VRS Preretirement

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:

  • Approximately three months before retirement: Contact the Benefits Division in University Human Resources at 434.982.0123 for an appointment to discuss VRS retirement payment options, health insurance, and other retirement benefits. Request that your department enter separation information into Oracle or PeopleSoft.

  • At least three months before retirement: Contact the local Social Security Office to apply for payments, if desired. If you or a dependent are age 65 or older, you must also apply for Medicare to begin on the retirement date.

The benefits available for you at retirement include VRS benefits, Social Security and Medicare, health care insurance, and, in many cases, life insurance and distribution from 403(b).

Virginia Retirement System Benefits

VRS Options

Before you retire, you will choose an income option. The following payment options are available:

  • Basic Annual Lifetime Benefit

  • 10% - 100% Survivor Option

  • Special Survivor Option

  • Partial Lump Sum Option Payment (PLOP)

  • Advance Pension Option (APO)

If you did not join the Virginia Sickness and Disability Program (VSDP), you are eligible to use your sick leave balance to purchase VRS service credit at retirement.

  • Maximum purchase of service time cannot exceed the sick leave payout rules and is governed by the VRS policies found in the VRS Handbook
  • Benefits Division will submit your accrued sick leave hours to VRS, and then VRS will determine exactly how many months of service you are eligible to purchase
  • Calculations performed by you and/or your Benefit Counselor are strictly estimates; VRS makes the final determination

If you joined VSDP, you are eligible to use your disability credits to purchase VRS service credit at retirement.

Taxation of Retirement Benefits

At retirement, you will file a VRS-15 Request For Income Tax Withholding.

  • Your VRS retirement benefit is subject to federal income tax
  • If you plan to reside in the Commonwealth of Virginia during retirement, your VRS retirement benefit is subject to state income tax

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 may 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 VRS, ORP, or MCRP retirement income. The Benefits Division 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

Your health insurance premium will be deducted from your monthly VRS check if it is large enough to cover the premium. Otherwise, you may choose to receive coupons and pay premiums by check each month, or you may authorize a monthly bank draft from your checking or savings account to pay your premiums if the administrator of your insurance plan offers this option.

If you, your spouse, or your dependents are ineligible for Medicare, you will be covered by the UVA Health Plan. Dental and/or vision options are available in addition to basic health coverage.

If you are eligible for Medicare, the state insurance program is available to you as secondary coverage. The Commonwealth group currently offers one Medicare-supplement plan with a dental/vision option.

These offerings are subject to change each January 1.

Health Credit for Retirees

The Commonwealth of Virginia provides a partial subsidy to cover the health insurance cost. 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. VRS calculates your health credit amount when you retire and automatically includes it in your monthly VRS check if you elect to stay in the state insurance program. If you waive your right to enroll in the state plan, you must complete the VRS-45 form to receive your monthly health credit in your VRS check. This form must be completed every time your premium or health insurance carrier changes.

How to Enroll in Retiree Health Insurance

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. Detailed information about the health insurance options is available from the Benefits Division.

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.

Life Insurance

If you were enrolled in Basic Life insurance with Minnesota Life, your life insurance continues after you retire at no cost to you if you meet both of the following requirements:

  • you are at least 55 years old
  • you have at least five years of continuous service as an employee, or are age 50 with 10 years of service (including five years of continuous service as an employee)

Reductions in Insurance

The amount of your insurance reduces by 25% annually starting January 1 following 12 months of retirement, and on every January 1, thereafter, until your coverage reaches 25% of its value at your retirement.

If you are eligible to retire but defer receipt of your annuity, reduction begins on January 1 following the first 12 months from the date you separate from service. At its fully reduced level, you will have approximately half of your preretirement compensation in life insurance.

If you retire because of a disability, your life insurance also continues and does not begin to reduce until you reach age 65. Beginning January 1 of the first full year following the date you reach age 65, your insurance begins to reduce at the rate of 25% annually until your coverage reaches 25% of its value at retirement.

If you took either a service or disability retirement before July 1, 2001, your basic group life insurance reduces 2% each month until it reaches 25% of its value at retirement.

Although accelerated death benefit and the right to voluntary irrevocable assignment continue into retirement, accidental death and dismemberment coverage ceases.

If you were a medical center employee enrolled in the Prudential Basic Life insurance, your benefit at retirement will be $5,000.

403(b) Savings

If you have been participating in Fidelity or TIAA 403(b) 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 reach 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.

Payout of Unused Annual Leave


  • You will be paid for your accrued annual leave balance not to exceed the maximum payment amount when separating from state service by resignation (including resignation from layoff status), retirement, termination, or death

  • You may request and use (if approved) annual leave on your last scheduled work day before separation from state service, including retirement

  • Annual leave balances remaining after separation will be paid up to the maximum limit

Medical Center

  • You will be paid for unused accrued PTO hours at 100% of your base rate of pay
  • 25% of your catastrophic leave balance, up to a maximum of $5,000, will be paid upon termination if you have five or more years of continuous service

Return to Work Policy

VRS retirees who accept non-covered employment with the same employer must have a bona fide break in service to continue receiving benefits. Non-covered employment includes temporary, part-time hourly, and adjunct faculty positions that do not provide VRS benefits.

After you retire, you can work for any employer who does not participate in VRS and continue to receive your retirement benefits. If you return to covered employment with a VRS-participating employer, you will become an active member and your retirement benefits will stop.

In some cases, you can work in a non-covered position with a VRS-participating employer and continue to receive your retirement benefits. If you return to non-covered employment with the employer from which you retired, you must have a bona fide break in service of at least one full calendar month from your retirement date. This break must occur over a period you normally would work. Periods of leave with or without pay, summer breaks, and intersession periods do not count toward satisfying this break in service. This requirement includes teachers who retire under an early retirement incentive program.

The Commonwealth of Virginia, including all state agencies and public colleges and universities, is considered one employer. Public school divisions and political subdivisions are considered separate employers. Your employer can make no verbal or written offer of reemployment before you retire. You and your employer must certify that there is no such prearrangement.

Before returning to a VRS non-covered position, you should take the following steps:

  • Check that you have been terminated from the VRS-covered payroll for at least 30 days

  • Have no prearranged employment commitment with the employer

  • Ensure you are not expected to perform all of the duties required of your preretirement, full-time position

  • Evaluate the need for the position with your employer periodically if it does not have an end date

  • Structure the position so the hours worked are at least 20% fewer than a full-time position; position descriptions should clearly define the difference between part-time and full-time positions requiring the same skills, experience and knowledge

Employment at UVA in a wage position cannot exceed 1,500 hours during a fiscal year calendar.

How to Contact VRS

Visit the VRS website to review the Preretirement Planning Guide and check the dates of the next VRS-sponsored Retirement Education Seminar.