The
Central Valley
Retiree Medical Trust
( CVRMT )
Introduction
The Central Valley Retiree Medical
Trust was originally established by the
Deputy Sheriff’s Association of
Stanislaus County in 2002.
The Trust is administered by a Board
of Trustees, which is made up of
emergency services personnel.
• PUBLIC SECTOR CONCERN – One concern for many
public sector employees who retire in their early to mid
50s is how to pay for medical coverage from retirement
until Medicare (age 65).
• RETIREE MEDICAL TRUST (“RMT”) – An RMT is a vehicle
to help pre-fund for retiree medical expenses during your
active employment years.
Retiree Medical Trust
What is the Benefit under the Plan?
Benefits under the Plan come
in the form of reimbursement
towards the cost of your health
insurance premiums and/or
expenses after retirement.
• Funded by employer and/or employee contributions.
• Each bargaining unit (as a whole) may select their own monthly contribution level
• Mandatory participation. i.e., all employees in a bargaining unit must participate.
• Lifetime stream of benefits
• Tax-free survivor benefits for spouses and dependents.
• Assets are invested and managed by a professional investment manager
• Regulated by federal law
Features
• Tax exempt status as a VEBA under Internal Revenue Code Section 501(c)(9).
• Allows tax-free reimbursement for qualified health premiums and medical expenses.
– Insurance premiums (medical, dental, vision)
– Prescriptions
– Hospital
– Miscellaneous medical costs (deductibles, co-pays, eyeglasses, contacts, etc.)
Features
• You will get reimbursed for the following:
– Health Insurance Premiums (e.g., medical, dental, vision)
– Medical/hospital expenses
– Dental or vision care
– Prescription drugs
– Long Term Care premiums
Benefits
Medical Trust
Medical/Hospital Expenses
Dental/Vision Care
Health Ins. Premiums
Prescription Drugs
Medical Trust
Medical Trust
Medical/Hospital Expenses
Dental/Vision Care
Health Ins. Premiums
Prescription Drugs
• Retiree Medical Trusts can offer the following tax advantages:
Tax Advantages
Employer –employers are not required to pay payroll taxes on the contributions, provided that the entire bargaining unit participates.
Employee –contributions are pre-tax. In addition, investment earnings on contributions are tax-exempt.
Retiree –the reimbursement benefits received from the Trust are tax free to the retiree, unlike pension benefits which are taxable.
�Retiree Medical Trusts offer a valuable benefit for employee
groups who are willing to negotiate a small portion of their
salary to save for post-retirement medical expenses.
�Contributions must be mandatory at the same rate for
everyone in the bargaining unit. No opt-outs and no option to
contribute extra or less.
�Contributions are made during active employment at a rate
that the Association and City agree upon at the bargaining
table, Ex., Employees will contribute $50/mo to the Trust.
Funding
• Accumulated sick and/or vacation leave time may be
transferred (pre-tax) to the Trust.
• A Participant may choose to:
– Use the leave transfer to purchase more active service units (at
actuarial cost) or
– credit the leave transfer to his or her individual account in the Trust
• Leave transfers must be made mandatory pursuant to an
MOU or side letter at the same percentage of accrued leave
for all members
Leave Transfer
• POOLED ACCOUNT– Contributions are held in a pooled account in
trust. These contributions are intended to fund a lifetime stream of
benefit payments for participants. The amount of your benefit
payment will depend on the length of your participation in the Plan
and the amount of contributions that you have made.
• INDIVIDUAL ACCOUNT – The Trust maintains an individual
bookkeeping account in the Trust for each Participant to which sick
and vacation leave transfers are credited. There is no monthly limit on
your individual account. You will be reimbursed for qualified expenses
from your Individual Account until your balance reaches zero.
Plan Design
After becoming eligible, a Participant’s lifetime
monthly benefit level will be calculated as follows:
Career Employee – 25 years in Trust: An Association
selects a contribution rate of $100/month, and Employee
Jones participates for seven years (or 84 months) at that
level. Then the Association increases the contribution
rate to $200/month, and Jones participates for 18 years
(or 216 months) at that level, and then retires.
