Navigating HRA and Medicare Transition for AEP Employees

Derrick Alexander |
Categories
Retirement

As an employee of American Electric Power (AEP), understanding the transition of your healthcare benefits, particularly your Health Reimbursement Arrangement (HRA), is essential as you approach retirement age and Medicare eligibility. Here's a breakdown of the key points you need to know:

Retiring Before Age 65:

 

1. Severance Package: If you take a severance before age 65, you are entitled to continue paying active employee rates for your medical insurance for 12 months post-separation.

2. Post-12 Months: After the initial 12 months, your rate will be adjusted based on years of service and age. You will continue to pay this adjusted rate until you are six months away from turning 65.

3. Pre-Medicare Planning: It is recommended that you apply for Medicare Part A & B six months before reaching age 65. AEP's insurance plans are structured to work with Medicare, ensuring a seamless transition.

Transitioning to Medicare at Age 65:

1. Medicare Enrollment: Once you turn 65, you'll be eligible for Medicare Part A & B and a Medicare Advantage plan offered by AEP through the insurance carrier Aetna.

2. HRA to RRA: Upon enrolling in Medicare, you will be notified that your HRA account will transition to a Retiree Reimbursement Account (RRA). This change comes with a switch in insurance providers; for example, active employees may have coverage under Anthem, while post-65 retirees will be under Aetna.

3. Choosing a Plan: After the transition to an RRA, you can either stick with the new Aetna plan or select a different Medicare plan that suits your needs.

Additional Considerations:

  • COBRA or Private Insurance: Should you separate from AEP, you have the option to continue your healthcare coverage through COBRA or to purchase private medical insurance.
  • HSA Post-Retirement: If you have a Health Savings Account (HSA), you can continue using these funds for qualified medical expenses tax-free. After age 65, you can also use the HSA funds for non-medical expenses without a penalty, although they will be taxed as income.

Action Steps for AEP Employees:

1. Review Your Benefits: Prior to retirement or separation, review the AEP employee benefits handbook and discuss your options with HR.

 

2. Prepare for Medicare: If you're nearing 65, start the Medicare application process six months in advance.

 

3. Understand Your Accounts: Know the differences between your HRA and HSA, and how each will be affected by retirement and Medicare.

 

4. Stay Informed: Keep your contact information up to date with AEP's HR department to receive important updates and packets regarding your healthcare benefits.

By following these steps and staying informed, AEP employees can navigate their retirement and Medicare enrollment with confidence, ensuring continuous and comprehensive medical coverage.