Keith's Note: "Pantex employees and retirees, understanding your health care options before Medicare eligibility at age 65 is an essential part of protecting your Real Wealth. This guide outlines eligibility, coverage continuation, and alternatives so you can plan confidently for early retirement." - Keith Demetriades, CFP®, CKA® | Financial Advisor Specializing in Pantex Retirees.
What Are My Early Retirement Health Care Options Before Age 65 at Pantex?
To be eligible to continue company-sponsored medical, prescription drugs, dental, and vision coverage until the retiree reaches Medicare eligibility at age 65, the retiree must meet both minimum service and age requirements.
For Pantex Employees:
Eligibility
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At least 10 years of full-time service under the pension plan.
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Be at least age 55 at the time of retirement.
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Coverage Continuation: If eligible, the retiree may elect to continue coverage for themself and eligible dependents.
Duration: Coverage may continue until the first of the month following the retiree's 65th birthday.
Cost: The retiree must pay any cost required by the company for the continued coverage, such as a share of the premiums.
For Y-12 Employees:
Eligibility: The employee must have had at least 10 years of full-time service under the Pension Plan and be at least age 50 at the time of retirement.
Duration: Coverage may continue until the first of the month of the retiree's 65th birthday.
Cost: If eligible, the retiree must pay any cost required by the company for the continued coverage.
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- Full Cost Eligibility: If the employee had less than 10 years of full-time service under the Pension Plan but was at least age 50 at the time of retirement, they may elect to continue coverage, but must pay the full cost for the continued coverage.
What About Continuation of Coverage for Spouses and Dependents?
Pantex (Non-Bargaining and Metal Trades Council): Coverage for an enrolled younger spouse and other eligible dependents may continue for a maximum of 10 years from the retirement date or the spouse's 65th birthday, whichever is earlier.
Pantex (Pantex Guards Union): Coverage ends at the end of the month prior to the retiree's 65th birthday. A younger spouse's coverage may continue for a maximum of 10 years from the retirement date or the spouse's 65th birthday, whichever is earlier.
Y-12: Coverage for an enrolled younger spouse and other eligible dependents may continue until the spouse reaches age 65.
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If the spouse reaches age 65 (and Medicare eligibility) before the retiree, the spouse’s medical coverage will end. However, dental and vision coverage for the spouse may continue until the retiree reaches age 65.
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Dependent Children: Coverage ends when both the retiree and the spouse are no longer eligible for the pre-65 retiree plans. They may then be eligible to continue coverage under COBRA.
Alternatives to Retiree Coverage
If a retiring employee is not eligible for continuing pre-65 retiree coverage, or upon termination of coverage, they may utilize temporary continuation options:
COBRA: If you leave the company, you or your dependents may continue medical, prescription drugs, dental, and vision coverage for up to 18 months through COBRA, unless termination was due to gross misconduct. COBRA must be applied for within 60 days of termination.
Health Care Flexible Spending Account (FSA): Participation in the health care spending account may be continued on an after-tax basis until the end of the calendar year of the COBRA event (the retirement effective date). Claims for eligible expenses may only be submitted if COBRA is continued.
Real Wealth Questions
Is early retirement one of your Real Wealth goals?
How do you plan to bridge the gap between your intended retirement date and Medicare eligibility at age 65?
Is your financial plan prepared to cope with how health care costs typically rise throughout retirement?
What To Do Next
Review your anticipated retirement date and confirm whether you meet the service and age requirements for pre-65 retiree health care coverage. Evaluate the costs and duration of coverage for yourself, your spouse, and dependents, and consider alternatives such as COBRA or a Health Care Flexible Spending Account if you are ineligible. For guidance on bridging the gap to Medicare, estimating future health care expenses, and integrating these costs into your broader retirement plan, contact Keith Demetriades, CFP®, CKA®, a financial advisor specializing in Pantex retirees.
