, you have completed 25 years of continuous full-time service immediately preceding retirement.
  • At age 65, you have completed 15 years of continuous full-time service immediately preceding retirement.

Employees and their eligible dependents are automatically enrolled in the retiree medical plan, if they meet the eligibility requirements to retire with medical benefits. No additional forms are necessary to enroll, unless

  • The employee is Medicare eligible and/or spouse is Medicare eligible
  • The employee is changing their family status, examples include going from Retiree Only coverage to Retiree and Spouse or going from Family coverage to Retiree Only
  • The employee wishes to refuse medical coverage into retirement.  Retirees who refuse coverage will not be able to re-enroll at a later date.

Step 3: Retiring and Medicare Eligible Benefits Enrollment Process

If you and/or your spouse are Medicare eligible, you should begin this process 3 months prior to your retirement. You and/or your spouse will need to be enrolled both parts A and B of Medicare effective the first of the month following your retirement, in order to transition into the Freedom Blue PPO plan through the University. 

1. Apply for Medicare Parts A and B by contacting your local Social Security Office.

The Social Security office will need the Request for Employment Information form, CMS-L564E, completed ONLY if you are older than 65 years and four months. If you are applying for Social Security three months prior to turning 65, or three months after turning 65, you are considered in your Special Enrollment period and this form is not necessary.

  • Complete a Request for Employment Information form, CMS-L564, for Social Security.
  • Request for Employment Information forms are available above in the reference chart or can be obtained from medicare.gov by searching for “Request for Employment Information” or “CMS-L564” under forms.
  • Complete Section A - Applicant Name, PSU Employee Name, Social Security Number
  • Send Request for Employment Information form to Penn State Employee Benefits to complete Section B. We are located at Penn State Employee Benefits, The 331 Building, Suite 136, University Park, PA 16802
  • Be sure to let us know how to return the completed form to you, either Intercampus Mail or the US Postal Mail and provide a return address
  • Submit the completed Request for Employment Information form to the local Social Security Office.

2. Once you confirm your Part A and Part B effective date, complete a Freedom Blue application and return it to Penn State Employee Benefits.

Failure to follow the process outlined could result in a disruption of your medical coverage. This process must be followed PRIOR to your retirement date to ensure your continued coverage

Your unit will initiate your separation electronically upon your retirement; your record will be updated to “retired” status. Your medical plan will be updated only after we receive your completed Freedom Blue Application.

Step 4: Retirees who have spouse as an active Penn State employee

Retirees who carry a spouse who will remain actively employed by Penn State, will need to remove their spouse from their benefits as per Penn State policy, retirees must be covered via retiree medical benefits and active employees must be covered under the active employee coverage. Prior to retiring, you will need to log into Workday and request to remove spouse upon your retirement. While your spouse also logs into Workday to request enrollment in the Penn State active plan.

Note: Active spouses can add the retiring employee to dental and vision.

Medical Coverage

As a benefits-eligible, non-Medicare- eligible retiree, what health plan options do I have? 

You have the choice of either the PPO Savings Plan or the PPO Plan. You may choose to keep the same plan in which you are currently enrolled into retirement, or you have the ability to switch plans at the time you retire. 

As long as YOU, the retiree, are not eligible for Medicare, you could participate in the PPO Savings Plan with the Health Savings Account (HSA). Your contributions to the HSA as a retiree will be made through the HSA vendor website. The triple-tax savings would be accounted for on your taxes and should be discussed with your accountant/tax advisor. 

If you want to remain in the same plan in which you are currently enrolled as a non-Medicare eligible retiree, you need take no action when you retire. If you want to change plans at that time, log into Workday and request the plan change prior to your retirement. 

As a benefits-eligible, and Medicare-eligible retiree, what health plan options do I have?

If you or your spouse are already or will be eligible for Medicare, you need to contact your local Social Security office three (3) months prior to your retirement. 

You and/or your spouse will need to be enrolled both parts A and B of Medicare effective the first of the month following your retirement, in order to transition into the Freedom Blue PPO plan through the University.  The Social Security office will need the Request for Employment Information form, CMS-L564E, completed ONLY if you are older than 65 years and four months. If you are applying for Social Security three months prior to turning 65, or three months after turning 65, you are considered in your Special Enrollment period and this form is not necessary.

