Article originally published in November 2020 Silver Star
The DSA continues to field inquiries about the San Diego County Retiree Medical Trust (RMT) benefit. Most recently, members inquired as to how the San Diego County RMT compares with the RMT fund that PORAC offers. This article addresses plan details of the San Diego County RMT and draws a comparison between it and the RMT offered through PORAC. Members are encouraged to read up on both plans and come to their own conclusions.
What is the San Diego County Retiree Medical Trust?
The medical coverage we have through the County as active law enforcement officers will not transition with us into retirement. Once we retire, we are forced to pay out of pocket for all medical expenses, and as we all know, health insurance premiums can be staggering. To help lighten this financial burden, the DSA bargained with the County of San Diego and the San Diego County Retiree Medical Trust (RMT) was instituted in 2014.
The San Diego County RMT enables us to use pre-tax funds contributed throughout the length of our careers to help pay for our medical care upon retirement. The money we contribute to the RMT now is deducted from our paychecks before taxes, so the fiscal impact on our check is actually less than the $25 that is deposited. The same is true for the payout of the benefit; it is also distributed tax-free.
Every employee within the Deputy Sheriffs’ Association bargaining group began paying into the RMT in March 2014, and all new employees hired after that date are automatically paying into it as well. The RMT is part of the DSA’s contract with the County of San Diego, and therefore, all employees must pay into it, regardless of their DSA membership status.
What will my monthly RMT benefit be when I retire?
To project your future monthly benefit, multiply your accumulated Active Service Units (ASUs) over the length of your career by the unit multiplier. The unit multiplier is a conversion factor used to calculate benefits. It is determined by the County with the help of a professional actuary and is based on local demographic and financial data.
For every $50 contributed by you, the employee, one ASU is granted. One ASU is equivalent to one unit of credit in the trust. So, presently, deputies receive 13 ASUs per year by contributing $25 each pay period for 26 pay periods a year.
Calculate your total ASUs and project your future monthly benefits using the following equation:
Biweekly Contribution x 26 Pay Periods = Your Annual RMT Contribution
Your Annual RMT Contribution ÷ $50 = ASUs Earned Annually
Number of Years in RMT x ASUs Earned Annually = Final # of ASUs for Retirement Calculation
Total ASUs x Unit Multiplier = Projected Monthly Benefit on Retirement
Say, for instance, Deputy Smith contributes $25 a pay period for a year:
$25 x 26 Pay Periods = $650 Contributed Annually
$650 ÷ $50 = 13 ASUs Accumulated Annually
If Deputy Smith pays into the RMT for 25 years, his monthly benefit would be calculated as follows:
25 Years x 13 ASUs Accumulated Each Year = 325 Total ASUs Accumulated
325 ASUs x .69 (Unit Multiplier) = $224.25 Monthly Benefit
In a 25-year career, Deputy Smith will have contributed a total of $16,250 to the San Diego County RMT. At the time of retirement, it would take Deputy Smith a mere six years to recoup his contributions, assuming he collected the full benefit amount each month.
So, what kinds of medical expenses are covered? Members recoup their contributions by receiving reimbursements for covered expenses as outlined in the plan documents. These include (but are not limited to) premium or contribution payments for coverage under health, dental, or vision insurance plans.
Why this specific plan? Is it the best option for DSA members?
When comparing RMT options, there are many important details to consider. While it may be easiest to simply look at the unit multipliers and make base comparisons, there’s more than meets the eye here. There are several contributing factors worth taking into careful consideration.
For example, when considering the RMT plan available from PORAC, the unit multiplier is currently at $0.74. The current unit multiplier for the San Diego County Retiree Medical Trust is $0.69. The base assumption here may be that the PORAC RMT is a better benefit than the SDCRMT simply because the unit multiplier is greater, but this is not necessarily the case. Two critical differences in these plans must be addressed.
First, the San Diego County RMT allows for funds to be withdrawn upon age 50, as compared to age 55 for the PORAC RMT. This point is critical, as the current members retiring are Tier A (3% at 50) employees, allowing for retirement at age 50. If these Tier A members instead had the PORAC RMT, for instance, they would either need to wait until age 55 to retire or they would need to wait five years after retiring at 50 before they could begin collecting their monthly benefit.
Second, the San Diego County RMT only requires five years of employee participation before vesting, as opposed to the PORAC RMT which requires 10 years prior to vesting. This truncated vesting period allows for members to gain a vested benefit from the San Diego County RMT in a shorter timeframe, which is critically important in the infancy stages of a RMT, as it allows more members who are near retirement to receive a lifetime benefit. Simply put, the SDCRMT has been vested since 2019, and all members who have retired thereafter are receiving a lifetime benefit. If the SDCRMT required a 10-year vesting period, any member who retired between 2019-2024 would not receive a lifetime benefit.
Another significant benefit to the San Diego County RMT is that we maintain local control, and because of that, employees can have a voice. If our RMT were housed elsewhere, we may not have the same opportunity to weigh in on issues and ask important questions that we do now.
Another concern voiced by members is that the RMT benefit is reduced to 50% upon Medicare eligibility. For example, a member who retires at age 50 will receive an annual RMT benefit from the time of retirement until they reach age 65. Thereafter, the RMT benefit will be reduced by 50% because they qualify to receive Medicare benefits as well. This specific plan requirement was implemented to ensure the highest unit multiplier while accounting for the age requirement for withdrawal (50 years old) and the number of years required for vesting (five years).
As Tier A employees continue to retire from the County, DSA members and future trustees of the RMT will have the option to adjust the age requirement to reflect the retirement ages of Tier B (55), Tier C (57), and Tier D (57) employees, as well as to adjust the years required for vesting as the plan matures. Having local control and DSA-elected trustees allows the members a voice to change the plan structure, which can positively increase the unit multiplier or allow the trustees flexibility in removing requirements of the plan (like the benefit reducing to 50% at Medicare eligibility).
In closing, it is important to ensure that when comparing plans, all factors are considered. It’s also important to note that participation in the San Diego County RMT cannot be adjusted during a contract period.
Partnership with Gallagher HealthInvest HRA
The San Diego County RMT recently partnered with a company called Gallagher HealthInvest HRA to assume management of the trust (previously, McGregor & Associates had managed it). The HealthInvest HRA platform offers an online portal and handy mobile app called HRAgo®. Members can view their daily account activity, including contributions, claims, automatic premium reimbursements (for retirees), and investment earnings. Quarterly e-statements are easily accessible, and the online portal contains eligibility information for those preparing for retirement.
For more information, visit www.healthinvesthra.com. All DSA members should have received a packet in the mail with information on HealthInvest HRA and setting up an online account. If you did not receive a welcome packet, please contact HealthInvest HRA’s Customer Care Center at 1-844-342-5505 or email customercare@healthinvesthra.com.
Questions, feedback, concerns?
For information regarding the San Diego County RMT, contact HealthInvest HRA directly by visiting their website at www.healthinvesthra.com or calling the Customer Care Line at 844-342-5505. You can also contact the DSA at (858) 486-9009 or email info@dsasd.org.⭑