By Vic Cox

(This article is the second in a two-part series on planning for UC retirement.)

Sustaining the increasing number of UCSB retirements—96 career employees, mostly staff, in 2006-07 alone—is the aging of the workforce. In 2006, 319 employees age 50 or more had at least 20 years of service credit, according to Tricia Hiemstra, manager of benefits.

Looming over most employees’ retirement decisions is the specter of post-employment health care costs. Even if the potential retiree enjoys good health and has been with the University 20 years, the member’s portion of the monthly premium is substantial and growing.

Employees who joined the UC Retirement Plan (UCRP) on or after Jan. 1, 1990, and retire on a monthly pension with fewer than 20 years service credit, also carry a percentage of what would have been UC’s “maximum contribution” for medical and dental costs. There are no medical or dental benefits if the UCRP member opts for a lump sum cash out, and currently vision care is not a retirement benefit.

Ten years service credit is the minimum required of employees hired after 1990 in order that UC pay half of its maximum contribution, which is indicated on each employee’s pay stub. UC coverage increases by 5 percent for each additional year of service. Known as graduated eligibility, there are other qualifying conditions, such as no break in employment longer than 120 days.

This and other information abounds online in the Retirement Book at <http://atyourservice.ucop.edu/employees/retirement_savings/ index.html>. Help is also available from retirement counselors at Human Resources. But no one understands the nuances of the health care benefit better than Laura Morgan, UCSB’s health care facilitator, and her assistant, Cyndi Richardson. Both can be reached at x4201.

“Most employees don’t notice much change, except for new membership cards, when they go under retirement (health) coverage,” says Morgan. She adds that during the transition from active employee to retiree, which usually takes three weeks, there is “a period of darkness” when the electronic record of the employee’s status is not up to date.

If a service is needed or a prescription must be filled during the transition, it may appear in the computer system that the retiree’s insurance has been canceled. Morgan says she can usually clear up this problem for new retirees. UC Customer Service can also help.

Unlike the UCRP pension check, health care is not a guaranteed retirement benefit. As UC’s literature repeatedly says, these “are not accrued or vested benefit entitlements.”

Additionally, graduated eligibility weighs service credit for health benefits differently from that used for pensions. The UC policy for health benefits rounds service credit time down to the lowest whole number of years. If by adding an employee’s sick leave to work time totals 17.9 years, for instance, the service credit will be counted as 17 years for health purposes.

Morgan points out that Medicare may come into play before or after retirement. A U.S. government program, Medicare is available to those aged 65 who have a Social Security account, or whose spouse pays into Social Security, as well as for younger people with certain disabilities. UC’s Office of the President sends retirees Medicare information and forms prior to their 65th birthdays, though enrollment is through Social Security.

“It is really important for employees to return the forms in a timely manner,” she says. Equally important is following all the instructions, since failure to do so may result in permanent loss of UC coverage.

The Benefits Office holds general retirement workshops at 9 a.m. on the second Wednesday of each month throughout the year, but specific health care questions are generally referred to Morgan. She tries to stage special sessions devoted to health plans and Medicare around once a quarter.