As an employee of the University of Michigan (U-M), you know that the university and students appreciate their staff. It’s no surprise that the university employee benefits package offers a variety of valuable financial, healthcare, and insurance benefits.

As one of the largest universities in the country, the benefits package is competitive and valuable for employees. At Pilot Wealth Management, we specialize in helping University of Michigan employees make the most of their benefits package and plan for a secure financial future.

Key Benefits of the University of Michigan’s Benefits Package

First, let’s quickly review some of the key benefits that U-M offers their employees focusing on retirement:

Retirement Savings Plans

Basic Retirement Plan (403b, 401a), 403b Supplemental Retirement Account,  and 457b Deferred Compensation Plan

Health Insurance

GradCare, U-M Premier Care, Comprehensive Major Medical, BCBS Michigan Community Blue PPO, Prescription Drug Plan

Flexible Spending Account (FSA)

Health Care Spending Account, Dependent Care Spending Account

Dental

Delta Dental PPO

Vision

Davis Vision

Insurance

Group Life Insurance, Travel Accident Insurance, Basic Long-Term Disability, Expanded Long Term- Disability, Legal Services

Making the Most of Your Benefits

1. Retirement Savings Plan

The basic retirement plan (403b, 401a) are tax deferred defined contribution plan with two-for-one matching on earnings up to $275,000. The employee contributes to the 403b plan and the university contributes to the 401a. Regular faculty and staff may participate and all savings are immediately vested. Employees contribute 4.5% to 5% of their pre-tax salary and receive 9-10% from U-M.

For the 403b supplemental retirement account, employees can make pre-tax and Roth after-tax contributions. There is no U-M match but you can contribute $18,500 if under age 50 and $24,500 if age 50 and older.

In the 457b deferred compensation plan you can save on top of adding money into the basic retirement plan, as well as the 403b. The 457 allows you to add an additional $18,500 if under age 50 and $24,500 if over age 50. Contributions can be made pre-tax and Roth after-tax.  There is not a 10% IRS penalty for early distributions under age 59 ½ from this plan, which applies to the other retirement accounts.

Employees may invest their retirement accounts at TIAA and Fidelity where they have a list of target date retirement funds to choose from.

2. Health Insurance

GradCare is available to GSIs, GSSAs, GSRAs, medical students, and sponsored graduate student groups at the University of Michigan. The plan pays 100% of the cost for most medical expenses with some co-pays ranging from $20 to $100.

With the U-M Premier Care-Employee plan, the employee must reside in Genessee, Livingston, Macomb, Oakland, Washtenaw and Wayne counties; and portions of Ingham, Jackson, Lapeer, Monroe, and St. Clair counties. This plan is very similar to GradCare but it’s for regular employees.

The comprehensive major medical provides nationwide coverage. Many medical expenses are “Partially covered” which means you pay a $500/$1,000 deductible, 20% co-insurance up to the annual out-of-pocket maximums, and costs that exceed the BCBSM fee schedule or balance billing when non-participating providers are used. Co-insurance means the percentage amount of the provider’s charge you pay for a covered service.

BCBS Michigan Community Blue PPO plan offers two service coverage levels depending on if you're using an In-Network or Out-of-Network provider. Generally, the In-Network costs are covered by the plan or have a low deductible of $25-$30. Out-of-Network has some medical expenses only covered at 50%.

The Prescription Drug Plan is administered by MedImpact HealthCare Systems. You get access to local and national chain pharmacies as well as mail-order pharmacy. The copay is determined by if its generic, a preferred brand, or a non-preferred brand and whether it’s dispensed by a retail pharmacy or the mail-order pharmacy.

3. Flexible Spending Account (FSA)                            

These accounts allow you to set money aside to use to reimburse yourself for health care and dependent day care expenses incurred during the plan year. You never pay federal income or Social Security taxes on this money. When you have eligible medical expenses, you can pay yourself back from your accounts with before-tax dollars.

Health Care Spending Account

You may contribute a maximum of $2,600 per year pre-tax to pay for medical, dental, vision, and hearing care expenses.

Dependent Day Care Spending Account

You may contribute a maximum of $5,000 per year pre-tax if married. Highly compensated employees making over $120,000 can only contribute $3,600 per year. You can use this account to pay for childcare expenses that are necessary for you and your spouse to work.  

4. Dental

The Delta Dental PPO plan has a deductible and maximum benefit per person on regular and orthodontic work. There are 3 different coverage options, with Option 3 covering in the most and Option 1 covering the least.

