Retirement Letter

The notional account and now the 401h is a medical account that NN funds. They gave an employee $12k annually and their spouse $6k annually until a few yrs ago when the plan changed. They still fund the account however the amount is less. Regardless, many people have between $100k-$200k+ in their account that will pay for health insurance until the money runs out. Clearly this is a great benefit if one makes it to 55, now 60. And clearly this is a big loss for those who had 5 years to go to retire at 55. Those who saved and invested properly who worked at NN for 10+ years could very well retire nicely at 55. Now they have to wait or risk losing this benefit if their sacked before turning 60. Good way to Cust cost but not good for the tenured, loyal employee.

 

agreed. And this is proving to show that NN doesn't value older employees. Ageism at its finest !

 

Very true.

For whatever this might be worth, some companies provide 401(h) accounts to provide health insurance for their retirees from the age they retire until age 65 when the retiree becomes eligible for Medicare. After the retiree goes on Medicare, the funds in the 401(h) revert back to the employer. That's what happened to me. My employer used the money in my 401(h) to buy health insurance for me from age 62 (when I retired) until age 65. After I enrolled in Medicare, the remaining money in my 401(h) was no longer used to buy health insurance for me.

My spouse is the NNI employee, and they have the 401(h) account. Does anyone know what happens to the remaining funds in the 401(h) after retiring from Novo and reaching age 65?

 

Exactly.

 

Yes, the money does exist. It's with Charles Schwab. But so what!!!

Although the 401(h) account doesn't precisely fit the definition of notional, it might as well be a notional account. Should you be fortunate enough to qualify for it, it may be the case that you may not ever take possession of a dime of it.

And this question still remains; What happens to the balance in the account AFTER you reach 65 and go on Medicare? If Novo uses the money in my account to buy health insurance for me from age 62 until age 65 and there is an amount leftover in my 401(h) what happens to that money? Do I get it in a lump sum?

 

Because you were hired in 2007, you are in the 2005 Retiree Medical Plan. Those hired after 10/1/2011 are in the 2012 Retiree Medical plan. The 2005 plan is frozen and notional. The 2012 plan is the 401(h) account.

You wont ever utilize it (that's if you make it to age 60 and have 10 YOS) to pay for health insurance costs....Novo will utilize the funds in the account on your behalf.

Sure it's a bogus benefit for those not close to that age. For those of us that are 55 to 59 its not so bogus. We have to decide this year whether or not we're going to leave Novo. Anyone 60 years old doesn't care.

 

Actually once you hit 55, I think, you can roll over the 401h into a qualified retirement acct of your choice

 

NOPE!!! I'm vested and over 55, but since I'm not 60, this will un-vest January 2, 2019.....unless I "retire" before then.

 

Does anyone have an answer as to whether the funds are no longer available after 65? Have you seen the cost of insurance through Novo? I think I could do better in the open market but that doesn't appear to be an option. The thought of contacting AskHR keeps me up at night....

 

I don't know whether or not the funds are still available to NNI employees after age 65.

But what could be done is Novo could place any remaining money in an employee's 401(h) with another party (for instance Towers Watson) who could the open and administer a Health Reimbursement Arrangement. While the employee couldn't take direct possession of the money, they could submit receipts for reimbursement to a company such as Towers Watson. The employee could be reimbursed for medical expenses such as doctor and prescription co-pay's, vision exams, an health insurance etc.

 

If you've never heard of a Health Reimbursement Arrangement, then click on this link;
https://www.zanebenefits.com/blog/bid/97288/health-reimbursement-arrangement-hra-what-is-it

This is something NNI could do with any remaining funds in an employee's 401(h) after the employee reaches age 65 and goes on Medicare.

 

There are lots of could's and should's for Novo to do, but what will Novo do? Exactly what has been done by offering a carrot that most cannot reach.

I learned yesterday by calling Schwab that if the retiree doesn't start drawing funds before 65, the funds evaporate and the account is closed. This includes retiree account and 401h. What I don't yet know is if the funds must be exhausted before 65, which is doubtful because Novo quotes supplement rates as "variable". The policy on the Novo benefits site is actually understandable, it just doesn't go far enough to explain different scenarios like you would find in FAQ.

 

Well, then why not withdraw all funds in your 401h in a single lump sum prior to age 65?

 

Ok, this is what happens with the original money in the 401h account. I have been here for 19 years and have a few friends that have retired and use these funds. My account is huge and I am very upset because I miss it by 1 year. Completely unfair that someone can be here for just 10 years and reaches 55 or now 60 gets the money. I could literally be here for 25 years and never get anything.

So here's how it works.......when you decide to retire you can if you want but you don't have to start using the money, you can start whenever you want. So before when I could retire at 55 and have the accounts, I could use my husbands health insurance as long as he still worked, the money would just be frozen until I was ready to use it. But whenever you start to use the account you pay for either full insurance, which would drain it pretty quick no matter how much you had saved up or if you are on Medicare it pays for the fee for the Medicare supplement, there are a few supplements that you can choose from. The supplements are very nice. One of my best friends and old partner has the account and her husband had cancer, she said it covered everything except about $500, his treatments were over $500,000. Fortunately he is a success story and has survived 5 years out and is considered cancer free.

 

yes that’s how it works! It’s great if you have/ get it!

 

Because you can't withdraw the money, It can only be used for insurance purchased through NNI.

 

I understand the 401h retirement account. What about the 401a Money Putchase Plan? How does that work. Sorry! Newbie here! Be nice.