After you or your spouse are successfully enrolled in parts A and B, you will need to complete a Freedom Blue PPO application PRIOR to your retirement. If you have questions pertaining to how Freedom Blue will cover specific services or regarding the prescription coverage, please call the non-member line at 1-866-546-7739 seven days a week, from 8 a.m. to 8 p.m. with REFERENCE CODE: 18FB8428

If you are retiring at the age of 65 ½ or older AND enrolled in the PPO Savings

If you are currently enrolled in the PPO Savings plan with the Health Savings Account, plan to retire within the next year, and are age 65 ½ or older, please read and take action as needed regarding a conflict between IRS regulations and Medicare requirements. 

An explanation of the issue and the solution is outlined below:

The issue: Anyone age 65 ½ or older who is enrolled in a qualified high-deductible health plan (PPO Savings plan) with a Health Savings Account (HSA), who retires and enrolls in Medicare Part A, will experience a Medicare-required “look-back period” of 6 months. That “look-back period” overlaps with the timeframe during which you may have had either or both employer and employee contributions made to your HSA. IRS regulations state that an individual cannot receive or contribute to a HSA if covered by Medicare or any other health care insurance. If the individual were to be audited by the IRS, taxes and penalties could apply to the amount contributed to the HSA.

The proposed solution: In order to avoid potential tax issues, you want to STOP YOUR HSA CONTRIBUTIONS so that you have 6 months of NO contributions before you FILE FOR MEDICARE.  For example, if you are retiring as of December 31 of any given year, you need to stop your contributions beginning with the June payroll of that same year.   In order to move into the University-sponsored Medicare plan after you retire, you must first enroll in Medicare parts A and B.  Therefore, you must “file” for Medicare during the month of your retirement, which is December in this example.  Social Security uses the filing date in December as part of the look-back period, which means you need to have NO HSA contributions from June – November.    

Please log into Workday through the Worklion portal to stop, start, or change your HSA contributions.  Any questions relating to Medicare guidelines, please contact your local Social Security office or your tax advisor.

Retiring and Over Age 65-Creditable Prescription Coverage

If you are over the age of 65, you may receive a letter from the Department of Health and Human Services stating “it appears you did not have prescription drug coverage that met Medicare’s minimum standards.”  The letter goes on to indicate you may be subject to a late enrollment penalty.

If you receive this letter, please complete the form and send it back to Highmark. They will adjust their records accordingly to ensure they reflect your credible coverage during the time you were enrolled in a Penn State sponsored medical plan. 

Retiree Billing

We have contracted with Lifetime Benefit Solutions to administer, bill, and collect the health care premiums from all of our retirees who have the Penn State medical benefit.

For new retirees, after your local HR unit updates your status from Active to Retiree, following your retirement, your retiree medical billing information will automatically be sent to Lifetime Benefit Solutions.  Upon receipt of your information, they will generate your first Retiree Bill and send you all the pertinent information to establish automatic payment withdrawal (ACH).  You are not able to initiate this process until your information is transmitted to Lifetime Benefit Solutions. Your first Retiree Bill should come approximately two to three weeks AFTER your retirement.  Payment is due within 60 days of receipt of your first Retiree Bill.

Going forward, you will be billed on a quarterly basis. Your premium payments are due on the 1st day of each calendar quarter and you will have a 60 day grace period.  Premium due dates are: January 1, April 1, July 1 and October 1; your 60 day grace period will begin on the date after the payment due date.

Dental and Vision Coverage

Option 1:

Although dental and vision coverage is not a benefit provided to Penn State retirees, you may choose to continue either or both of those plans under COBRA. The maximum period of coverage under COBRA is 18 months. Employees eligible for COBRA will receive information and payment premium coupons following their qualifying event directly from Lifetime Benefit Solutions, Penn State's COBRA partner. All questions regarding COBRA benefits after an individual is enrolled in COBRA should be directed to Lifetime Benefit Solutions at (800) 828-0078.

Option 2:

Retirees can take advantage of a FREE vision discount program available through Davis Vision. Enjoy discounts on eyeglasses, accessories, and examinations. Simply present the card at a participating Davis Vision provider.

Davis Vision discount pricing is available to anyone enrolled in a Highmark medical plan. See our guide for how to access the Davis Vision Member Portal.       

Option 3:

Pennsylvania Association of Retired State Employees (PARSE) is available for additional dental and vision benefits after COBRA benefits end, if elected at time of retirement. For more information on PARSE, please visit their website.

