This document describes an enhanced health insurance benefit for faculty who participate in the Tenured Faculty Early Retirement Incentive Program. The existing benefit is summarized first, to provide basic facts and figures for comparison.
The Existing “Unenhanced” Benefit
The standard health insurance benefit for retiring members of the faculty has two phases. The first phase covers those retiring before the age of 65. Such retirees younger than 65 can continue participating in the college health insurance plan on exactly the same basis as active faculty. That is, the college pays approximately 75% of their insurance premium and the retiree pays the remaining balance. This remains unchanged with the introduction of the enhanced benefit described below.
The second phase begins at the age of 65. At this point retirees secure their own health insurance, independent of the college plan. They typically enroll in Medicare and consider supplemental insurance as well, to cover gaps in Medicare. To help with these costs the college provides retirees with an annual supplement based on their years of service at Williams. The annual supplement is $56 per year of service at the outset, escalating gradually to a maximum of $126 per year of service after 25 years of retirement. For example, a faculty member with 30 years of service would be reimbursed, in her/his first year of retirement, for up to $1,680 ($56 x 30 years) paid to Medicare or other supplemental insurance plans. That same faculty member, 25 years later, would receive up to $3,780 ($126 x 30 years). The increase over time is intended to account for inflation and other unpredictable factors that might cause health insurance premiums to rise.
The existing benefit also has limited provisions for spouses and dependents. These are expanded with the enhanced benefit, as explained in Part 2 below.
The Enhanced Benefit
The college is pleased to announce a new two-part health insurance benefit for retirees who choose to take advantage of the Tenured Faculty Early Retirement Incentive Program. This first part of the benefit more than doubles the original value of the annual payment to $126 per year of service immediately upon reaching the age of 65. The second part extends assistance to the retiree’s spouse and dependents to help with insurance costs that would not be covered otherwise. The details of this two-part benefit are explained below and a number of hypothetical examples are included to show how the benefits apply in different situations. Even with these examples, faculty are likely to have questions about how these benefits will intersect with their personal situation. Faculty are therefore encouraged to meet with HR staff who will answer questions tailored to their specific circumstances.
Faculty participating in the Tenured Faculty Early Retirement Incentive Program, including those who enroll during the initial 180-day window of the program, are eligible to also participate in this special enhanced health insurance benefit. Only faculty participating in the Tenured Faculty Early Retirement Incentive Program can take advantage of this offer.
Part 1: The Retiree Health Insurance Benefit
First, it is important to note that faculty who retire younger than age 65 can continue on college health insurance at the current rate of college insurance premium subsidy (around 75%, depending on the plan) that they enjoy as active employees. That is, the college pays some large portion (e.g. 75%) of the retirees insurance premium and the retiree pays the remaining balance.
The enhanced benefit described in this document begins when the retiree turns 65. At that time, Williams will create an account for each participating retiree to be used exclusively for the reimbursement of paid Medicare and Medicare supplemental insurance premiums for the retiree and his or her spouse.
How the account is funded and in what amount
The account will begin to be funded annually beginning on the July 1st following the later to occur of the participant’s retirement date or their 65th birthday.1 The annual benefit amount will be derived by multiplying the retiree’s years of service (up to a maximum of 35) at Williams by $126.2 For faculty who do NOT participate in the Tenured Faculty Early Retirement Incentive Program that multiplier is set at $56 as a starting point and only increases to $126 after 25 years of retirement. So the enhanced plan distributes the maximum annual amount immediately upon retirement. Unused funds carry over and thus the total available funds in the account can accumulate. Each plan year will begin on July 1 and end on June 30.
For example, each year on July 1, a participating retiree who had worked at Williams for 34 years, and who is 65 or older, would receive $4,284 ($126 x 34 years) in his or her account. If the participant doesn’t use all of the annual benefit by June 30 of each year, the remaining balance will be added to the following year’s annual benefit.
How to use it
To be reimbursed, participants must submit documentation to the Williams College Benefits Office that shows the amount paid for Medicare and Medicare supplemental insurance premiums during the plan year, for the employee and/or their spouse.
The College will send the participant a check or a direct deposit for the amount claimed, or the amount of the benefit in the participant’s account, whichever is less. Checks will be sent at the beginning of the month following the month a claim is filed.
A claim may be filed each time an insurance premium is paid, or a participant may send in multiple claims at once.
PLEASE NOTE: The college reserves the right to close any account that has not been used for two years.
Benefits for Deceased Participants
If a retiree who is participating in this plan dies during the plan year, the surviving spouse may exhaust the remaining benefit within the plan year. The benefit will not be renewed on the July 1 next following the date of the retiree’s death. If there is no surviving spouse, the balance reverts to Williams College at the time of death.
