Back in 2008, the Retiree Medical Trust took its first steps, strapping on a couple of associations willing to tie in with us and a big promise. Our idea was a fairly simple one, with a total of four basic thoughts:
- You make contributions to us on a tax-free basis.
- We will invest the money wisely, growing it in the process.
- After you are retired, we will return the money to you, tax-free, to help pay for your medical expenses.
- We make those benefits stream for a lifetime.
The plan seemed solid, and with the backing of PORAC, we began a journey.
Fast-forward to today, and it is really easy to see that we have sustained a pretty good rate of growth. In May, we had a total of 59 participating associations (see charts on the opposite page). That gave us around 6,400 monthly contributing participants. By the time you read this article in July, we will have grown yet again.
Please welcome the men and women of the Sacramento Police Officers Association as they join us. With their nearly 800 members, our core number will now grow to over 7,200 participants. I would truly like to thank all of the association leaders at Sacramento POA who helped finalize the paperwork. Honestly, it has taken quite a while, which means that several different iterations of leadership have contributed to the effort. Most recently, that includes Josh Kirtlan and the current Sacramento POA President Dustin A. Smith.
And that is yet another important point to make. For a variety of reasons, it often takes time to join. Some of it has to do with internal changes of leadership within the association. On other occasions, the city or county side of bargaining can become an obstacle, which is sometimes difficult to overcome.
It’s not uncommon for it to take five years, or sometimes even longer, to get on board. We have grown accustomed to waiting. And then, when you least expect it, an association calls up out of the blue and says, “We want in — like right now.” I wish I knew how to explain all of this, but I can’t.
Our main reason for desiring growth is fairly simple. Our costs per capita generally go down as we do so. This is because some of our costs are more fixed than others. Second, we seem to be able to open up additional investment options when we have more money. Third, we are able to draw from a bigger pool of folks in order to map out our succession planning.
During the first week in June, our three-account investment portfolio, currently managed by Payden & Rygel in Los Angeles, was hovering just under $130 million.
Moving on, I received some criticism the other day for not being clearer in my articles about how one goes about participating in the RMT. So, for the record, here goes. If you want to be a participant with us, your association must first join the RMT. As mentioned earlier, that process can be extremely short or not. Here are some ideas on how to go about that:
- Educate yourself about the RMT, including what we offer and how we operate
- Talk to your association leaders to get them interested
- Arrange for the RMT trustees to provide your association with a presentation (Zoom will work, but in person really is the way to go)
- Vote to join the RMT
- Negotiate your participation with your employer to chronicle your association’s joinder agreement with the RMT
That last part is super critical. The Trust is regulated by both the IRS and the DOL. Our attorneys are constantly having to monitor their decisions on how this type of trust has to operate to comply with their most current rulings. As such, they have to scan with an eagle eye each MOU prior to an association joining. We can certainly help you with this.
As members of PORAC, this is really your Retiree Medical Trust plan. We exist to help PORAC members address the high costs of medical premiums and expenses in retirement. But it does take some planning to make it happen. Feel free to contact me at (530) 588-5117 or CPOAPrez@sbcglobal.net, and we will be glad to share this Trust with you.
