Preparing to Retire

As you think about when to retire, keep in mind that your age and years of service may affect your eligibility to receive benefits or other payments from certain programs.

If you are under age 65 when you retire:

  • You must be at least age 55 with at least 10 years of service to receive a prorated bonus from the Annual Incentive Plan (AIP) for the plan year in which you retire, even if you’re not employed on December 31 of that year.
  • You must be employed on December 31 of the plan year to receive a Retirement Account Contribution (RAC) of up to 3% of eligible pay contributed to your 401(k) account.  
  • You are not yet eligible for Medicare and will have to consider healthcare coverage (see the Retiree Healthcare Coverage tab for details).
  • At age 62, you will become eligible for Social Security Benefits.
  • Note: A select group of employees enrolled in the Supplemental Deferred Compensation Plan can receive a retirement benefit from the plan at age 55. Contact Lockton Financial Advisors for more information: Executive.Benefits-KCNQ@lockton.com.

If you retire between ages 62 and 70:

  • You can begin receiving your Social Security retirement benefits anytime between ages 62 and 70. However, the age you begin receiving benefits affects the size of your monthly Social Security benefit. Get details from the Social Security Administration at ssa.gov.

If you are at least age 65 when you retire:

  • You must have at least five years of service to receive an AIP Bonus and LTI Payment.
  • You can receive a prorated RAC for the plan year in which you retire, without having to be employed on December 31 of that year.
  • You are eligible for Medicare healthcare coverage (see the Retiree Healthcare Coverage tab for details).

The age at which you retire affects the coverage available to you.

If you retire when you or a family member you cover for health insurance is under the age of 65—and therefore not yet eligible for Medicare—you need to consider how you will maintain health insurance coverage. You may:

  • Extend your current Company health coverage under COBRA for a limited time (see details below)
  • Consider enrolling in your spouse or domestic partner’s plan through their employer, if available
  • Buy coverage through Via Benefits or the Marketplace at healthcare.gov. Note: Via Benefits can’t enroll residents of Vermont, Rhode Island, or Massachusetts in plans through the marketplace or directly through the insurance carrier due to state licensing restrictions. However, Via Benefits can help you choose a plan from publicly available information on the state’s anonymous shop and compare website.
  • Review this Planning for Medicare recorded presentation to hear from Blue Cross Blue Shield on the countdown to 65.

Note: A select group of legacy Sigma Aldrich and Millipore Chemicals employees may be eligible for retiree medical benefits if they meet certain age, service, and other requirements. Review your benefit options and eligibility on Benefits4MeEnroll.com.

COBRA Coverage

The Consolidated Omnibus Budget Reconciliation Act (COBRA) is a federal law that allows you to continue your active coverage for up to 18 months following your retirement.

  • You will receive information regarding the cost of COBRA, how to elect coverage, and how to pay your premiums shortly after your retirement.
  • You can elect to purchase continued medical, dental, and/or vision coverage, as long as you are enrolled in these plans on your last day of work. You may also be eligible to continue your Health Care Flexible Spending Account (FSA) and/or participation in the Employee Assistance Program (EAP).
  • The cost of COBRA is 102% of the total monthly premium for medical, dental, vision, and a Health Care FSA —which means it may cost you more than the other health insurance options available to you. Continuing participation in the EAP will cost you 102% of the cost the Company pays to offer that coverage to you, since you don’t pay for coverage as an active employee.

No matter when you retire, you must enroll in Medicare once you reach age 65.

Medicare is the federal health insurance program for people:

  • Age 65 or older
  • Under age 65 with certain disabilities
  • Any age with End-Stage Renal Disease (ESRD), which is permanent kidney failure requiring dialysis or a kidney transplant

Medicare is made up of four parts: 

Key Terms

Part A: Hospital Care

Part B: Medical Care

Note: Part A and Part B are each part of original Medicare, which is provided by the federal government

Part C: Medicare Advantage

Part D: Prescription Drugs

Note: Part C and Part D are offered by private insurance companies

Medicare

What It Covers

What You Pay

Additional Notes

Medicare Parts A and B make up the Original Medicare program, offered by the federal government

Part A: Hospital Insurance
  • Inpatient hospital services
  • Skilled nursing facilities
  • Hospice care
  • Some home healthcare

$0 premium if you have paid 40 quarters’ (10 years’) worth of Medicare taxes. If you have paid fewer, premiums are determined by the Social Security Administration.

Original Medicare (Parts A and B) does not cover:

  • Most prescriptions
  • Long-term care (also called custodial care)
  • Most dental care and dentures
  • Eye exams
  • Cosmetic surgery
  • Acupuncture
  • Hearing aids and exams
  • Routine foot care

Part B: Medical Insurance
  • Doctor visits
  • Outpatient care
  • Medical supplies
  • Chemotherapy
  • Preventive services

Standard base premium for 2024 is $174.70 per month (may be higher based on income) and usually deducted from your Social Security check. If your modified adjusted gross income is above a certain amount, you may pay an Income Related Monthly Adjustment Amount (IRMAA). If you aren’t taking Social Security benefits, you’re responsible for paying Medicare premiums independently.

