Chairman
What Is the RMT?
The PORAC Retiree Medical Trust is an IRS-recognized 501(c)(9) trust operating under the rules of the federal Employee Retirement Income Security Act of 1974 (ERISA). Generally speaking, those rules protect the retirement assets of U.S. workers.
What Is the Purpose of the RMT?
The main premise is to help pay for medical expenses once a participant retires. It is not designed to be a replacement for fully paid health insurance.
Who Runs the RMT?
There are five trustees — one from each of the four PORAC regions and one appointed by the PORAC president. All trustees are either current or retired police officers. The trustees have the assistance of five different professional service providers, including legal, investment, auditor, actuary and third-party administrator (TPA).
Who Can Participate?
Any police or fire association in California that is also a participating member of PORAC. Also, public safety associations across the U.S. are now also eligible to join us.
How Many Participants Are There Currently?
There are 52 active associations, representing over 5,500 active contributors. Additionally, there are around 2,000 additional participants who are already receiving benefits or waiting to become age eligible in order to collect their benefits.
How Does the Trust Work?
Once your association joins, monthly contributions are sent to the Trust. Those contributions are made on a pre-tax basis. The source of the contribution can be from the participant, the employer or a combination of both. The money is invested with the assistance of a professional investment advisor. The earnings from the investments are not taxed. Benefits are paid once an employee retires and becomes age eligible. Those benefits are not taxed.
How Long Will My Benefits Last?
The plan is designed to offer a lifetime stream of benefits. However, the trustees retain the right to adjust the benefit levels to ensure the financial viability and longevity of the Trust.
Who Is Covered by My Benefits?
Benefits can be used to cover expenses for you, your spouse and your dependents, as defined by the IRS.
What Can My Benefits Be Used For?
Your benefits can be used to pay for your medical expenses and insurance policies. This includes health, dental and vision insurance. It covers premiums, co-pays, deductibles and prescriptions. It also includes chiropractic services. For more information, refer to IRS Publication 502.
Are There Surviving Spouse Benefits?
Yes. Upon your death, your spouse is eligible to receive up to 50% of your benefit. That benefit is available to the surviving spouse until the death of that spouse.
When Can I Collect Benefits?
Participants must be at least 55 years of age to collect benefits. In addition, they must have severed employment from their employer, as well as any other employer where the association is enrolled in the Trust.
Is There a Minimum Vesting Period of Time?
The Trust doesn’t call it that, but we do have some rules. When your association first joins, all of the original participants must contribute for five years in order to be eligible for benefits. Any participants hired after that first day must contribute for 10 years in order to be eligible for benefits.
What Happens to My Money If I Don’t Make the Five- or 10-Year Mark?
This is a great question. When an association joins, it is very likely that there will be senior members who won’t be around long enough to get to the five-year mark. Don’t worry, you won’t lose any money. First, the federal COBRA act of 1985 allows a participant to self-pay for a period of 18 months. For example, if a participant only contributed for four years and then retired, that participant could self-pay for one year and then be eligible for the lifetime stream of benefits. But if, for some reason, the participant couldn’t get to the five-year mark, or chose not to self-pay, all of that participant’s contributions will be transferred into an individual account. No money would be lost.
What Are the Advantages of Joining the RMT?
Saving money for medical expenses in retirement is always a good idea. Saving that money in a tax-free environment is a great idea. Not planning ahead doesn’t mean that your medical expenses and health insurance costs will disappear. It simply means that you will pay for those expenses with post-tax money. In other words, Uncle Sam will have already taxed your money, which costs you more in the end.
How Can My Association Find Out More About the RMT?
There is a lot of information available on our website at poracrmt.org. Now that many COVID restrictions are being lifted, we are also available to meet with you in person. We can provide a presentation, along with a much more detailed explanation of the RMT.
I am always available to answer any questions, so feel free to reach out to me for more information.