5. Vision

The Davis Vision plan covers eye exams, eyeglass frames, and lenses.

6. Insurance

Life Insurance

The group life insurance plan is offered through Metlife. Eligible employees receive $30,000 of life insurance paid by U-M. You may also purchase additional group life insurance for yourself as well as your spouse and children, which may be less expensive than a private plan.

Travel Accident Insurance

All active employees traveling domestically and internationally on official U-M business are provided coverage for accidental death or permanent total disability. If you die while traveling, the plan pays a minimum benefit of $50,000 or 10 times your salary, whichever is more, with a maximum of $500,000. The plan also pays benefits for dismemberment and disability with a maximum benefit for anyone covered accident being $10 million.

Basic Long-Term Disability

After 4 years of service, members of AFSCME receive a disability benefit up to $1,200 per month if they become totally disabled.

Expanded Long-Term Disability

This is an optional benefit which you can enroll in after 8 continuous months of service. The plan covers up to 65% of your pre-disability base salary if you become totally disabled. This is a valuable benefit to protect your income.

Legal Services

The legal services plan is a low cost plan with a monthly premium. You can get help with wills, powers of attorneys, trusts, estate planning, family law, debt defense, civil lawsuits, and much more.

Gaining Confidence in Your U-M Benefits

Whether you just started working or you're getting ready for retirement, you will want to feel confident that you are maximizing your benefits offered to you. Here are several ways you can work accomplish this.

1. Start with a Solid Foundation

Review your insurance options carefully and decide how much you truly need. Are you buying enough life insurance to protect your family in case something were to happen to you? What if you became disabled? You don’t want to have that happen, but you’d be glad at that time if you purchased the disability insurance. Which retirement plan makes the most sense for you and your long term goals?

2. Develop a Plan

You should think of what you want your long term picture to be. U-M provides excellent benefits to its employees. Focus on the future and how U-M benefits can help you achieve your vision. Consider the things that can go wrong to derail you from this vision, and make sure you have enough insurance for the unexpected events that can happen. If you want to retire early, your actions should match your plan.  You should be investing heavily in your employer-sponsored retirement accounts and likely other places as well.

3. Take Advantage Of The Retirement Plans

If you are investing in one of the retirement plans, you should take a few minutes to review all your options. Most people working in the public sector only get a 401k with a maximum contribution of $24,500 if they are over age 50. Not only can you add into the Basic Retirement Savings plan and receive up to a 10% match, but you can contribute up to $49,000 in the 403b and 457 accounts.  Because the 457 doesn’t have the early 10% IRS withdrawal penalty, adding to this account helps to retire early.

4. Maintain Proper Asset Allocation

Your retirement portfolio should align with your comfort with risk and factor in when you will need to start taking money out. Your allocations should be reviewed at least annually to ensure your portfolio is not too safe or too risky. This is a proactive measure which can reduce risk and increase returns over time.

5. Get Educated

Knowledge is essential for making informed decisions. Get a clear view of the benefits available to you and speak with an advisor to evaluate how you can maximize them for your financial future and retirement.

If you have questions about your retirement accounts or have yet to develop your exit strategy, contact my office for a complimentary review. We can discuss what you’re currently doing, what changes may need to be made, and how to structure your exit strategy based on your retirement goals.

Taking the Next Step

Money may not come with directions, but you don’t have to make all the hard choices and confusing decisions alone. With a supportive advisor by your side, I can help pilot you along a smooth and direct path toward financial independence.

As an added value service, I would be happy to provide you a complete financial analysis of your current financial situation and your goals. Through this analysis, I can evaluate appropriate solutions available to you. If you have questions about your current or future financial needs, I’d be happy to meet with you and conduct an initial analysis. There’s never a fee, charge, or obligation for your first meeting. To discover your financial opportunities, call me at 734-330-7033 or email chris@pilotwealthmgt.com.

About Chris

Chris Rueger, AAMS® is the President and Founder of Pilot Wealth Management, a fee-based only financial advisory and investment management firm. With nearly two decades of experience, he serves as a financial planner who brings financial advice and investment guidance to families serious about their financial future. With all his clients, he strives to instill in them peace of mind that their life savings are being handled appropriately so they can maintain their desired lifestyle. Based in Ann Arbor, Michigan, he works with clients locally and across the country. To learn more, connect with him on LinkedIn.