The University understands that health care costs and the escalation of those costs can be unpredictable. To help with paying for medical coverage, the University established a credit-based system that it provides to eligible retiring faculty and staff called the Defined Dollar Benefit (DDB) Program.
The credits that each eligible retiring faculty and staff member receive monthly may be used toward the reimbursement of retiree medical coverage. The credits are also provided to the eligible spouse or domestic partner. Credits cannot be used toward the cost of dental or vision coverage or toward the cost of Medicare premiums.
The credit amounts are reevaluated annually with an effective date of January 1 to correspond with the federal government’s Medicare renewals and are increased in accordance with the medical component of the general consumer price index, up to five percent (5%). For the rest of 2023, and throughout calendar year 2024, DDB credits will remain the same as the previous year at $401 per month.
Detailed information about this program can be found in the DDB Plan.
How to Use the DDB Program
As a Pre-65 Retiree
Credits do not accrue while retirees and their spouses/domestic partners are covered under the University’s pre-65 medical plans. Instead of electing medical coverage through the University, you may obtain coverage through another source (for example, through a spouse’s plan or by accepting employment elsewhere that provides medical coverage). In this situation, DDB credits will accrue in an account for you that may be used at a later date. Please note:
- Credits will not accrue while retirees and their spouses/domestic partners are covered under the University’s pre-65 faculty and staff medical plans.
- Your eligible spouse/domestic partner (at least age 62) is qualified for DDB credits if retiree medical coverage is obtained elsewhere.
For faculty and staff who retire at or after age 62, but prior to age 65, there are three options to consider when enrolling in pre-65 retiree medical coverage:
- Enroll in the University’s active medical plan at the same cost-share premium as active faculty and staff. Your contributions are made on an after-tax basis.
- Obtain your medical insurance coverage outside of the University (cannot be another employer’s active coverage) and enroll in the Defined Dollar Benefit (DDB) Program for reimbursement of coverage.
- Accrue DDB credits for future use.
Applying DDB Credits
Credits will accrue if coverage is obtained through a spouse/partner or another employer, but will not accrue while retirees and their spouses/partners are covered under the University’s pre-65 active medical plan. Under the DDB program, you may continue enrollment in University-sponsored coverage or you may elect any other retiree medical coverage. The cost of the premiums may be reimbursed from the credits in an account established for you and your eligible spouse/partner.
Your credit balance will accrue from month to month and year to year if the cost of the retiree medical coverage does not exceed the amount of credits in your account. As such, the accrued credits may be applied to retiree medical coverage at a later date. Credits are applied separately to the retiree’s account and to the account of the eligible spouse/domestic partner.
On the first of each month, a fixed amount of credits is applied to an account that may be used toward the reimbursement of retiree medical coverage. The credits cannot be used toward the cost of dental or vision coverage, Medicare premiums, or premiums for another employer’s active coverage.
If you choose to participate in a non-University-sponsored plan, you must pay the full cost of coverage up front and then apply for reimbursement.
- DDB claim forms must then be completed and submitted with proof of payment to Benefit Management Services (BMS). This form is required annually. Claim forms must be submitted within six (6) months from the end of the prior plan year.
- Once approved, BMS will reimburse you for the payment up to the current DDB credit allowance in the account you designate.
- To the extent that the retiree medical plan costs more than the amount of the credits in your account, you will be reimbursed up to the DDB credit balance.
In the event that both a retiree and his or her spouse/domestic partner participate in the DDB program, two separate applications of credits will occur for two separate DDB accounts. However, withdrawals and/or reimbursements may be made to and/or from the same checking account.
As a Post-65 Retiree
All post-65 retirees and their eligible spouses/domestic partners who are entitled to participate in the DDB program can choose to use their credits three different ways:
- Apply credits toward the cost of a University-sponsored post-65 retiree medical plan.
- Apply credits toward the cost of retiree medical coverage obtained independently of the University. Reimbursements may be obtained on a monthly basis from BMS. A Defined Dollar Benefit Reimbursement request form (claim form) is required each calendar year by both the eligible retiree and eligible spouse/domestic partner.
