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Healthcare Provider Update: Healthcare Provider for American Electric Power American Electric Power (AEP) typically collaborates with major health insurance providers for its employee healthcare plans, frequently partnering with organizations such as Anthem Blue Cross Blue Shield. This partnership allows AEP to offer comprehensive healthcare benefits to its employees, including access to various medical services, preventive care, and wellness programs. Potential Healthcare Cost Increases in 2026 Looking ahead to 2026, healthcare costs are projected to rise substantially, driven by a perfect storm of factors. Premiums for Affordable Care Act (ACA) Marketplace plans are expected to see median increases of around 20%, with some states experiencing hikes exceeding 60%. A significant contributor to these increases is the potential expiration of enhanced federal premium subsidies, which could result in more than 24 million enrollees facing out-of-pocket costs rising by over 75%. The combination of rising medical costs, increased demand for healthcare services, and insurer rate hikes paints a concerning picture for consumers relying on these plans in the coming year. Click here to learn more
“Assumable mortgages can occasionally create opportunities in a higher-rate environment, but American Electric Power employees approaching retirement should evaluate how housing decisions fit into their broader financial picture before making a move,” – Wesley Boudreaux, a representative of The Retirement Group, a division of Wealth Enhancement.
“During periods of higher mortgage rates, assumable mortgages can become part of the conversation, but American Electric Power employees nearing retirement may benefit from viewing housing choices within the context of long-term income planning, health care costs, and overall retirement readiness,” – Patrick Ray, a representative of The Retirement Group, a division of Wealth Enhancement.
In this article, we will discuss:
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How assumable mortgages work and why they are being discussed more often in today’s higher interest rate environment.
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The eligibility requirements, limitations, and financial considerations involved in transferring an existing mortgage.
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How housing decisions may connect to broader retirement planning considerations for American Electric Power employees.
By Wealth Enhancement's Neva Bradley, CFP®
Many Baby Boomers who built long careers with companies like American Electric Power love their homes but quietly recognize that they may no longer need as much space. Once the nest empties, the four-bedroom house that once held children, pets, and holiday gatherings can begin to feel oversized.
At the same time, many younger families are searching for larger homes that better meet their needs. This housing dynamic may set the stage for the use of assumable mortgages, an arrangement that allows a homebuyer to take over the seller's existing mortgage.
American Electric Power employees approaching retirement could benefit from this strategy, particularly for those who may have locked in historically low mortgage rates, like that those prevailed in 2020 and 2021. During that period, 30-year fixed mortgage rates briefly dropped below 3%, and many homeowners obtained loans below 4%. 1
In today’s higher rate environment, sellers could arguably use the leverage of an assumable mortgage to secure a higher purchase price on their homes in exchange for allowing the buyer to take on a mortgage at rates lower than current market averages.
What Is an Assumable Mortgage?
An assumable mortgage allows a buyer to take over the seller’s existing loan rather than obtaining a new mortgage. If the lender approves the transaction, the buyer may take on the loan’s existing interest rate, remaining balance, and repayment terms, something that could benefit American Electric Power employees who obtained home loans during a lower rate period.
Instead of obtaining a new mortgage at current rates, a qualified buyer could potentially assume a homeowner’s mortgage that originated during the pandemic-era housing market at a rate near 2.75% or 3%. This feature sometimes becomes relevant when American Electric Power homeowners evaluate potential selling strategies.
However, this is only possible if the buyer meets the lender’s qualification requirements and the mortgage itself allows assumption. In many cases, the lender still reviews the buyer’s credit profile and financial standing, which may influence the practicality of this option for American Electric Power employees.
Loans That May Be Eligible
Not every mortgage can be assumed. Government-backed loans often allow assumptions, including:
- FHA loans
- VA loans
- USDA loans
Conventional loans backed by Fannie Mae or Freddie Mac typically do not allow assumptions, although certain adjustable-rate mortgage structures may permit limited forms of assumption depending on the loan terms. This distinction can matter for American Electric Power retirees evaluating potential buyers.
Even when a mortgage is assumable, the buyer generally must still qualify with the lender or loan servicer. Credit review and financial verification are normally required before an assumption is approved, something American Electric Power employees should understand when exploring this strategy.
An Important Detail: Seller Liability Release
One of the most significant—and sometimes misunderstood—aspects of mortgage assumptions is the release of liability.
If the lender does not formally release the seller from responsibility, the seller may remain legally liable for the mortgage even after the loan has been transferred to the buyer. This detail can be important for homeowners considering this type of transaction.
If the buyer later defaults and the seller was not properly released, the seller could still face financial consequences related to the loan. For that reason, lender approval and proper documentation are essential parts of the process for American Electric Power employees considering an assumable mortgage sale.
The Reality of the Down Payment
One practical challenge with assumable mortgages is home equity.
Home values have increased significantly over time. For example, if a home originally purchased for $500,000 is now worth $700,000 and the remaining mortgage balance is $420,000, the buyer must pay the difference between the home’s price and the remaining loan balance. This type of equity gap may be something American Electric Power employees encounter when selling a property.
