There are many important items for employees to keep in mind as they plan to retire or leave University employment. Below you will find information pertaining to details regarding the end of your benefit coverage, the return of Penn State property, and final pay information.

For an active employee participating in employee benefits, your benefit coverage will continue through the end of the pay period in which you retire or terminate employment.

• Monthly paid employees (retirement or termination) - you will have coverage under the active benefit plans through the end of the month in which you leave active employment.
• Bi-weekly paid employees (retirement) - your medical coverage will extend to the end of the month in which you retire; all other coverage will extend through the end of the bi-weekly pay period in which you retire.
• Bi-weekly employees (termination) – you will have coverage under the active benefit plans through the end of the bi-weekly pay period in which you terminate.

Additional details regarding each benefit plan are outlined in detail below.

After an employee leaves the University, coverage under a Penn State health care plan stops at the end of the pay period during which the termination is effective, unless you are eligible to receive medical benefits under Penn State Retiree status per HR Policy HR54 Retirement Qualifications and Retirement/Posthumous Benefits.

Medical coverage may be continued under COBRA benefits for up to 18 months if enrollment is made within 60 days from the date of termination of the coverage. To receive more information about continuation please call HR Services, (814) 865-1473.

Additionally, as outlined within Penn State's online 1095-C FAQs, beginning with the 2025 IRS Form 1095-C forms will not longer be printed and mailed to terminated, or retired, employees. This is in response to The Paperwork Reduction Act (PRA), specifically H.R.3797, that eases the burden of Affordable Care Act (ACA) reporting for employers by allowing them to furnish Form 1095-C only upon request. Please note that even after you have separated employment, you will still have access to print your Form 1095-C using the instructions within the FAQs.

Dental and vision coverage, if applicable, stops at the end of the pay period during which the termination is effective. Dental and/or vision coverage may be continued under COBRA benefits for up to 18 months if enrollment is made within 60 days from the date of termination of the coverage.
 

Per IRS regulations, an employee who is enrolled in a Health Savings Account (HSA) cannot contribute to the account while enrolled in Medicare. If you are collecting Social Security, you are automatically enrolled in Part A. Enrollment in Medicare includes enrollment in Medicare Part A and/or Medicare Part B. Contributions to the account include employer contributions, pre-tax contributions the employee makes, and post-tax contributions the employee makes directly through HealthEquity. Please keep in mind that this regulation only applies to you, the HSA account holder, and does not apply to your dependents enrolled in your plan.

If you were to be audited by the IRS, taxes and penalties could apply to the amount contributed to the HSA while enrolled in Medicare. We always recommend reviewing your intended contributions with a licensed tax professional, to ensure that your contributions fit your financial plan and do not have any tax implications with Medicare enrollment. 

This information will help you navigate what steps you may need to take if you are currently enrolled in the Lion Advantage HSA plan with the Health Savings Account and plan to separate within the next year.  While the below is general information and may not fit your exact scenario, it can be used as a guideline. Please look for the heading below that best fits your situation.

All HSA contribution changes are completed in Workday via the Change Health Savings Account benefit event.

Terminating or Retiring under the age of 65: 

If you are under the age of 65, you don’t need to take any action with your HSA. Contributions will stop upon your separation from the University. Please keep in mind that once retired, and if eligible for retiree medical benefits, the University does not contribute to the HSA annually. While you remain enrolled in the High-Deductible Health Plan (HDHP) you may make post-tax contributions to your HSA, up to the IRS annual maximum. You may continue your post-tax contributions until the month prior in which your Medicare begins. 

Terminating or Retiring 65 or older:

65 or older and enrolled in Medicare: 
If you are currently 65 or older and are enrolled in Medicare, you want to STOP your HSA contributions immediately. If you have been contributing to the HSA or received PSU contributions to your account since you have enrolled in Medicare, you would want to work on removing excess funds with HealthEquity. You could also review with a licensed tax professional to review any implications of contributing to the account while enrolled in Medicare.

65 or older and not yet enrolled in Medicare:
If you are currently 65 or older and have delayed your Medicare enrollment, you will need to apply for Medicare approximately 3 months prior to your separation date. Medicare enrollment should begin the first of the month after your retirement date. As a reminder, your active medical benefits extend until the end of the month in which you retire, provided you retire under Policy HR54 and/or as outlined in the Collective Bargaining Agreement (CBA). Both the policy and CBA links are provided below:

• HR Policy HR54 Retirement Qualifications and Retirement/Posthumous Benefits
• Teamster Local Union No. 8 Collective Bargaining Agreement

When applying for Medicare at 65 or older, Medicare performs a 6 month look back period to see if you have had HSA contributions which may delay your enrollment eligibility in Medicare. During this 6 month time frame, you cannot make or receive contributions to your HSA.  

If you have made contributions during the 6 month time frame but have since stopped the contributions, you would want to work on removing excess funds directly with HealthEquity. You could also review with a licensed tax professional to review any implications of contributing to the account while enrolled in Medicare.

The chart below shows when you would want to stop and/or make Open Enrollment changes to ensure you don’t receive or contribute to the HSA during the 6 month look back period, based off your retirement/Medicare enrollment date.

Account Information:

Employees who separate from Penn State will have access to the funds in the HSA until exhausted; however, the monthly fee increases to $3.95 as your account becomes an individual account with HealthEquity. 

It is important that you have your beneficiaries on the HSA up to date. You can update your beneficiary through the HealthEquity portal or by the HealthEquity app. The beneficiary would then be able to continue to utilize HSA funds for eligible healthcare expenses after your death. If there is no beneficiary assigned, the individual who handles your estate after death would be able to contact HealthEquity directly in order to access funds.

