According to a news release, the program combines tax-advantaged investment vehicles with access to group retiree health insurance plan options that integrate with Medicare. Emeriti Retirement Health Solutions, a consortium of colleges, universities and other higher education-related tax-exempt organizations, created and oversees the program.
The announcement said that program uses employer- and employee-funded trusts called Voluntary Employees’ Beneficiary Associations (VEBAs) as the investment vehicles, which are funded over the course of employment. Contributions made by higher education institutions are not taxable to employees and contributions made by employees are after-tax, according to the news release.
These contributions are invested in a set of mutual funds managed by Fidelity Investments at the direction of the employee. Fidelity also provides recordkeeping functions and manages disbursements during retirement for health insurance premiums and other qualified out-of-pocket medical expenses, Fidelity said in the announcement.
Assets in the VEBAs grow tax free until retirement when they can be used on a tax-free basis to pay for qualified medical expenses, including Medicare supplemental insurance premiums after age 65, the news release said.
Signing Up for Medicare
At retirement at or after age 65, individuals sign up for Medicare Parts A and B and can choose among three health plan options offered through the Emeriti Program that complement Medicare coverage. After satisfying retirement eligibility requirements for their institution, individuals also can receive reimbursement for other qualified medical expenses (e.g., out-of-pocket costs not covered by Medicare or supplemental insurance) from their accounts.
“This program was designed to address findings of a three-year study where we interviewed a broad range of tenured faculty and found the majority expressed concern, anxiety and frustration about the cost of and access to, retirement medical insurance,” said Dr. Linda Evers Cool, founding director of New York-based Emeriti Retirement Health Solutions. “In fact, many tenured faculty are delaying retirement due to these concerns. Our research showed that individuals at institutions with substantial commitments to post-retirement health insurance retired on average 18 to 36 months earlier than peers at institutions with no such health benefit.”
According to the news release, the Emeriti Program can help institutions support more timely retirements by giving retiring faculty and staff access to group health plan options that provide coverage beyond what is offered by traditional Medicare, such as out-of-pocket maximum protection in cases of prolonged, catastrophic illness and enhanced prescription drug benefits. The program offers portable benefits that allow access to care anywhere in the United States, short-term coverage while traveling abroad, and a range of health plan options at annual enrollment, the announcement said.
According to the news release, Aetna provides Medicare-eligible participants in the Emeriti Program with a choice of three indemnity health benefit plan options that complement traditional Medicare. Options I and II integrate with Medicare fee-for-service, which allows beneficiaries to see the physician or health care professional of their choice, but provides coverage for medical expenses not covered by traditional Medicare, such as those incurred during foreign travel. Option III offers prescription drug coverage only. All three plans provide coverage to retired employees anywhere in the United States and its territories.