The PORAC Retiree Medical Trust is a funding vehicle in which to deposit money while you are working, to pay for medical expenses after you retire, pursuant to the rules of the Plan. Any PORAC member association may choose, as a bargaining unit (through collective bargaining), to join the Trust. (You cannot choose to join as an individual; it must be through bargaining by your association.) Currently, we have associations participating from California, Oregon and Washington. That includes both Police and Fire. It is anticipated that we will begin to grow into additional states in 2021.
Your association should consider joining the PORAC Retiree Medical Trust as part of the solution to the problem of rising health care costs, and budget strains on cities and counties. The Trust is a flexible and tax-favored program available to PORAC member associations to fund for post-retirement medical expenses, through pre-tax employer and/or employee contributions. Also, the Trust offers the advantages of pooling contributions, such as providing a lifetime stream of benefit payments. This differs from an individual health savings account benefit, which will terminate when the account balance reaches zero.
The Trust’s Medical Expense Reimbursement Plan is a financial tool that allows current employees to save money tax-free to pay for medical expenses they will incur in retirement. The Trust will invest pre-tax contributions, earn income tax-free, and after retirement, reimburse participants tax-free for covered medical expenses and health insurance premiums. Benefits are funded with regular payroll transfers and/or lump-sum transfers of sick and vacation leave. The unions and employers must negotiate a set contribution rate and must transfer the same percentage of each employee’s accrued leave for all members. An individual employee cannot elect to contribute more than what is set forth in their MOU.
Eligibility for monthly benefits is open to any participant who qualifies as a regular beneficiary by: (1) earning 5 years of active service (10 years for employees hired after their association joined the Trust); (2) having contributions made to the Trust on their behalf for all years of active service; (3) attaining age 55; and (4) ceasing employment as an employee under the Plan. Retirees who do not meet these eligibility requirements will still be eligible for medical expense reimbursement benefits paid out of individual employee accounts.
For more details, read the answers to our Frequently Asked Questions.