Medicare Parts C and D are additional, optional coverages offered by Medicare-approved companies

Part C: Medicare Advantage Plan

All Original Medicare services and may cover extra benefits such as:

  • Prescriptions
  • Dental coverage
  • Vision coverage
  • Fitness benefits

You may pay a low monthly premium to a private plan, while continuing to pay your Medicare Part B premium to the federal government. This coverage caps your out-of-pocket spending on covered medical costs.

You are required to have both Parts A and B before you can enroll in a Medicare Advantage Plan.

Part D: Medicare Prescription Drug Plan
  • Covers Medicare-approved prescription drugs
  • Often included in a Medicare Advantage plan

You may pay a monthly premium. Can be purchased separately to go with Original Medicare.

You can only enroll in Medicare Part D if you have Part A and/or Part B coverage.

As an alternative to Part C and D, you may also find other Supplemental or Advantage benefit programs available through private insurance companies. As you consider which coverage is best for your needs, ask yourself:

  • Would you prefer to pay a higher monthly premium in exchange for less money when you receive care and a wider network of providers?
  • Do you anticipate having significant medical expenses after you turn 65?

There is no one right answer about which coverage to choose. If you have questions about your options, Via Benefits can help. Learn More About Via Benefits.

Enrolling in Medicare

You have an opportunity to enroll in Medicare Parts A and B during your Initial Enrollment Period (IEP), which is a seven-month window that begins three months before you turn 65 and ends three months after your birth month. For example, if you turn 65 on September 29, your IEP would be from June 1 – December 31.

If you don’t enroll in Medicare during this time, you may have to pay a later enrollment penalty for as long as you have Part B coverage. Your monthly premium will go up 10% for each 12-month period you were eligible for Part B but didn’t enroll. This penalty does not apply if you delayed enrollment because you were covered under a group medical plan. For example, if you retire from our Company after age 65, and you provide proof of coverage under our Company medical plan, you would not be penalized. 

The Annual Election Period (AEP) runs every year between October 15 and December 7. This will be your once-a-year opportunity to change your health plans and prescription drug coverage for the coming year.

You have two options:

  1. Sign up to get only Medicare coverage
  2. Apply to start getting benefits from Social Security (or the Railroad Retirement Board). Once you’re approved to get those benefits, you’ll automatically get Part A coverage. You’ll choose if you want Part B coverage when you apply for benefits.

When you’re ready, contact Social Security to sign up:

  • Apply online (at Social Security): This is the easiest and fastest way to sign up and get any financial help you may need. You’ll need to create your secure my Social Security account to sign up for Medicare or apply for Social Security benefits online.
  • Call 1-800-772-1213. TTY users can call 1-800-325-0778.
  • Contact your local Social Security office.
  • If you or your spouse worked for a railroad, call the Railroad Retirement Board at 1-877-772-5772.

For more information about Medicare, call your local Social Security Office.

Note: If you’re currently enrolled in the Consumer Choice Plan with HSA when you enroll in Medicare, you can’t make contributions to your HSA for any months after are enrolled in Medicare, even if you’re also covered by an HSA qualifying plan. 

As your chosen retirement date approaches, use the following checklist to take the right actions at the right time.

Timing

Action

180 days prior to retirement
  • Notify your manager and HR of your intent to retire. Review your retirement plan options and discuss your situation with a tax advisor.

90 days prior to retirement
  • If you want to begin receiving Social Security right away and are at least age 62, apply for Social Security benefits, if applicable. You may apply online at www.ssa.gov/benefits/retirement, in person, or by calling 1-800-772-1213.
  • If you are at least age 65 or otherwise eligible for Medicare by your retirement date, apply for Medicare. You may apply online at www.ssa.gov/benefits/medicare, in person, or by calling 1-800-772-1213.
  • Contact Fidelity, your 401(k) Plan administrator, to request a 401(k) estimate, if applicable. Call Fidelity at 1-800-835-5095 or visit netbenefits.com.

30 – 60 days prior to retirement
  • Contact your manager to prepare for your last day, which includes submitting your letter of resignation in writing.
  • Review your coverage options and work with the Benefits4Me Program Service Center to determine which options work best for you.

Upon retirement
  • Your Company medical, dental, and vision coverage will continue until the last day of the month in which you retire.
  • After your retirement date, you’ll be mailed an information packet about COBRA continuation coverage. Note: This information is a legal requirement explaining your right to continue certain benefits for a limited time after your retirement.
  • Contact Fidelity, your 401(k) Plan administrator, for your account withdrawal options, if applicable. Call Fidelity at 1-800-835-5095 or visit netbenefits.com.
  • Review your options and work directly with the carrier to convert any applicable life insurance coverage.

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