FAQs - Important Information About Plan
January 1, 2002
The Deputy Sheriffs’ Association of Stanislaus County (DSASC) is sponsoring a retiree medical benefit plan, effective April 20, 2002. It will be funded through a tax exempt employee benefit trust, called the Central Valley Retiree Benefit Trust. We are hoping other law enforcement and public employee associations in the region will join the Trust. The purpose of this Bulletin is to answer common questions about the Plan, which provides for health premium reimbursement after retirement.
A. ELIGIBILITY AND BENEFITS
1) What kind of benefits will be available to me under the Plan? The Plan will reimburse you toward the cost of post-retirement premiums you pay for health coverage. Health coverage is broadly defined: it includes insurance for medical and hospital expenses, dental or vision care and prescription drugs. The premium can be paid to a wide variety of health care plans, e.g., traditional insurance company for individual coverage, to your spouse’s employer plan for group coverage, Medicare, etc.
2) When will benefits commence? Benefits commence after termination of employment or retirement, depending on the election of your association.
3) How do I become eligible? Eligibility for benefits generally requires: a) employment in the bargaining unit covered by the DSASC, during which contributions are made to the Plan under a Memorandum of Understanding or under a “special agreement” defined by the Trust Document; and b) termination of employment.
4) How long will benefits last? Benefits shall terminate on the first to occur of the following: 1) The date the Retiree’s Account balance reaches zero; 2) The date of the Retiree’s death; or 3) the date the Plan is terminated. (However, if the Plan is terminated, Trust assets must be distributed to participating employees and retirees for medical coverage.)
5) What will the benefit level be? The monthly benefit amount is determined by you, at your option, and is limited only by the cost of your premium.
6) Are there survivor benefits? Yes, the Plan includes benefits to surviving spouses, as well as benefits to dependent children or other qualified relatives who survive the Retiree.
1) How is the Plan funded? Stanislaus County and the Deputy Sheriffs’ Association of Stanislaus County have negotiated, through the MOU process, for a contribution of 1% of salary into the Plan, plus 50% of the value of your accumulated sick leave at retirement. The advantages of tax-free earnings and compound interest allow significant appreciation on the contributions.
All contributions into the Plan can be spent only on benefits and administrative expenses. It would violate federal law if the assets ever were paid to the Association, the employer, or the Trustees.
2) May I elect whether or not to participate (like a cafeteria or 401k plan)? No, there is no individual selection into the Plan. It is for the entire bargaining unit, or no one. The tax advantages depend on the absence of individual election.
3) What are the tax advantages of the Plan? Under current tax law, there are three separate tax breaks:
a) Your contribution can be pre-tax money, i.e., it will not count as taxable wages;
b) The Trust itself will accrue earnings on a non-taxable basis; and
c) Your benefits will not be taxed when you receive them.
This means that the portion of your salary contributed to the Plan will never be taxed (unlike pension benefits, which are taxed upon receipt), and you will receive it after retirement for medical coverage.
4) Will I have an individual account in the Plan? Yes. The Plan will maintain an Employee Account on each Employee, which will reflect all contributions made to the Plan in the name of the Employee, investment earnings and losses, administrative expenses, and distributions. In addition, the Deputy Sheriffs’ Association of Stanislaus County has negotiated that 50% of your sick leave will be distributed to this Plan on your retirement, for your benefit only. Any other association that joins the Plan may negotiate that a distribution of all or part of its members’ sick leave will be distributed on their retirement to the Plan, for its members’ benefit only. This may be particularly valuable for older employees, close to retirement when the plan is adopted.
C. OPERATION OF PLAN
1) What is the legal structure of the Plan? Plan assets (i.e., contributions and earnings) will be held in a trust, legally separate from the Deputy Sheriffs’ Association of Stanislaus County or the employer. The Trust is controlled and administered by a three-member Board of Trustees, two elected by members of the Deputy Sheriffs’ Association of Stanislaus County and one appointed by the Deputy Sheriffs’ Association of Stanislaus County Board of Directors. The Board of Trustees designs the Plan, selects investment vehicles, decides on distribution options, etc. The Board of Trustees reserves the right, in their sole discretion, to adjust the benefit amount, amend, modify or terminate the Plan at any time.
The Trust is regulated by federal law, and the Trustees are charged with fiduciary responsibility to administer the Plan for “the exclusive benefit” of the participating employees. If the Trustees fail to do so, they are subject to civil and criminal penalties.
2) Who can become a Trustee? Any member of the Deputy Sheriffs’ Association of Stanislaus County can run for election as a Trustee.
The exact rules of the Plan are contained in the formal “Premium Reimbursement Plan of the Central Valley Retiree Medical Trust”, which will prevail over this Bulletin, in case of conflict.
For additional information regarding the plan please navigate to the “Trust Documents” tab and visit the Summary Plan Description.