Understanding Your State Farm® Retiree Health Reimbursement Account (HRA)
Information for Medicare-Eligible Retirees
In 2011, State Farm informed Medicare-eligible retirees of a change to their retiree medical benefits. Instead of continuing to be covered under the State Farm Group Medical PPO Plan, Medicare-eligible retirees will select and enroll in Medicare supplemental insurance coverage, such as Medicare Supplement, Medicare Advantage and/or Medicare Prescription Drug plans.
The Company plans to provide an annual contribution to retiree Health Reimbursement Accounts (HRAs) to reimburse Medicare-eligible retirees for the premium cost of the individual Medicare supplemental plan(s) they choose. The Company contribution will be added to the retiree HRA in January of each year. The amount of the retiree HRA contribution will be communicated to you before the start of each year, which will help you budget for your health care expenses.
NOTE: Effective January 1, 2014, the HRA contribution may also be used to reimburse out-of-pocket prescription drug costs and other employers' group medical plan premiums (paid on an after-tax basis), in addition to reimbursing premiums for individual Medicare insurance coverage, such as Medicare Supplement, Medicare Advantage, and/or Medicare Prescription Drug plans.
Here are the Highlights
- Retiree HRA dollars can only be used for reimbursement of eligible premiums for individual Medicare Supplement, Medicare Advantage and/or Medicare Prescription Drug plan coverage. Medicare Part B premiums will not be reimbursed from the retiree HRA, and other health care expenses such as copays, coinsurance, and deductibles are not reimbursable either.
- You'll continue to be reimbursed for your insurance premiums until the retiree HRA dollars are depleted. Any additional premium expenses for the year would be paid by you.
- Any remaining balance in your retiree HRA at the end of the year will rollover to be used in future years.
- The retiree HRA is available whether you enroll in Medicare supplemental insurance through Aon Hewitt Navigators or through another party.
- If you have a spouse or dependent adult/child who is Medicare eligible, they will also receive a Company contribution to reimburse them for the cost of their individual coverage. A joint account will hold the Company contribution for you and your Medicare-eligible spouse or dependent adult/child.
- If you have a spouse or dependent adult who is not Medicare eligible, they will be covered under the State Farm Group Medical PPO Plan's Pre-Medicare Retiree Option until they become eligible for Medicare.
- If you have dependent children who are not Medicare eligible, in general, they will be covered under the State Farm Group Medical PPO Plan's Pre-Medicare Retiree Option until the end of the year in which they turn age 26.
Here's How it Works
- Upon receipt of proper notification* of paid premiums, you will be reimbursed for the full amount of your insurance premiums until your retiree HRA dollars are depleted. Any remaining premium expenses for the year would be paid by you.
- If you sign up with an insurance plan that offers automatic reimbursement, notification of the premiums you pay will be submitted to the retiree HRA on your behalf, generally at the end of each month.
- If automatic reimbursement is not available through your insurance plan, you can submit notification* of your paid premiums online or by mail or fax.
- Once the notification is received, reimbursement from your retiree HRA will be deposited into an account of your choice, or a check can be mailed directly to you.
*Notification of paid premiums may be validated by providing one of the following: Medicare statement for the year, billing statement, invoices, payment vouchers, cancelled checks, or online bank statements.
Conveniently Pay for Your Coverage
- Pay your health insurance premium by check each billing period
- Have your premium automatically withdrawn from a checking or savings account. Most insurance providers that Aon Hewitt Navigators works with allow automatic withdrawal as a convenient alternative to paper checks. To have your premium automatically withdrawn, you'll just need to provide your benefits advisor with your checking or savings account details when you apply. Your first premium is typically paid by check, and future payments will be withdrawn from the account you choose.
NOTE: Your premium will no longer be deducted from your pension check or term pay. However, if you have a non-Medicare-eligible spouse or dependent adult/child, their premiums will continue to be deducted from your pension check or term pay.
It's This Easy
- Enroll in a plan.
- Pay the bill by check or automatic withdrawal from a checking or savings account.
- Obtain reimbursement for premiums by check or direct deposit:
- automatically if offered by your carrier/plan,
- or by submitting notification of premium payments online, by mail or by fax.
How Does Reimbursement from the Retiree HRA Work?
Step 1: Pay Your Medicare Insurance Premiums
You are responsible for paying your Medicare supplemental insurance plan premium directly to the insurance company.
Most insurance carriers will allow you to pay your premium either by check or by having money withdrawn directly from your bank account. In addition, Medicare Advantage and Medicare Part D Prescription Drug plans allow you to have your premium withheld from your Social Security check. Having premiums withheld from your State Farm pension check or termination pay is not an option.