Example: Lifetime Benefit Level
• Step 1: Convert monthly contributions to Active Service Units.
$100/month = 2 Active Service Units/ Month
$200/month = 4 Active Service Units/ Month
• Step 2: Add Up the Active Service Units.
2 Active Service Units x 84 months = 168 Active Service Units
4 Active Service Units x 216 months = 864 Active Service Units
Total = 1032 Active Service Units
• Step 3: Multiply number Active Service Units by Unit Multiplier.
Monthly Benefit Amount: 1032 x $0.50* = $516.00
*UM as of 9/1/15 for illustration purposes ($50 per Active Service Unit)
Example: Lifetime Benefit Level
• Tax-free earnings and compound interest allow
significant appreciation on contributions. The benefit
amount will vary depending on length of contributions
made on behalf of the employee, investment income,
and administrative expenses.
• There is no monthly limit on the benefit from your
Individual Account. You may be reimbursed for qualified
medical expenses until your balance reaches zero.
Individual Account
A Participant must meet all of the following requirements to
become eligible for the pooled account benefit.
• Participated in the Plan for 10 years. However, this requirement is 5
years for an individual who is an Employee when his/her bargaining
unit joins the Trust.
• Made contributions to the pooled account for all years of participation
in the Plan.
• Attained age 50 if sworn-public safety or age 55 for other Employees.
• Ceased employment with a participating employer.
Lifetime Benefit Eligibility
CVRMT Trustees
Matt Pettus, Stanislaus DSA
Bryan Roof, Modesto Fire
Gregg Clifton, Stanislaus SMA
Gerard Hilgart, Stanislaus DA Inv.
Matthew Ponce, Modesto POA
Derek Nichols, Stanislaus Cons Fire
Plan Administrator
Trust Office
Delta Fund Administrators
Legal Counsel
Linda Stuessi
Saichek Law Firm APC
Investment Manager
Gerard Tamparong
Payden & Rygel
The Players
17
A distinguished and dedicated career encompassing
• Employee benefit plans
• Extensive research and analysis
• Lobbying and speaking on behalf of trust funds
• 28 years as counsel to employee plan trustees
Licensure
• State Bar of California (1992), US District Court, SD CA (1993), US Court of
Appeal, 9th Circuit (1994)
Saichek Law Firm, APC
• Represents over 25 retiree medical trusts
• A team of five attorneys with over 90 years of combined
experience in employee benefits and labor law
Shana Saichek and the Saichek Law Firm
Over 40 years experience as a national provider of administrative solutions
• Accepts and processes employer contributions
• Tracks all account balances, both pooled and individual
• Daily claims processing
• Account information changes
• Semi-annual participant account activity statements
• Maintains all trust documents
• HIPPA, COBRA, DOL and ERISA compliant
• In-house Finance Department
Administers trusts/plans which encompass over 70,000 public employees
Based in Stockton, California
Delta Fund Administrators
• Payden & Rygel, headquartered in Los Angeles since 1983, is among
the largest independent investment managers in the United States,
with $90 billion in assets under management.
• For the past 25 years, Payden & Rygel has advised public funds,
pension plans, corporations, foundations, endowments and
individual investors on their overall investment strategies.
• The firm has developed a special reputation as one of the world’s
most prominent global bond managers.
Payden & Rygel
• Contact your membership and explain the benefits of an RMT.
• Get a approval from your membership to join.
• Sign a joinder agreement.
• Modify your MOU or side letter (request model language from Trust Administrator)
– Acknowledges the Trust
– Agrees to make contributions on Employees behalf
• Pick a contribution level.
• Pay joinder fee ($25 per member/deductible from first contribution; min. $1000; max. $5000 ( <1000 members))
• Begin making contributions.
How to Implement
Administrator
Delta Fund Administrators
(800) 700-6762
Website: centralvalleyRMT.com
Board of Trustees
Matt Pettus, Chairman
(209) 247-7132
Bryan Roof, Trustee
(209) 988-8729
For More Information Contact:
Thank You!