That difference may require:
- A significant cash down payment
- A second mortgage to cover the remaining amount
This can create challenges for buyers, particularly first-time buyers, which may influence how sellers structure potential transactions.
Additional Factors to Consider
Several other factors can affect how practical an assumable mortgage strategy may be.
Approval Timelines
Certain mortgage programs include timelines for evaluating assumption requests. For example, some FHA and VA guidelines outline how quickly lenders should review completed applications, though actual timelines may vary for buyers interested in properties owned by American Electric Power retirees.
Delinquency Restrictions
Many mortgage programs require the loan to be current—or brought current during the transaction—before the assumption can be approved. This requirement may apply to properties owned by American Electric Power employees considering a sale.
VA Loan Eligibility
With VA loans, the original borrower’s VA entitlement may remain attached to the property unless it is properly substituted. This detail could affect the seller’s ability to use VA benefits for a future home purchase, something that may matter for some American Electric Power employees who are veterans.
Fees
Assumable mortgages may include administrative or transfer fees charged by the lender or loan servicer. While these costs may be lower than those associated with originating a new loan, they still need to be considered by buyers and sellers.
Second Mortgage Considerations
If the buyer needs a second loan to cover the difference between the purchase price and the assumable balance, coordinating with multiple lenders may make the transaction more complex. This situation occasionally arises when American Electric Power employees have accumulated significant equity in their home.
Retirement Planning and Housing Decisions
Housing decisions often connect to broader financial planning considerations.
For individuals approaching retirement, downsizing may involve more than simply reducing square footage. Factors such as cash flow, liquidity, investment allocation, taxes, and long-term planning often become part of the conversation for long-tenured American Electric Power employees preparing for retirement.
At The Retirement Group , housing decisions are frequently reviewed alongside:
- Retirement income planning
- Tax considerations
- Health care planning
- Estate planning
- Long-term portfolio management strategies
For many households, a home represents one of their largest financial assets. Decisions about downsizing, selling, or financing a future home purchase can play an important role in retirement planning for American Electric Power employees.
Thinking About Moving?
If downsizing is part of your retirement considerations, it may help to review your full financial picture before making a decision.
The Retirement Group often discusses housing decisions with individuals and families within the context of broader retirement planning.
To learn more about how housing decisions may fit into your overall retirement strategy, you can speak with a member of The Retirement Group at (800) 900-5867 .
Downsizing is not only a real estate decision—it can also become an important element of long-term financial planning.
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Sources:
1. Federal Reserve Bank of Philadelphia. ' The Pandemic Mortgage Boom ,' by Natalie Newton, James Vickery. Q3/Q4 2022.
2. Freddie Mac. Market Watch: Housing Trends Report . Freddie Mac Single-Family Division, 2022, p. 17. https://sf.freddiemac.com/docs/pdf/other/market-watch-housing-trends_rrs22.pdf.
3. United States, Department of Veterans Affairs, Veterans Benefits Administration. Circular 26-23-10: VA Loan Assumption Updates . 22 May 2023, p. 1. https://www.benefits.va.gov/HOMELOANS/documents/circulars/26-23-10.pdf.
4. United States, Department of Agriculture, Rural Development. HB-1-3555 Single Family Housing Guaranteed Loan Program Technical Handbook . USDA Rural Development, rev. 14 Apr. 2025, pp. 17-14–17-15. https://www.rd.usda.gov/media/file/download/hb-1-3555-consolidated.pdf.
5. Stucki, Barbara R., Jane Tavares, and Marc A. Cohen. Using Home Equity to Sustain Cash Flow for Aging in Place . National Council on Aging, Apr. 2021, pp. 3, 5, 7, 21, 27. https://assets.ncoa.org/ffacfe7d-10b6-0083-2632-604077fd4eca/3c1dd0cf-08a8-46ed-812c-5a56fdf6ded4/2021-NCOA_Home%20Equity-Report%20TWO_5-5.pdf .
How does the AEP System Retirement Savings Plan compare to other retirement plans offered by AEP, and what are the key features that employees should consider when deciding how to allocate their contributions? In particular, how might AEP employees maximize their benefits through the different contribution types available under the AEP System Retirement Savings Plan?
The AEP System Retirement Savings Plan (RSP) is a qualified 401(k) plan that allows employees to contribute up to 50% of their eligible compensation on a pre-tax, after-tax, or Roth 401(k) basis. AEP matches 100% of the first 1% and 70% of the next 5% of employee contributions, making it a valuable tool for maximizing retirement savings. Employees can select from 19 investment options and a self-directed brokerage account to tailor their portfolios. This plan compares favorably to other AEP retirement plans by offering flexibility in contributions and matching opportunities(KPCO_R_KPSC_1_72_Attach…).
What are the eligibility requirements for the AEP Supplemental Benefit Plan for AEP employees, and how does this plan provide benefits that exceed the limitations imposed by the IRS? AEP employees who are considering this plan need to understand how the plan's unique features may impact their retirement planning strategies.
