ADM Retirement Options: Pension and Health Insurance Options Explained
If you’re retiring from ADM, there are a few things we want you to know, including the ADM buyout options and your retiree health insurance options.
We’ve been approached by several individuals and couples faced with these decisions, and we were able to provide some counsel and peace of mind. Once you understand all your options, you can make an informed decision and take comfort in it.
What is the ADM Buyout?
A couple recently came into our office here at Sams/Hockaday & Associates, and they were faced with an ADM buyout dilemma. They were 55 and 58 years old.
They were given three options for their pension package:
- A lump sum
- $3,900/mo for the rest of the man’s life, but if he passed away, the wife gets nothing
- $3,300/mo for the rest of both of their lives
They wanted to know which option they should choose. We played around with some numbers to see what could potentially be done with the money. For example, if they took the $3,900 per month option, and we put $600 per month toward a big life insurance policy, would it make sense?
We were trying to see what it would look like if something happened to the husband, and the wife could get a multi-million dollar life policy.
However, when all was said and done, we were able to endorse the $3,300 per month option.
Most folks probably come to us believing we’ll give this big sales pitch on how we could invest the lump sum option, but in our opinion, the best thing to do in this case is to accept the $3,300 ADM is offering.
Those numbers may be different for everyone, but after doing the homework and running the numbers, the lifetime pension package seemed to be the best deal for this couple.
We will help you determine which option is in your best interest. We don’t want you to feel like we’re endorsing ADM’s buyout option for everyone in every situation, because every situation is different. We can evaluate your scenario, review your options, and see if we can help you make the best decision.
What About My 401 (k)?
Once we determine the best option for the pension package, we naturally shift to your 401 (k) or other retirement savings account.
Clients often come in with questions like, “Should I leave my 401 (k) where it is, should I roll it over, what should I roll it into?”
One of the more popular options is to consider a guaranteed contract that offers a modest interest rate and has zero risk.
When you’re over 65, the investment focus shifts from acquiring wealth to preserving it and helping it grow modestly. We have programs that allow you to earn right around 4% interest on your 401 (k) once we roll it over. The rollover process is not a taxable event.
However, there are many options to choose from, and we simply try to determine what your goals are. When do you plan to use the money, and how much do you plan to use when you do? That’ll help us make our best recommendation for you.
What Is This Health Reimbursement Arrangement?
This doesn’t apply to you if you’re under 65, but if you’re over 65, ADM is offering a health insurance package that goes with the pension ordeal.
It is called a Health Reimbursement Arrangement, or HRA. ADM says they will allocate benefit dollars into that account for you, and the amount will be based on your years of pension vesting before January 1, 2018.
Here is a screenshot from an ADM document titled “Salaried Retiree SR21 and HRA Benefits Summary, Effective January 1, 2019”:
The document also states that if you and your Medicare-eligible spouse enroll for coverage effective January 1, 2018 and you have 30+ years of service at the time of your retirement, ADM will allocate a total of $3,920 ($1,960 x 2) to your HRA for the year.
The gist is that you can purchase a Medicare Supplement and Part D drug plan with those dollars through One Exchange – and you’re encouraged to by ADM. The document says, “Once eligible for Medicare, the SR21 medical plan ends and options for Medicare Supplement plans are available by contacting One Exchange.”
But we recommend not purchasing through One Exchange for a few reasons:
- You only have a handful of plans to choose from, and they generally are not the plans with the most competitive rates – we have more options that offer the same exact benefit, but for less premium
- Many retirees come to us very frustrated with filing claims – we can assist you with that and can help when something goes wrong, such a claim being denied for unknown reasons
- You are likely doing everything over the phone, often times long distance, and sometimes there’s a language barrier that can make it difficult to communicate
- It’s a serious headache just trying to get the money that’s rightfully yours
We often have clients that call us and say, "I just got a letter from the benefits company saying I can save money by switching plans, but I have a plan with you that's cheaper!"
The retirees from Caterpillar had a very similar situation, as did the retirees from Ameren. Many companies are making the shift toward this type of arrangement, so we have quite a bit of experience with it.
It is in your best interest to let us help you choose a Medicare Supplement and Part D drug plan.
Our local agents at Sams/Hockaday offer many benefits, including:
- Access to over 20 Medicare Supplement options, compared to a select few (big savings to be had!)
- Access to all 27 Part D drug plans compared to a couple options (again, major savings and options)
- Having a personal relationship with a local representative who can assist you every time you need help
- Annual reviews on your drug plan, since plans change every year
- Annual reviews on your Medicare Supplement, which can experience rate increases every few years
- A personal touch and hands-on experience with someone who understands your situation – you won’t have to re-explain yourself every time you need assistance
- Our service is 100% free!
From our experience, we truly believe that a lot of people don’t fully understand the options available to them! That’s why we’re so excited to put all of this into English for you.
You can have comfort and peace of mind knowing that you’ve done your homework and have learned all your options.
What Should I Do Next?
We know ADM retirees are looking for some guidance and counsel.
If the only person you’re listening to is your coworker, you don’t have a lot of peace of mind that you’ve done your due diligence. That’s why we wanted to publish this article and share an alternative option.
It is our understanding that the decision and necessary documents must be completed by May 31, 2019. If you need counsel, please reach out to our office by calling 217-423-8000 and our agents can help you compare your options!
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