OCAA Members,
We are happy to remind you that on July 8, 2016, pursuant to our MOU, our county retirement medical plan will be changing. As of that date, all employed OCAA members will no longer have access to the County’s Retiree Health Plans and Medical Grant once they retire. If you would like to be a part of the County’s Retiree Health Plans and Medical Grant you will need to retire on July 7th or sooner.
On July 8, 2016, OCAA members will be set up with a Health Reimbursement Account (HRA) through the county. The HRA is an individual retiree health investment account. Some highlights of the HRA are: (1) the contributions are pre-tax and the withdrawals for qualified medical expenses are tax-free; (2) your surviving spouse and dependents can use the HRA; and (3) you have great flexibility in deciding how to spend your withdrawals.
Starting July 8th, your personal HRA will be funded by a 1% pre-tax deduction from your salary and a matching 1% from the county, for a total of 2% of your salary. Your HRA will be administered by ICMA-RC (ICMA-RC). Much like a 457 plan, you will be in control of the investment strategy. Initially, your HRA will be invested into a default age-based target plan that you may change on or after July 8th.
In addition to the 2% (1 + 1) funding level, many of our members will have an initial lump sum deposited into the HRA. If you were a county employee between 1993 and 2006, 1% of your salary was deducted from your pay to fund the County’s Retiree Medical program. The monies deducted from you between those years, plus accrued interest through 2015, will be deposited into your HRA on July 8th. In early 2017, interest for the first half of 2016 will also be deposited.
If you are an OCAA member who was employed anytime between 1993 and 2006 and you are contemplating retirement before July 8th and you know you will not be participating in the County’s Retiree Health Plans and Medical Grant, you ought to consider retiring on July 8th or after so the money deducted from you for the grant program can be deposited into an HRA for you. For those members considering retirement in the near future, you ought to make yourself familiar with the pros and cons of the County’s Retiree Health Plans and Medical Grant versus an HRA.
Information on the County’s Retiree Health Plans and Medical Grant can be found here: County’s Retiree Health Plans and Medical Grant
Information on the HRA is found in the attached PowerPoint. The PowerPoint does a great job of explaining the benefits of an HRA and why we wanted to set it up for our members. One thing that may not be clear from the PowerPoint is that you cannot voluntarily contribute more than the 1% agreed upon in our MOU. The contribution amounts are set by the MOU. They can, however, be changed by subsequent MOUs.
You will not have access to your HRA account through ICMA-RC until July 8th and ICMA-RC representatives will not have information on your individual account until then. You may, however, call ICMA-RC with any general questions on the HRA. Shortly after the HRA is implemented, ICMA-RC will conduct an on-site presentation for all of us.
In late June, you should receive a letter from the county with information on the HRA. Around July 1st, you should receive the HRA program packet, which will include instructions on how to set up online access to your account. Please keep an eye out for both of these important mailers and make sure that your address is up to date with the County so that you are sure to receive this important information.
Best Regards,
OCAA Board of Directors