A plan for post-employment expenses
By Greg Cieslewicz
When planning for retirement, one of the challenges is the cost of health insurance and medical expenses.
Starting July 1, the WEA Trust has a new solution to help school districts and employees manage post-employment health care expenses. It’s called TrustSecure, a group-bargained benefit used by employers to make tax-exempt contributions on behalf of eligible employees.
The employer contributions are invested in a Trust-managed group investment account. TrustSecure is designed so the funds in the account accrue on behalf of the employee, and all contributions, earnings, and distributions are 100% tax-exempt.
The commercial version of plans similar to TrustSecure is referred to as a health reimbursement account (HRA). With an HRA used to fund post-employment medical expenses, the employer has many fiduciary responsibilities.
With TrustSecure, the WEA Trust is responsible for the fiduciary role of the plan. The funds in the plan are available to the employee if he or she leaves employment or as defined in the collective bargaining agreement.
Participants who leave employment, retire, or are disabled are eligible to request reimbursements from their accounts to pay for qualified medical expenses. Because of Internal Revenue Service rules, the money can never be taken as a cash withdrawal.
- Funds in the account accrue for the employee.
- Account balances carry over from year to year so there is no “use it or lose it” rule.
- Funds in the account can be used to obtain reimbursement of post-employment qualified medical expenses for the employee, spouse, and other IRS-qualified dependents.
- Upon an employee’s death, remaining funds in the account can be used until depleted by a spouse and other IRS-qualified dependents to pay for qualified medical expenses.
- Districts are not required to have a Trust health plan to participate in TrustSecure. All districts with a WEAC-affiliated collective bargaining unit are eligible to join TrustSecure.
To learn more about this plan, contact your WEA Trust field representative.
Eye on Insurance columns
Posted June 17, 2008