The AEP Supplemental Benefit Plan is a nonqualified defined benefit plan designed for employees whose compensation exceeds IRS limits. It provides benefits beyond those offered under the AEP Retirement Plan by including additional years of service and incentive pay. This plan disregards IRS limits on annual compensation and benefits, allowing participants to receive higher benefits. Employees should consider how these enhanced features can significantly boost their retirement income when planning their strategies(KPCO_R_KPSC_1_72_Attach…).
Can you explain how the Incentive Compensation Deferral Plan functions for eligible AEP employees and what specific conditions need to be met for participating in this plan? Furthermore, AEP employees should be aware of the implications of deferring a portion of their compensation and how it affects their financial planning during retirement.
The AEP Incentive Compensation Deferral Plan allows eligible employees to defer up to 80% of their vested performance units. This plan does not offer matching contributions but provides investment options similar to those in the qualified RSP. Employees may not withdraw funds until termination of employment, though a single pre-2005 contribution withdrawal is permitted, subject to a 10% penalty. Employees need to consider how deferring compensation affects their cash flow and long-term retirement plans(KPCO_R_KPSC_1_72_Attach…).
How can AEP employees achieve their retirement savings goals through the other Voluntary Deferred Compensation Plans offered by AEP? In addressing this question, it would be essential to consider the specific benefits and potential drawbacks of these plans for AEP employees in terms of financial security during retirement.
AEP's other Voluntary Deferred Compensation Plans allow eligible participants to defer a portion of their salary and incentive compensation. These plans are unfunded and do not offer employer contributions, making them ideal for employees seeking additional tax-advantaged retirement savings. However, since they are not funded by the company, participants assume some risk, and the plans may not provide immediate financial security(KPCO_R_KPSC_1_72_Attach…).
What options are available for AEP employees to withdraw funds from their accounts under the AEP System Retirement Plan, and how do these options compare to those offered by the AEP System Retirement Savings Plan? AEP employees need to be informed about these withdrawal options to make effective plans for their post-retirement needs.
Under the AEP System Retirement Plan, employees can access their funds upon retirement or termination, with options including lump-sum payments or annuities. The AEP System Retirement Savings Plan offers more flexibility with in-service withdrawals and various distribution options. Employees should carefully compare these withdrawal choices to align with their retirement needs and tax considerations(KPCO_R_KPSC_1_72_Attach…).
In what scenarios might AEP employees benefit from being grandfathered into their retirement plans, and how does this affect their retirement benefits? A comprehensive understanding of the implications of being grandfathered can provide significant advantages for eligible AEP employees as they prepare for retirement.
AEP employees grandfathered into older retirement plans, such as those employed before 12/31/2000, benefit from higher retirement payouts under previous pension formulas. This offers a significant advantage, as employees can receive more favorable terms compared to newer cash balance formulas. Understanding these grandfathered benefits can help eligible employees plan for a more secure retirement(KPCO_R_KPSC_1_72_Attach…).
How can AEP employees take advantage of the matching contributions offered under the AEP System Retirement Savings Plan and what strategies can be implemented to maximize these benefits? Understanding the contribution limits and matching algorithms of AEP is crucial for employees aiming to enhance their retirement savings.
AEP employees can maximize matching contributions under the AEP System Retirement Savings Plan by contributing at least 6% of their compensation, receiving a 100% match on the first 1% and 70% on the next 5%. To enhance savings, employees should ensure they are contributing enough to take full advantage of the company's match, effectively doubling a portion of their contributions(KPCO_R_KPSC_1_72_Attach…).
What are the key considerations for AEP employees regarding the investment options available in the AEP System Retirement Savings Plan, and how can they tailor their portfolios to align with their long-term financial goals? Employees should be equipped with the knowledge to make informed investment decisions that influence their retirement outcomes.
The AEP System Retirement Savings Plan offers 19 investment options and a self-directed brokerage account, providing employees with a variety of choices to build their portfolios. Employees should evaluate these options based on their risk tolerance and long-term financial goals, aligning their investments with their retirement timeline and desired outcomes(KPCO_R_KPSC_1_72_Attach…).
As AEP transitions into more complex retirement options, what resources are available for employees seeking additional assistance with their benefits, particularly regarding the complexities of the AEP Supplemental Retirement Savings Plan? It’s essential for AEP employees to know where and how to obtain accurate support for navigating their retirement plans.
As AEP introduces more complex retirement options, employees can access resources such as financial advisors, internal retirement planning tools, and educational webinars to navigate their benefits. Understanding these resources can help employees make informed decisions, particularly when dealing with the intricacies of the AEP Supplemental Retirement Savings Plan(KPCO_R_KPSC_1_72_Attach…).
How can AEP employees contact the company for more information regarding their retirement benefits and plans? Knowing the right channels for communication is important for AEP employees to gain clarity and guidance on their retirement options and to address any specific inquiries or uncertainties they may have about their benefits.
AEP employees can contact the company’s HR department or use online portals to access information about their retirement benefits and plans. Timely communication through these channels ensures employees receive support and clarity regarding any concerns or inquiries related to their retirement options(KPCO_R_KPSC_1_72_Attach…).
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