Shell Retiree Health Insurance 2006 – 2016

Full Transcript:

What milestones do I need to reach for Shell retiree health insurance?

A Shell employee recently asked me “What milestones do I need to reach to qualify for retiree health insurance, and what does that benefit look like?” This is an excellent question. Let’s walk through an example. We’ll use John to help you understand what the eligibility and benefit looks like for retiree health insurance.

First let’s talk about the eligibility. In order to be eligible for Shell retiree health insurance. You first want to look at when did you hire on with Shell. There are three different windows, and each one has a different retiree health insurance option. The first one is if you were hired on before 2006. This is the best health insurance coverage, and we’ll cover that in a future video. Today, we’re going to focus on employees that were hired on between 2006 and 2016. Now, lastly for those of you that were hired on after 2016, unfortunately, Shell discontinued retiree health insurance for recently hired employees.

Now for those that hired on between 2006 and 2016, first to understand if you’re eligible when you retire from Shell, you need to be on Shell’s health insurance, and you also have to have reached at least age 50 and have at least 80 points. Now, a lot of people ask about the 70-point plan which is a really good way of getting health insurance a little bit earlier, if it makes sense for you. A couple things with the 70-point plan. You must get this during a special severance, so in times like a reorg. You must still also reach this age 50 threshold, and you must have 20 years of service. So make sure that you qualify for it by checking with your HR professional before accepting a severance.

Now for the benefit. It’s based on your years of service between age 40 and 60. That’s divided by 20, and then Shell will cover up to five years of 80% of the cost of the PPO. So, let’s look at John to really go through what this looks like for him. John is currently 45 years old, and John hired on with Shell in 2006. John wants to retire from Shell at age 55 in 10 years. So, when John is age 55, he will meet the age 50 threshold, and he will have 27 years of service in 2033, so John will have 82 points, also meeting the 80-point threshold.

Now for John’s benefit at age 55. He will have 15 years of service between ages 40 and 60, so we’ll divide that 15 by 20, and now we’re going to multiply that by the cost of the PPO coverage. Now this is the total cost of coverage, both employee and employer, for a couple. We’re going to assume that the cost for a couple in 2033 is $30,000.

In addition to that, there’s also a factor for increasing in the form of a percentage. We’ll assume it goes up a couple percent per year, so the five year average increase would be 116%. And, now Shell will pay for up to five years and up to 80%, so when we calculate this out for John his retiree healthcare benefit is $104,400. So, $104,400 covers just shy of four years of coverage on the PPO. Now if John has young kids when he retires his health insurance costs will be higher, and he can go through this a lot quicker. On the flip side if John chooses a cheaper plan, John can stretch this out to last many more years.

I’m really glad John asked this question as it helps him make an educated and informed decision about his Shell benefits.