Is it worth subscribing to MTP?

Health insurance is the only benefit of any significance under MTP.

Is it worth subscribing to MTP and get AT&T health insurance or are we better off getting health insurance via ACA?

Example:

Severance Amount: $50,000

Tax: 20%

Savings in health insurance premium with AT&T Medical relative to ACA: $200 per month (as an illustration)

Net Amount without MTP: 50,000 - 10,000 tax = $40,000

Net Amount with MTP: 25,000 - 10,000 tax = $15,000 (whole severance is taxable)

Severance loss: 40,000 - 15,000 = $25,000

Months to recover loss: 25,000 / 200 = 125 months = 10.4 years

AT&T only provides retiree health insurance till age 65.

The Medicare subsidy of $2700 is only funded till 2023 (or 3 years) for those retiring by the end of 2020. AT&T is not providing the subsidy for employees retiring in 2021 and beyond.

Please do the Math as suggested above and let me know if MTP makes sense in your situation.

Comment! It's anonymous!

4 replies (most recent on top)

@OP...your info is incorrect...MTP is only for those managers that are within 24 months of meeting the MR75 retirement benefit qualification.
At the cost of 50% of your severance, AT&T will allow you enroll and receive retirement benefits only.
These are retirement Benefits only (retiree discounted rates on services and products)...not retiree medical subsidies and not retirement pensions.
If you have already met your MR75 numbers, you do not qualify for MTP.
As a MTP participant, you will pay 100% of your current healthcare cost until you qualify for Medicare.
More than likely you don't qualify for subsidized medical if you need to enroll in MTP...medical subsidized plans ended for anyone hired after around 1997-1998.

The current tax rates on Severance plans is around 39% and this is taxed on the full amount of severance.
So using your numbers...
A $50k MTP severance equates to a $100k non MTP severance, if a person who qualified for the $100k severance selected MTP, they now only receive $50k but are taxed at the full $100k rate.
This person would only take home $11,000 severance due to the $39k tax bill accessed to the MTP $50k severance.
Same for a person with a $50k severance that equates to a $25k MTP...total bring home after taxes is only $5,500!
Neither of these would pay for much AT$T medical for a family....roughly 6-12 months before paying out of pocket for a MTP participant.

How do you know that the Medicare subsidy is $2700/year until 2023 for those retiring by the end of 2020? Where is the documentation that the subsidy will be $2700?

In March 2020, after more than 30 years with AT&T, I retired. I have received $80.00 (2 months @ $40.00/month). Twice, I asked the Benefit office why I was receiving only $40.00/month and to verify that I was receiving the correct amount. I was told that $40.00 per month was correct, but they provided NO documentation because they said they do not have access to AT&T's documentation.

if your health insurance is not subsidized, the only thing MTP gives you is retiree discounts.

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Is it worth subscribing to MTP?

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