Employees who had an HSA in any tax year will be receiving HSA Statements—a 1099-SA and a 5498-SA from HealthEquity.

Important Links and Contact information:

HealthEquity Phone Number: (866) 346-5800
HealthEquity HSA information (including Login)
HSA Qualified Expenses

The flexible spending account (FSA) acts as an upfront loan. This means that you make your annual election during Open Enrollment for the following plan year. PSU will then make that full annual election available to you on January 1st, when the plan year begins.

While the full annual election is available to you as January 1st, this means that you can use all your funds prior to you making any contributions. Your per pay contributions via payroll are essentially paying towards the annual election that was already made available to you. 

Making Changes to your FSA: 

Penn State must follow the IRS qualifying events to process change requests to your flexible spending accounts. IRS qualifying events may be subject to change based off Federal changes. PSU will follow the IRS guidelines regardless of our FSA administrator.

You may read more information on what is considered an IRS qualifying life event within our helpful online FSA life event resource chart.

It is important to note that if you do experience an event that allows you to decrease your FSA, you cannot request to decrease to an amount lower than what you have already used from your original annual election.

All FSA contribution changes are completed in Workday via the Change Flexible Spending Account benefit event.

Terminating or Retiring with an FSA: 

Upon your separation, your FSA contributions will end with your last normal pay. You have 90 days after your separation to submit claims to your FSA for your period of participation. Your period of participation for the FSA would be January 1st – until your separation date.

During the 90 days, you must work with HealthEquity to submit manual reimbursement for claims that have occurred during your period of active participation. This means that your card may no longer be used, and you must contact HealthEquity directly. Contact information can be found below. Any unused funds at the end of 90 days would be returned to the University.

As your contributions stop upon your separation with the University, regardless of your balance in the account or the amount you contributed year to date, additional per pay deductions are not due, nor are they deducted from your balance if you have used more than you contributed year to date. Just as employees take a risk when signing up for an FSA (if they do not use it, they lose it), employers take a risk as well (making funds available as of January 1st without receiving full contributions from employees). By the IRS regulations, employers cannot ask employees who leave employment to repay the account in full after leaving.

FSA Rollover if you plan to Terminate or retire mid-year:

All prior year plan claims must be submitted by March 31st. However, if you re-enroll in the FSA for the current plan year, you may rollover the IRS maximum from last year to the current plan year. In order to receive the rollover, you must remain an active employee through the end of April of the current plan year.

If you should separate employment prior to March 31, you would not be eligible to receive the rollover. Your current plan year would have 90 days after your separation (mentioned above) to submit. Any unused funds for either of plan years after the allotted time would be returned to the University.

Important Links and Contact Information:

HealthEquity Phone Number: (866) 346-5800
HealthEquity FSA information (including login)
HealthEquity FSA Qualified Expenses

Protection in this plan stops 31 days after the end of the pay period in which the termination becomes effective. The employee's University policy can be converted to an individual policy without a medical examination if the application is made within these 31 days.

An employee leaving University employment should contact the group life insurance provider for rate and coverage information if they wish to take advantage of the conversion privilege.  All decisions regarding conversion or portability of coverage are the responsibility of the insurance provider. To obtain an application, please contact Unum at (866) 220-8460, Monday - Friday, 8:00 am to 8:00 pm EST.

Coverage under the AD&D, LTD, and STD plans stop at the end of the pay period during which the termination is effective. The AD&D and LTD plans can be converted to individual policies if application is made within 31 days after the end of the pay period. To obtain an application, please contact Unum at (866) 220-8460, Monday through Friday 8:00 am to 8:00 pm EST.

An employee leaving University employment should contact one of the following offices regarding possible retirement benefits or the withdrawal of contributions.

• State Employees' Retirement System
  SERS Counseling Center: (800) 633-5461
   
• Teachers Insurance and Annuity Association
  TIAA Counseling Center: (800) 842-2252
   
• Public School Employees' Retirement System
  PSERS Counseling Center: (888) 773-7748

In certain instances, retirement credit is portable and may be transferred to the retirement system of the new employer. If the employee contributed to the State Employees Retirement System (SERS) and is accepting a job with an agency of the Commonwealth of Pennsylvania, contributions may not be withdrawn when leaving the University.

It generally takes four to six weeks following the termination date for contributions to be refunded.

SupportLinc, the current Employee Assistance Program, is extended to employees for a period of 120 days after termination.

SupportLinc may be contacted online, using group code pennstate, or by phone at (888) 501-3532.

The employee must arrange to receive their final pay (unless they have direct deposit) and year-end W-2 form. If a change of address is known, a new W-4 (Employee's Withholding Allowance Certificate) should be submitted within Workday prior to your last day of work. If there is a change of address after termination but before the end of the calendar year, the Payroll Office (Room 101 James M. Elliott Building) must be notified so year-end tax statements can be forwarded to the new address.

For the final pay to include any unused accumulated vacation pay, if applicable, University policy states that the Termination of Employment form must reach Human Resources by the fifteenth of the month of termination for employees paid monthly, and by the end of the pay period for those paid bi-weekly.

If payment for unused accumulated vacation is due but is not included in the final pay, a separate payment at the next pay date will be made. For employees who do not have direct deposit, unless other arrangements have been made, the final pay and/or the separate check for vacation accumulation will be held at the Office of the Bursar. 

Prior to leaving, the faculty or staff member shall return all University-issued items as per Human Resources Guidelines HRG20 Separation and Transfer Protocol.

Users with an account balance at the time of separation may request a refund at LionCash Refund Request Form | id+ Office. All requests for refunds must be received by the id+ Office within ninety (90) days after graduation, withdrawal from the University or termination of employment.