Health Benefits

Health Vesting: What Is It, and How Much Will Your Employer Contribute in Retirement?

Health vesting refers to the time you must work for your employer to receive a contribution toward your retiree health premium.

Just like your employer contributes to your CalPERS pension, they may also contribute toward your health plan premium during retirement. For state and California State University (CSU) members, how much they pay is based on vesting schedules. For public agencies and schools, this will depend on whether they use a vesting schedule.

The requirements for health vesting are different for state, CSU, and public agencies and schools that have vesting agreements with their employees. Each employer type has unique vesting schedules that depend on your job at retirement and the following factors:

  • Whether your employer is the state, CSU, a public agency, or a school district.
  • The amount and type of CalPERS service credit you’ve earned at retirement.
  • Your collective bargaining unit or affiliation (i.e., excluded and exempt).
  • Your first date of hire and/or your retirement date.

When you retire, we will evaluate your employment history to determine if you’re subject to vesting and, if so, the applicable vesting schedule.

Vesting for State Employees

Most state employees today fall under either a 20-year or 25-year vesting schedule. This means to receive 100% of the state’s contribution, you need to earn either 20 or 25 years of service credit.

You can find out which schedule you’re on by logging in to your myCalPERS account, and selecting Health Vesting under the Health tab.

For most employees, your vesting schedule is based on your first hired date and collective bargaining unit or affiliation (i.e., excluded or exempt). Also, when you achieve either 10 or 15 years of earned service credit, you’re partially vested, meaning you’ll receive 50% of the state’s contribution and 5% more after each additional year worked.

The 20-year vesting schedule works like this:

Years of credited state service Percentage of state contribution
Less than 10 0
10 50%
11-19 50%, plus 5% for each year after 10
20 100%

For example, Lila was hired in July of 2007, so she falls within the 20-year vesting schedule. She retired from BU1 with 17 years of state service credit, so she’ll receive 85% of the state’s contribution toward her premium.

The 25-year state vesting schedule looks like this:

Years of credited state service Percentage of state contribution
Less than 15 0%
15 50%
15-24 50%, plus 5% for each year after 15
25 100%

The State’s Contribution May Not Cover the Entire Monthly Premium

If you’re fully vested and receive 100% of the state’s contribution toward your health benefits, that amount may not cover your entire monthly premium, and the remaining balance will be deducted from your retirement warrant.

The state’s contribution is set annually based on a formula set in state law, and is calculated for single, two-party, and family health premiums. That amount is published annually on the Retiree Plans & Rates page of the CalPERS website before Open Enrollment.

CSU, Judicial, and Legislative Employees Vesting Requirements

There are no state vesting requirements for employees of the Legislature, CSU employees hired before July 1, 2017, or state and CSU members that qualify for a disability or industrial disability retirement. These members receive 100% of the state contribution.

CSU employees hired on or after July 1, 2017, in certain bargaining units, have a 10-year health vesting requirement.

Judicial branch employees hired before 2017 have a 10-year vesting requirement. If you were hired after January 1, 2017, you fall under the state’s 25-year vesting schedule.

Members of the Legislature have a 10-year vesting requirement.

Vesting for Public Agency and School Employer Employees

If you’re retiring from a public agency or school district, your employer’s monthly contribution is established in their agreement with CalPERS. Public agencies can elect to use a 20-year vesting schedule. Schools can establish customized vesting schedules. Contact your employer for contribution amounts and any vesting requirements.

Learn Your Vesting Schedule and More

To learn the vesting schedule that applies to you, based on your bargaining unit and hire date, view pages 19 and 20 of the CalPERS Health Program Guide (PDF).

State and CSU employees can also log in to myCalPERS and visit Health Vesting under the Health tab. If you’re within five years of your minimum retirement age you can use the Health Into Retirement Calculator in your myCalPERS account. This tool allows you to review the state’s share of premium based on the current year plan premiums.

While the premiums change each year based on the approved rates, the state’s contribution changes annually too, providing a good estimate to plan for your health in retirement.

Employees of public agencies and schools should contact their employer to determine if health vesting applies to them and to find out how many years of service credit is needed to receive the employer’s contribution toward their premium.