What You Need to Know About Early Retirement Executive Compensation Packages and Health Insurance Coverage

Article by: Kim Daigle
President/CEO – Insurance Trust 

Does your credit union currently offer an early retirement executive compensation package that includes health insurance coverage?  

You need to be aware that just because you were offered an early retirement package by your credit union’s Board of Directors does not mean that it is necessarily compliant with the organization’s current or future health insurance companies’ provision for retired employees.

Over the last 3 years, I’ve discovered that many credit unions’ executive compensation plans do not align with the insurance companies’ policies. To qualify for your employers’ health insurance coverage, you must be working the minimum number of hours to remain on the active group plan.  This will vary but minimum hours are dictated by each carrier and your plan documents and must be consistent for all employees.

If you plan to retire before age 65 and have an executive compensation package from your Board of Directors that includes health insurance coverage, you NEED to ask the following questions:

  1. Does your current or future health insurance company offer retiree coverage for those retiring under age 65?
    • Just because your employer keeps you on the active group plan doesn’t mean you are eligible for coverage. If your credit union keeps you on the active group plan and your current or future health insurance does not allow retired employees under age 65 on the active group health insurance plan, you’re not eligible for coverage.
    • If your health insurance carrier does allow under age 65 retirees to stay on the active group health insurance plan, make sure you get this in writing from your health insurance carrier including the parameters in which they allow an under age 65 retiree to be on the current plan.
  2. If your health insurance plan does not allow you to be on the active group health insurance plan under 65, here are the options you have:
    • If your credit union is large enough to be COBRA eligible (20+ FTE or in a MEWA), this would allow for coverage for 18 months from your retirement and end date on the active plan.
    • If COBRA will expire prior to turning age 65, you can then enroll in an individual marketplace health insurance plan through healthcare.gov until you become eligible to enroll in Medicare. These plans are offered on the “exchange” but can be quite costly since it based off your current age.
    • If your credit union is not large enough to be COBRA eligible, you can enroll in the individual marketplace health insurance through healthcare.gov.
    • Your employer CAN contribute to the cost of your COBRA coverage AND/OR your individual marketplace health plan coverage.

Insurance Trust uniquely understands credit unions and Employee Benefits. Please utilize our agency as a resource to help make sure your executive compensation package is compliant.

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