MARSP News & Announcements

As Michigan public school personnel look ahead to an uncertain back to school landscape in fall 2020, Michigan Association of Retired School Personnel (MARSP) hosted a webinar on Aug. 6 outlining factors potential retirees should consider.

Facilitated by MARSP Executive Director Royce Humm, the webinar was the third in a series of online events for public school employees and retirees.  It featured expert guidance from financial professional Aliceson Milanowski of Williams and Co., the firm that has partnered with MARSP since 2003 to offer retirement planning geared to the education community.   Williams and Co. is part of an exclusive network of PlanMember Financial Centers that work with school districts and nonprofit employers nationwide.

Addressing both pension and health insurance factors, Milanowski gave a comprehensive overview of the choices potential retirees may need to make and drove home the point that individual life situations and factors should be carefully assessed, in order to develop the best program for each person.  Making decisions about specific programs can be complex and can have long term effects, she cautioned.  Some decisions can be changed later, but others cannot.

Pensions
“The big question for everyone is, ‘How much income do I need to retire and still be able to maintain my style of living,’’ Milanowski said, noting that life expectancy, age at retirement, years of employment, amount of debt, a spouse’s retirement status and other factors, need to be considered.

Pension plan members need to decide whether or not to name a beneficiary to receive some or all of the pension in the event of the retiree’s death.

“If you pass away,” she explained, “and you picked a survivorship option, your beneficiary would receive all or some of your pension as well as the insurance.”  Milanowski noted that in 2009 MARSP convinced the Legislature to improve the spousal benefit and allow system members whose spouses die first to name a new beneficiary if and when they remarry.

Pension benefits are based on the average salary calculation, for the highest three to five years of service, Milanowski said, not the most recent years of service, as many people might assume.  The type of pension plan a person has depends on when they started his or her employment, because laws were changed over the last decade to create hybrid plans and even a defined contribution option.  If a member is in a pension plan, a pension check is deposited into the system member’s bank account on the 25th of every month.

“Once you pick your pension beneficiary option, you can’t switch it,” she cautioned.  “With health insurance, however, you are not locked into what you choose.  You can usually switch plans after six months.”

Williams and Co. has a product called Lifetraxx that helps future school district retirees analyze their individual situations, including retirement eligibility, early retirement, beneficiary options, etc.  With so many variables each person needs to consider, Milanowski said it makes sense to obtain guidance before making pension decisions that could be final.

Health Insurance
Milanowski noted that health insurance has “many moving pieces,” however, and, like pensions, requires careful consideration to select the best plan for a retiree’s individual needs.

“Retiree insurance is quite a bit different from what you have today,” (as an active employee) she explained.  “The choice depends on how you will use your insurance.  For example, on the PPO plan, the deductible is $1,000, so you pay for everything until you get to the $1,000. If you are on an HMO, a doctor’s visit can be as little as $25.  The nice thing is for everyone on the insurance plan, at age 65, retirees are on Medicare and the state insurance plan is then a Medicare advantage plan, which covers your prescriptions and many other gaps that the traditional Medicare has.”

Milanowski outlined a number of other scenarios that underscore the need to review health insurance options carefully and make an informed decision.  Employees hired in on or after July 1, 2008, for example, would be on the graded subsidy and 22 years of service are needed to obtain the full or maximum subsidy.  In order to obtain a 30 percent subsidy, at least 10 years of service are needed.

“You will not need to calculate this on your own,” Milanowski noted.  “The Office of Retirement Services calculates it for you, which you can check on your MIaccount.  You should check everything to be sure your information is accurate.”  She noted that in 2010 the state began taking out 3 percent from retirees’ checks to apply to health insurance costs and if that 3 percent is still coming out, retirees are eligible for the insurance subsidy.

Substitute teaching
Some school districts in the state are struggling with teacher shortages and may rely heavily on substitute teachers to fill gaps.  Because state laws have changed over the years, retirees need to know the rules prior to going back to work for a public school district.  Retirees can be penalized, for example, if they go beyond certain limits when working for a reporting unit, which includes K-12 school districts, some universities and charter schools.

“If you are working for a reporting unit, keep track of your paycheck to make sure you don’t go over the limits and cause you to pay back your pension.”

If working for a third party, however, the rules may allow working more hours.

“Before you take any school position, let the ORS know what you’re doing so that you don’t get penalized,” Milanowski recommended.  “Whether you are performing a ‘core service” makes a difference.  You cannot perform a core service for a third party and collect your pension unless the position is considered a critical shortage.  When a critical shortage of substitutes exists, you can make as much as you want, but you must have been retired for more than one year to be able to perform the critical shortage position.”

Another way retirees can protect their pension and still earn a paycheck is to work in another state or take a job unrelated to the Michigan public school system.

Milanowski reminded all those considering retirement to contact MARSP when they have questions.

“I suggest you call MARSP instead of ORS because MARSP’s staff has the answers and you will reach them more quickly.”

To watch the full webinar visit www.marsp.org/webinars