- Accrue credits in your account for use at a later date if you have comparable retiree type medical coverage from another insurance carrier, employer, or spouse/domestic partner. DDB credits cannot be used to pay for active group coverage through an employer.
DDB credit balance statements are sent to each eligible participant on an annual basis.
Applying DDB Credits
On the first of each month, a fixed amount of credits is applied to an account that may be used toward the reimbursement of retiree medical coverage. The credits cannot be used toward the cost of dental or vision coverage, Medicare premiums, or premiums for another employer’s active coverage.
Your credit balance will accrue from month to month and year to year if the cost of the retiree medical coverage does not exceed the amount of credits in your account. As such, the accrued credits may be applied to retiree medical coverage at a later date. Credits are applied separately to the retiree’s account and to the account of the eligible spouse/domestic partner.
If you choose to participate in a University-sponsored retiree medical plan, your credits will be applied automatically each month toward the total premium of the plan you elect. If the cost of coverage is more than the credit allowance, the remaining amount will be deducted from a designated checking account.
If you choose to participate in a non-University-sponsored plan, you must pay the full cost of coverage up front and then apply for reimbursement.
- DDB claim forms must then be completed and submitted with proof of payment to Benefit Management Services (BMS). This form is required annually. Claim forms must be submitted within six (6) months from the end of the prior plan year.
- Once approved, BMS will reimburse you for the payment up to the current DDB credit allowance in the account you designate. A reimbursement plan can be set up on an automatic recurring plan.
- A reimbursement plan can be set up on an automatic recurring plan.
- To the extent that the retiree medical plan costs more than the amount of the credits in your account, you will be reimbursed up to the DDB credit balance.
- For more information about the DDB reimbursement process, please reference this flowchart.
In the event that both a retiree and his or her spouse/domestic partner participate in the DDB program, two separate applications of credits will occur for two separate DDB accounts. However, withdrawals and/or reimbursements may be made to and/or from the same checking account.
Defined Dollar Benefit Calculator
The Defined Dollar Benefit calculator may be used to determine your eligibility date for the DDB program. Eligible faculty and staff hired prior to July 1, 2004 must be at least 62 years of age. Faculty and staff hired on or after July 1, 2004 must have their age and service equal 85 to qualify for this program.
Scenarios of Coverage Levels with Cost-Sharing Information
Plans and DDB availability vary depending on your age (as the retiree) as well as your spouse's/domestic partner's age and whether or not you have dependents that also may need to be covered. To better understand what coverage is available to you, review this table of scenarios with coverage levels and cost-sharing information.
Spouse and Domestic Partner Eligibility
Your eligible spouse is the person to whom you are married at the date of retirement. This means that if you marry or remarry after retirement, that spouse is not covered by the program.
Your eligible domestic partner is the person for whom an approved affidavit is on record at the University as the partner of record at the time of retirement. As above, the same concept applies, if you register a domestic partner after you retire, that person is not covered by the program.
DDB for Surviving Spouses/Domestic Partners
The eligible spouse/domestic partner of a deceased retiree will have continuation of coverage for three months following the end of the month in which the retiree passes away. The credits for the deceased retiree are dissolved.
Continuation of coverage refers to your ability to continue with the same cost share for coverage (if applicable) for a surviving spouse/domestic partner between the ages of 62 and 65 or accrue the Defined Dollar Benefit credits for those waiving University coverage. Surviving spouses/domestic partners age 65 and older will continue to accrue credits for three months following the end of the month in which the retiree passes away.
After three months, the surviving spouse/domestic partner may elect to continue group coverage through the University; however, they will then become responsible for paying the full cost of the premium. However, they can use the remaining credits in their own account to pay the premiums until they are depleted. Coverage will end if the spouse/domestic partner fails to pay the monthly premium.
A surviving spouse becomes ineligible for coverage when they remarry. A domestic partner becomes ineligible when they establish a new domestic partnership or get married.