To document that Medicare premiums have been paid, participants may use a copy of the letter from Medicare at the end of each calendar year confirming their coverage and premium for the upcoming year. Participants only need to send a copy of the letter once each year, and it will be kept on file in the Benefits Office.
The required documentation for a participant’s paid Medicare supplemental insurance premiums will depend on the type of insurance he or she has purchased. A participant who has AARP core coverage may choose to have the premium directly withdrawn from his or her bank account. In this case, the participant may use the letter that AARP issues at the end of each calendar year confirming the next year’s premium. If a participant has coverage through an insurance company, (for example, Benistar or BCBS Medex), he or she may use a copy of the quarterly or monthly bill issued by the company. Participants may also use canceled checks as documentation.
Part 2: Special Health Supplement for Spouses and Dependents
Spouses of faculty who participate in the Tenured Faculty Early Retirement Incentive Program who are themselves under the age of 65, and dependents of such retiring faculty who are under 26 years old, and who do not have access to health insurance from their employer(s)3 will receive an annual health supplement of $2,500 for each dependent. This is a taxable benefit. The retiree must sign a form each year indicating the age and insurance status of each beneficiary.
These annual payments will continue until the spouse is age 65. In the case of dependents they will continue until the dependent becomes 26 years old. If the retiree should die, eligibility for the payments would continue until the spouse and dependent reach the age cutoffs described above, or for ten years after the retiree’s death, whichever comes first. In this case the surviving spouse must sign a form each year indicating the age and insurance status of each beneficiary.
For faculty who do NOT participate in the Tenured Faculty Early Retirement Incentive Program health supplement payments are not provided to spouses or dependents.
Here below are some hypothetical examples of how the Health Insurance Benefit Plan would work for Faculty Participating in the Tenured Faculty Early Retirement Incentive Program.
- Professor Hutchins retires at age 67 after a 37-year career at Williams. His spouse is 63 years old and does not have access to insurance from her employer. Hutchins has three children ages 23, 25, and 29. The youngest child depends on him for health insurance. The older children have full time jobs with their own health benefits.
- Being already over the age of 65, Hutchins immediately becomes eligible for Part 1 of the benefit – he will annually receive access to $4,410 (that’s the maximum 35 years of service x $126/yr) to reimburse him for costs he might pay towards Medicare Part B and/or Part D and/or Medicare Supplemental (Medigap) insurance premiums for himself or his spouse.
- In that year Hutchins pays supplemental insurance premiums totaling $4,000. He submits that bill to the Benefits Office and is reimbursed for the full amount. The unspent $410 in his account rolls over into the next year and remains available to him. When his account is funded in July of the following year he will have a total of $4,820 available to him ($410 rolled over from this year plus his $4,410 annual allotment).
- Because Hutchins’ spouse is not yet 65 and does not have access to her own health insurance, she is eligible for Part 2 of the benefit. She will annually receive a $2,500 health supplement until she herself turns 65 or becomes insured via her employer
- Likewise, Hutchins’ 23 year old dependent will annually receive $2,500 to help her pay for health insurance until she is 26 years old or until she is employed with insurance of her own.
- Professor Jones retires at age 66 after a 36-year career at Williams. Her spouse is 67 years old and is himself retired. They have three children, one of whom is 23 years old and is in graduate school and depends on them for health insurance.
- Being already over the age of 65, Jones immediately becomes eligible for Part 1 of the benefit – she will annually receive access to $4,410 (that’s the maximum 35 years of service x $126/yr) to reimburse her for costs she might pay towards supplemental insurance premiums for herself or her spouse. Any unused funds are rolled over for use the following year.
- Because Jones’ spouse is over the age of 65, and thus eligible for Medicare, he is not eligible for Part 2 of the benefit.
- Jones’ 23 year old child will annually receive $2,500 to help him pay for health insurance until he is 26 years old or employed with insurance of his own.
- Professor Smith retires at age 63 after a 30-year career at Williams. His spouse is 59 years old and does not have access to insurance from her employer. Smith also has two adult children aged 27 and 31 who are insured through their employers.
- Because Smith is under 65 he and his spouse may continue to be on Smith’s existing health insurance policy at the college, just like any active employee, and the college will subsidize his health insurance premiums at its current proportion (currently 75% of premiums). Smith continues to pay 25% just like he has for years.
- When Smith turns 65 he will become eligible for Part 1 of the benefit – he will annually receive access to $3,780 (that’s 30 years of service x $126/yr) to reimburse him for costs he might pay towards supplemental insurance premiums for him or his spouse. Any unused funds are rolled over for use the following year.
- When Smith turns 65 his spouse, who is four years younger than he, becomes eligible for Part 2 of the benefit. His spouse will begin to receive, annually, a $2,500 health supplement until she herself turns 65 or becomes insured through some other employer
- Professor Hammond retires at age 66 after a 29-year career at Williams. Her spouse is 63 years old and has access to insurance from her employer. Hammond has one adult child aged 38 who is insured through his employer.
