Health Benefit Trust
What is the proposed new health benefit trust?
Currently, retiree group benefits are funded by employer contributions and retired member premiums. Funds do not accumulate or earn interest over time. Unused contributions are transferred to the Inflation Adjustment Account (IAA) to fund cost-of-living adjustments. The full contribution cannot be used for benefits each year as there must always be a buffer built into the budget in case of extraordinary costs.
The proposed plan design changes include establishing a new health benefit trust. This would provide more flexibility in funding retiree group health benefits while recognizing that member premiums will still be required. The fund would be seeded by an initial transfer of funds of about $100 million and sustained by ongoing funding from employer contributions. The trust’s governance framework has not been finalized, but it will provide an opportunity for meaningful input from retired members.