Aon Hewitt Navigators recommends setting up automatic payment to help you avoid any lapses in coverage. Your benefit advisor can help you get this started when you enroll.
Step 2: Submit Your Health Expense Claims for Eligible Premiums to Your Spending Account
You can be reimbursed from the retiree HRA in any of three ways:
- Automatic Reimbursement: Available if you enroll through Aon Hewitt Navigators, this service ensures that your Medicare supplemental insurance premium will be automatically reimbursed from the retiree HRA; no claim submission is necessary. This option is available for most (but not all) Medicare supplemental insurance plans—your benefit advisor can confirm if your plan supports automatic reimbursement.
- Online Claim: You can submit an electronic claim for reimbursement on the Your Spending Account website.
- Paper Claim: You can submit a claim for reimbursement in paper form.
Step 3: Receive Your Reimbursement
Once your claim for reimbursement is approved, you will be paid from the retiree HRA. Your reimbursement payment will be made by either a direct deposit to the bank account of your choice, or by a check mailed directly to your home.
Once you enroll in individual Medicare supplemental insurance, additional details on the retiree HRA reimbursement process will be provided to you.
Common Questions and Answers
If automatic reimbursement is not available through my insurance carrier/plan, do I have to submit notification of paid premiums every month?
You'll have the choice to either submit notification each month or to submit quarterly, semi-annually or annually.
NOTE: In 2013, if you enrolled through Aon Hewitt Navigators, but the carrier/plan doesn't offer automatic reimbursement, you can request a Recurring Premium Reimbursement Claim Form from Your Spending Account (YSA) and submit that claim form once each year to establish recurring monthly reimbursements from your HRA.
Where will I submit the proof of payment for my incurred claims?
You may choose to file your claim online on the My State Farm Benefits Resource website at www.resources.hewitt.com/statefarm or mail or fax in your claim. Online, you'll be asked to enter your claim information then fax, mail or upload your documentation. If you prefer to enter your claim information on a paper form, you may request a paper form from the benefits center and mail your documentation to: PO Box 785040 Orlando, Florida 32878-5040. Your claim will be reviewed and processed upon receipt, and you will receive an Explanation of Benefits (EOB) and payment (if applicable) via check.
Who handles the retiree HRA for me?
Your Spending Account (YSA) is a service provided by Aon Hewitt, which administers the retiree HRA on behalf of State Farm.
Where can I view my retiree HRA?
You'll be able to access your retiree HRA on the My State Farm Benefits Resource website (www.resources.hewitt.com/statefarm). If you have questions regarding your retiree HRA, you may contact a benefits advisor at 800-505-8575. Once your retiree HRA takes effect, benefits advisors can continue to help you with your general retiree HRA questions, and if you need more detailed information regarding claims, they will transfer your call to a Your Spending Account representative who can help.
Do I have to enroll through Aon Hewitt Navigators for the reimbursement?
No. Enrollment through Aon Hewitt Navigators is optional. All State Farm retirees will have access to a retiree HRA regardless of where they purchase their individual policy.
I want to get my Medicare-eligible spouse set up on the retiree HRA, how do I do this?
If your spouse is eligible for State Farm coverage and is Medicare eligible, you'll receive an HRA amount for each of you to reimburse you for the cost of individual coverage. You and your spouse will have a joint account for your contributions, but you will choose individual coverage that meets your needs. A benefits advisor can discuss your options with you and help you enroll yourself and your spouse. No additional action is required on your part.
Are the contributions or reimbursements provided through the retiree HRA considered taxable income by the IRS?
Contributions into the retiree HRAs will not be reported as income. For retired employees, reimbursements from the retiree HRA will not be reported as income because the amount may only be used for reimbursements of premiums for Medicare Supplement, Medicare Advantage and/or Medicare Prescription Drug plans (i.e., medical expenses). However, for retired agents, reimbursements will be reported as income on Form 1099 because agents, as independent contractors, do not benefit from the tax exclusion for Company-paid medical benefits. This is consistent with how the Company treats its share of medical premiums for coverage today for both employees and agents.
Will I earn interest on the money in my retiree HRA?
No. The retiree HRAs are not interest-bearing accounts.
Will I receive monthly statements from YSA?
No. However, at the end of the calendar year, YSA will send out a statement (fourth quarter) to those who have a balance left in their HRA. This will help to serve as a reminder to file claims for unused funds if desired. You can log on to the Your Spending Account website at any time to view your available account balance and claim activity.