To Semi-Retire or Not To Semi-Retire

Now I have another scenario where I can use help.

Do you think we would be allowed to require 65+ ee's to take Medicare as primary and us secondary when they want to semi-retire? We've got someone who wants to go part-time but still get benefits. What they've come up with is a phony 4 day week, 8 hours a day.

Here's the kicker. Actually, they will be working 3 days a week and using a vacation day each week to make up the 4th day = 32 hours (minimum for benefits). They have enough vacation days to last them at least 1 year. Unfortunately, this is not going to be a one time event. We've got several of us ol' timers who will be trying to get creative with their working vs retiring time.

Again, any help would be appreciated.
KathyD

Comments

  • 15 Comments sorted by Votes Date Added
  • With our plan, Medicare cannot be primary if the EE is eligible for our benefits. Though your proposal sounds good in theory (at least to the semi-retiree!), I think it will be a nightmare. Let us know what happens!

    We had an employee retire a few years ago after which we brought her back as an hourly employee to cover for vacations in the department she was in before retirement. When we informed her that we wouldn't need her anymore, she filed unemployment and was able to receive benefits based on her salary from the previous year! I fully understand that unemployment is the employee's right, BUT this woman was treated like a queen and had one heck of a retirement party. We felt extremely slighted by her behavior.
  • Thanks for the reply. Unfortunately, these thngs have a way of being a catch 22. She's been an outstanding ee for about 20 years, so we want to be as loyal to her as she has been to us, however.......!
    Our Plan Doc says that eligibility depends on an ee being regularly scheduled to "work" 32 hours per week, not regularly scheduled for 24 hours plus at least 8 hours of PTO! I'm afraid this play on words is going to be a can of worms if we don't come up with something concrete to cover it, and soon.
    Thanks, again.
    KathyD
  • If you count PTO as hours "worked" for the purpose of determining eligibility for other employees, I think it would apply here too.

    I fully understand how hard this situation is...and how easily it can come back to bite you!
  • We are the same as FunHRBanker: We cannot force an employee to use medicare as their primary if they are eligible for health benefits with us. When we change the status of a full-time ee to part-time we pay them all accrued vacation that they have coming on their last pay check as F-T. We also notify all insurance companies of their change in status. Speaking of insurance companines, check with your provider if you are seriously considering this.
  • Thanks, Dutch2.
    Are you saying that if an ee wanted to do what this ee is doing, you would tell them they are now considered part-time (24 hours), thus no benefits, and here's the money for the PTO you have accrued and not used?
  • Obviously, whenever someone takes a week or two, or a day or two, using their PTO accruals, those days are still counted toward length of service and their "full-time" status. It's a little harder to swallow when it's planned only as a way to keep benefits, and that PTO day each week is every week forever.

  • Do you require that leave be approved by supervisors or managers before allowed? If so, then she is basically asking for a permanent approval of weekly time off. I would think other employees would be expecting you to allow them to play the system the way this employee wants to. Why shouldn't they be allowed to take off one day per week if they have time built up? How would that affect your busy periods? Why shouldn't they get to schedule their leave time for a couple of years in advance before you know if it will work for the company or not?

    Based on sick and vacation history, we pay out PTO at 45% when an employee terms. We had an employee retire and then come back to work for us. She works one day a week and also fills in for her department. We required a termination and paid out her leave. She then came back to work for us a month later. She is, and always has been, an excellent employee, but we couldn't make an exception for one employee when it might cause other employees to expect the same.

    We also do not allow employees to schedule a termination date and then use up their leave time before the date.

    Nae
  • I agree with Nae. This is a bad idea!

    We have changed our PTO system (we have separate vacation, sick, and personal time) to an accrual system. If an employee terminates before the time is accrued, they must pay back any unearned time they've used. We do not pay out unused time at time of termination. The only exception is retirement after age 60 with 20 years of experience, 10 of which must be with us, we will pay 50% of earned sick time.
  • Don't they have to earn it before they get to take it with pay?

    With this ee, the 20 years experience is all with us, which is one reason why we need to weight the good will vs negative moral affects by holding on to hard rules instead of the benefits of being more gracious.

    Fortunately, we have several ee's who are in the 20 year area. We figure we must be doing something right, so don't want to blow it by making the wrong move here.

    It was mentioned that some of you pay out only a portion of the PTO accruals when a person terminates. We have some people on payroll in California, so we use CA laws everywhere (unless a state is tougher on the employer, which is unlikely). CA says accrued PTO is considered earned wage and every penny will be paid to the ee upon termination. I'm sure nobody is surprised to hear that out of CA! ha ha
    KathyD
  • Yes, all PTO days taken do need to receive manager's approval. Unfortunately, this quagmire bothers us in the HR administration a lot more than it does her manager or her co-workers. They're thrilled she is not retiring all together, and it's actually easier for the manager to plan schedules when he knows she will consistently be working Mon-Wed each week.


  • Looking back to your first post, I'm a little confused. Does she still want to be eligible for your benefits or just Medicare? If I understand Dutch correctly, you wouldn't have this issue if you simply paid out her accrued time (in accordance with your policy) and had her work 3 days/week. At that point, she wouldn't be eligible for your benefits and Medicare could be primary. Most plans do not allow Medicare to be primary if the EE is working enough hours to qualify for benefits.
  • She wants to continue her benefits under the group plan, not go to Medicare. She simply wants to cut back on her hours, but still qualify as full-time for her benefits. She wants to physically work Mon-Wed, 8 hours/day. Then she wants to use her accrued PTO at 8 hours per week to equal the 32 hour requirement for eligibility for benefits.

    Our Plan Doc states that 32 hours per week meets the requirement to qualify for health, life and dental benefits. Where we may differ from a lot of companies is that we quantify between a permanent ee and a temporary ee. We have several ee's who work part-time, permanently. If their schedule does not meet the 32 hour requirement, they are not eligible for the insurance benefits. However, they are eligible for all other benefits, as in vacation, holidays, 401k, bonuses, etc. Those benefits are simply scaled to coincide with the hours they work. Except for the insurance benefits, they are just like any other permanent ee. They just have shorter, but regular, hours. It has been a win-win proposition.


    By the way, even if I don't find a resolution out of my questions, today, I want to thank all of you for your time and expertise. You have all been very helpful. Thank you.
    KathyD
  • If you decide to allow this, you are setting a precedent. All future resignations and retirements will be subject to how you handle this situation. There will come a time when one of your retirees will not be as welcome to return as a part timer.

    Our policy on vacation requires that you must use your vacation each year. How did this employee manage to accrue at least 52 days vacation?

  • Excellent point Ritaanz. As much as you'd like to keep her based on her wishes, I think it's a bad can to open.

    We put a max on vacation carry over (10% of time earned in the preceeding year), personal days do not carry over, and sick days can accrue up to a max of 66 days (the waiting period for long-term disability).
  • You are both right. We need to be sure we are happy, and in compliance, with whatever way we go because it's not a matter of IF but WHEN it will come up again.
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