The University Record, May 21, 1996
Terminated staff members may continue benefits through COBRA
From the Benefits Office
Faculty and staff members who lose their eligibility for benefits because of the termination of their employment are eligible for COBRA continuation for themselves and their covered dependents if they apply within 60 days of their termination.
The Consolidated Omnibus Budget Reconciliation Act (COBRA) is a federal act that allows the continuation of many benefits including health insurance, dental insurance, vision insurance and the Blue Cross Blue Shield of Michigan (BCBSM) prescription drug program (a bargained-for benefit).
The faculty or staff member will be required to pay the total cost of the insurance plus a 2 percent administration fee; however, the premiums will be at the University's group rate. Faculty and staff members can extend coverage for themselves and their covered dependents for 18 months.
The Benefits Office will be notified of an employee's termination and will mail a COBRA application immediately. A faculty or staff member who does not receive the application within a reasonable length of time (approximately 10 days) should call the Benefits Office at 763-1214 and ask for the COBRA specialist. There is only a 60-day window for applying.
Faculty and staff members have several options for their retirement plan accumulations in the event of termination. They can begin partial or full annuities at any time after termination regardless of age or length of service; or they can continue contributions to the plan on their own on an after-tax basis by sending premiums directly to TIAA-CREF; or they can suspend contributions and let interest and dividends continue to accrue until ready to begin retirement.
There are limitations to cash withdrawals from the Basic Retirement Plan. Up to 100 percent of accumulations in TIAA, CREF and Fidelity are available for cash withdrawals for terminated faculty and staff at age 55 or older. Withdrawals from the TIAA Traditional Account are made over a 10-year period.
Accumulations in the Supplemental Retirement Account (SRA) can be withdrawn at any time after termination of employment. Contact TIAA-CREF and Fidelity for applications. (TIAA-CREF, 1-800-842-2252; Fidelity, 1-800-343-0860).
Cash withdrawals from either plan may be subject to a 10 percent IRS penalty and a 20 percent federal withholding tax.
Call the Benefits Office, 763-1214, for additional information.