MCRP and ORP Preretirement
When to Contact Human Resources and Your Retirement Providers
In order to receive your benefits in a timely manner, you will need to start the process well before your retirement date. Use the following timeline:
At least four to six months before retirement: Contact your retirement plan companies for information about the forms you need to complete. If you retire before Jan. 1, 2017, you must take distributions out of the MCRP or ORP account, at minimum, annually. You do not have to take a distribution if you are retiring after Jan. 1, 2017.
Approximately three months before retirement: Contact the Benefits Division in University Human Resources at 434.982.0123 for an appointment to discuss health insurance and other retirement benefits.
At least three months before retirement: Contact the local Social Security Office to apply for payments, if desired. If you or a dependent are 65 or older, you must also apply for Medicare to begin on the retirement date.
The benefits available for you at retirement include MCRP, Social Security and Medicare, health care insurance, and, in many cases, life insurance and distribution from 403(b) savings plans.
You may defer receipt of retirement benefits until one of the following dates (whichever is later):
April 1 of the calendar year following the year you turn 70½
April 1 following the year you retire
If you defer retirement benefits, you are not eligible to enroll in the retiree health insurance program.
Contact your retirement vendor to discuss distribution options.
Taxation of Retirement Benefits
Retirement plan contributions are usually made with before-tax dollars, so federal income taxes are deferred until you begin taking withdrawals later on.
No taxes are due on pretax contributions and earnings made until the money is withdrawn, but because these plans are intended primarily for retirement, you can generally withdraw funds only after termination of employment or age 59½ (subject to plan rules). If you withdraw funds before age 59½, they may be subject to an additional 10% early-withdrawal penalty.
Contact your tax advisor for additional guidance.
Health Care Insurance
Insurance for Active Employees Age 65 and Over
- This insurance is identical to that of employees under age 65
- Because Medicare is the secondary provider while you remain employed, you can enroll in Medicare Part A just before your 65th birthday, but may defer Medicare Part B until you retire
- If you enroll in Medicare Part B just before you retire, there will be no penalty
Eligibility for Insurance After Retirement
The Commonwealth of Virginia provides a health insurance group for retirees who receive ORP or MCRP retirement income. University Human Resources will assist you with the health insurance application if you elect coverage for yourself and dependents at the time you retire.
Spouses will be able to continue coverage for the rest of their lives in the event of your death if you meet both of the following requirements:
- both of you elect coverage when you retire
- you continue coverage in the state retiree insurance program until your death
The state insurance program is available to you and your dependents as secondary coverage if you are Medicare-eligible. The Commonwealth Group currently offers one Medicare-supplement plan with a dental/vision option. This offering is subject to change each January 1.
How to Enroll
During a preretirement appointment with a representative of the Benefits Division, you and your spouse may complete applications for the retirees’ group. If you do not elect health insurance within 31 days of retiring, you waive all future rights to the coverage.
Health Credit for Retirees
The Commonwealth of Virginia provides a partial subsidy to cover the cost of health insurance. The subsidy is a tax-free credit on the monthly premium and is available for retirees with 15 or more years of service.
The monthly credit is calculated by multiplying $4.00 by the number of years of service. If you are enrolled in MCRP, UVA will calculate your health credit amount when you retire and send appropriate paperwork to VRS since this organization distributes the monthly credit to eligible retirees. If you waive your right to enroll in the state plan, you must complete the VRS-45 form to receive your monthly health credit. This form must be completed every time your premium or health insurance carrier changes.
How to Change Retiree Health Insurance Coverage
Retirees in the state insurance program who need to make health coverage changes should contact the Benefits Division of University Human Resources. Changes include additions, deletions, address changes, and Medicare eligibility. Some changes can only be accepted and processed at specific times during the year. Therefore, it is imperative that you contact the University Benefits Division as soon as the event causing the change occurs.
The Standard Life Insurance
UVA currently provides $10,000 in life insurance to eligible retired members who have participated in The Standard Life Insurance. You may verify your insurance and beneficiary when you retire. The Standard Life Insurance Plan also allows you, at retirement, to convert part or all of the basic and supplemental insurance you have as an active employee.
If you have been participating in Fidelity or TIAA 403(b) plans or the Commonwealth’s 457 tax-deferred savings plan, you can do one of the following:
- elect to receive income at the time of retirement
- defer payments until April 1 of the calendar year following the year in which you attain age 70 ½ or following the year in which you retire, whichever is later
Contact your retirement plan companies directly to make arrangements, or make an appointment to meet with a campus representative from your vendor.