Option 4:

If your spouse is an active Penn State employee, they may cover you and eligible dependents under their Dental and Vision plan, which may be more cost effective than electing COBRA. If this is the case, please contact Employee Benefits.

Additional Benefits - All Retireess who meet the years of service requirements (as outlined in Policy HR54)

Life

  • For employees hired on or before April 30, 1954: $10,000 life insurance policy will be provided to you after retirement.
  • For employees hired on or after May 1, 1954: A $5,000 life insurance benefit will be provided to you after retirement at no cost.

Please review your beneficiary designation in Workday.

Voluntary Life

Voluntary life insurance (beyond the $5,000 at no cost) will end upon retirement, unless you convert to an individual policy.  You must complete and return the UNUM conversion form within 31 days of your retirement date.

To obtain an application, please contact UNUM at (866-220-8460).

Long-Term Disability

Long-Term Disability coverage ends upon retirement. However, if you begin working elsewhere after retiring from the University, you may convert your coverage to an individual policy within 31 days following your retirement.

To obtain an application, please contact UNUM at (866-220-8460).

Accidental Death and Dismemberment

Accidental Death and Dismemberment (AD&D) coverage will end upon retirement, unless you convert to an individual policy. You must complete and return the conversion form within 31 days of your retirement date to the Hartford address listed on the form.

To obtain an application, please contact UNUM at (866-220-8460).

Physical Activity Programs

Highmark Blue Shield offers a variety of online programs; non-Medicare eligible retirees can contact Highmark at (800) 914-4384 and Medicare-eligible retirees can contact Highmark at (866) 918-5285. Their website is also a valuable resource, at highmarkblueshield.com.

Silver Sneakers is one of the nation’s leading exercise programs designed exclusively for older adults. It is a unique physical activity, lifestyle, and social-oriented health and wellness program specifically designed for Medicare-eligible members of all fitness levels. Freedom Blue PPO members receive a complimentary membership at a participating fitness center, plus access to any participating location across the United States. Members have free access to all amenities included with a basic fitness center membership. Members, who live more than 15 miles from a participating center, can still take advantage of the Silver Sneakers Steps self-directed walking and physical activity program. To learn more or to locate a participating provider, visit the SilverSneakers website.

Retiree ID Card

In accordance with HR102, all retirees will be required to surrender their active Faculty/Staff id+ card to their department supervisor. Retirees who meet the years of service requirement are eligible to obtain a new Retiree id+ card after their official retirement date.  For more information, please visit Penn State id+ website.

Educational Benefits

Educational privileges are available to retirees able to retire from the University, as outlined in Policy HR54.  The grant-in-aid is for 75% of the tuition charge and applies to Penn State resident instruction and continuing education credit courses (See University Policies HR36 and HR37).

Educational privileges are available to a retiree's spouse and unmarried dependent children. A spouse already receiving educational assistance from the University (such as a graduate assistantship) is not eligible for the grant-in-aid.

A completed Application for Dependent Grant-In-Aid form must be submitted to the Employee Benefits Division in order for the tuition discount to be applied for spouses or unmarried children.  No forms are necessary for retirees.

Retiree Healthcare Savings Account, employees Hired AFTER January 2010

For anyone who was hired after January 2010,  the university will contribute $144 monthly into a Retiree Savings Account, administered by TIAA, to help pay for qualified medical expenses in retirement. Funds can be used to purchase health insurance and other qualified medical expenses for you and your eligible dependents.

Retirement Healthcare Savings Plan Advantages:

  • Money is set aside for your healthcare expenses at retirement while you are working
  • Money accumulated in your account can be used for a variety of healthcare expenses, such as healthcare insurance, co-payments, deductibles and long-term care insurance
  • Healthcare savings plan can be used yourself, spouse and eligible dependents
  • Tax-free growth on any earnings on the contributions Penn State makes on your behalf
  • Tax-free reimbursement of qualified healthcare expenses at retirement
  • On-line access to healthcare savings account, when you meet Penn State’s eligibility retirement qualifications.
  • Check Status of Claims
  • Submit a premium payment to health insurance provider
  • Access health and wellness tools

Retirement Healthcare Savings Plans Fact Sheet

For additional information or questions regarding retirement, please contact HR Services at 814-865-1473 or log an inquiry via the WorkLion portal.