- Being already over the age of 65, Hammond immediately becomes eligible for Part 1 of the benefit – she will annually receive access to $3,654 (that’s 29 years of service x $126/yr) to reimburse her for costs she might pay towards supplemental insurance premiums for herself or her spouse. Any unused funds are rolled over for use the following year.
- Neither Hammond’s spouse nor adult child are eligible for Part 2 of the benefit because they are both employed with access to their own insurance.
- Professor Davidson retires at age 65 after a 15-year career at Williams. He is unmarried but has two children aged 22 and 25. The younger child depends on him for health insurance. The older child works for an employer that provides health insurance.
- Being age 65, Davidson immediately becomes eligible for Part 1 of the benefit –he will annually receive access to $1,890 (that’s 15 years of service x $126/yr) to reimburse him for costs he might pay towards supplemental insurance premiums for himself. Any unused funds are rolled over for use the following year.
- Davidson’s 22 year old child will annually receive $2,500 to help her pay for health insurance until she is 26 years old or employed with insurance of her own.
- Professor Douglas retires at age 66 after a 30-year career at Williams. She is unmarried and has no dependent children.
- Being already over the age of 65, Douglas immediately becomes eligible for Part 1 of the benefit – she will annually receive access to $3,780 (that’s 30 years of service x $126/yr) to reimburse her for costs she might pay towards supplemental insurance premiums for herself. Any unused funds are rolled over for use the following year.
- Professor Franklin retires at age 66 after a 25-year career at Williams. He has a 52-year old unemployed spouse and a 13-year old child. Parts I and 2 of the enhanced health benefit apply immediately and the supplemental payments begin just like in example #1 above. Unfortunately, Professor Franklin dies the following year at age 67, at which point his spouse is 53 and their child is 14.
- Any unspent funds in Franklin’s supplemental account at the time of death are available to the spouse to use on documented medical expenses within that plan year. Funds remaining on the next July 1 following Franklin’s death will revert to the college.
- Franklin’s spouse is eligible to continue receiving his/her $2,500 supplemental payment for an additional ten years after Franklin’s death during any plan year in which he/she is not employed in a job with health insurance benefits. That is, eligibility for the $2,500 payment can turn on and off within the ten-year period, but does not extend beyond the ten-year period after Franklin’s death.
- Franklin’s child is likewise eligible to continue receiving the $2,500 supplemental payment for an additional ten years after Franklin’s death, so long as Franklin’s spouse does not gain access to health insurance benefits through an employer, or until the child is employed with insurance of his or her own.
Plan Administrator and Agent for Service of Legal Process
The Vice President for Finance & Administration and Treasurer at Williams College is the Plan Administrator of the Retiree Health Plan. The Vice President for Finance & Administration and Treasurer has designated the Director of Human Resources to be responsible for enrolling participants and other administrative duties, including helping faculty with questions about Plan provisions, eligibility and participation.
The Plan Administrator may delegate any of its authority and duties with respect to the Plan to one or more officers or other employees of the College. Any such delegation will be in writing.
Service of legal process may be made upon the Plan Administrator: Vice President for Finance & Administration and Treasurer, Williams College, P.O. Box 458, Williamstown, MA, 01267, 413-597-4421.
A major responsibility of the Plan Administrator is to make sure that Plan provisions are applied properly and equitably. If you feel that you have been treated unfairly or denied benefits improperly, you are encouraged to seek a review by the Plan Administrator. Any determination by the Plan Administrator concerning the Williams College Group Insurance Plan shall be final and conclusive on all persons, in the absence of clear and convincing evidence that the Plan Administrator acted arbitrarily and capriciously. Decisions by the Plan Administrator are subject to review by the President of the College to ensure that the Plan Administrator does not act arbitrarily or capriciously.
Plan Records and Plan Year
Plan records are kept on file in the Benefits Office and are kept on July 1 through June 30 plan year basis.
Plan Identification Numbers
Employer Identification Number: 04-2104847
Plan Number (assigned by the College): 506
Amendment and Termination of the Plan
The Board of Trustees of the College reserves the right to modify or discontinue the Plan at any time by majority vote. Any amendment or termination of the Plan will not adversely affect any benefit provided by the Plan that is owed prior to such amendment or termination. The Trustees may delegate any of its power and duties with respect to the Plan to one or more officers or other employees of the College. Any such delegation will be in writing. The College will exercise good faith, apply standards of uniform application, and refrain from arbitrary action.
Benefits Office 2/21/14
1 A retiree who becomes age 65 during any plan year will receive his or her benefit on the first of the month following his or her 65th birthday. The annual benefit will be pro-rated for the first year of participation.
2 This amount is constant though the college may periodically review it and adjust it for inflation.
3 Or from Williams College in the case of retirees younger than 65 year old who can remain on Williams insurance.