Friday, October 18, 2019

 

Overview of the MERS Defined Contribution Plan How It Works

The MERS Health Care Savings Program is an employer-sponsored program providing a tax-free medical savings account for post employment medical expenses. The account is available for use by your employees, their spouses and any legal dependents, as well as a named beneficiary. The MERS Health Care Savings Program is not a Health Savings Account, Flexible Spending Account, or Health Reimbursement Account. It is a tax-exempt Section 115 Governmental Integral Part Trust, which ensures the assets are used for reimbursement of future medical expenses only.

HCSP Process

Step 1 Employer and employee groups work together to design the contribution structure using one or more of the types of contributions

Step 2Individual employee accounts are invested and grow tax-free

Step 3Upon separation of employment, regardless of age, the account becomes available for tax-free medical expense reimbursement

Funding The Program

Contributions to your Health Care Savings Program are based on the provisions indicated in the Participation Agreement and include:

Basic Employer Contributions are a flat dollar amount or a percentage of pre-tax wages, which have a vesting schedule.

Vesting can be:

  • Immediate – the employee is fully vested upon participation
  • Cliff – the employee is fully vested upon completion of a stated number of years of service
  • Graded – the employee is partially vested in the account balance according to your adopted schedule. For example, the employee is 50% vested after 1 year and 100% vested after 2 years.

Mandatory Salary Reductions are a fixed-dollar or percentage of pre-tax wages withheld through payroll deduction. All employees in the specified division must make the specified contributions; it is not optional. These are not required to be reported on the employees' W-2s.

Post Tax Voluntary contributions may be started or stopped at any time. The investment returns and reimbursements are tax-free even though the contribution was after tax.


 

Program Advantages

There are many benefits of the MERS Health Care Savings Program (HCSP).

Cost-effective

Because we operate on a not-for-profit basis, HCSP is offered at no cost to employers, and our already low participant costs continue to decrease.

 Unique Beneficiary Structure

HCSP allows participants to name both a primary and contingent beneficiary, a feature that is unique to MERS.

 Sound Investments

The HCSP investment menu provides your employees with select investment options to design a diversified portfolio to match their investment needs.

 Participant-outcome Focused

MERS employs behavioral economics to design a streamlined investment menu that guides participants to make decisions in their own best interest, while giving them the freedom to pursue their own investment choices.

 Retirement Readiness Resources

MERS has taken a proactive approach to helping participants achieve their financial goals with a truly comprehensive retirement readiness platform. The customized online Full Picture Report tool uses the information that MERS has along with data provided by the participant to help project retirement readiness. Free investment guidance is offered to assist participants in achieving their retirement goals if they are not on track to do so.

Fiduciary Responsibility

 As the sole fiduciary for our retirement plans, MERS takes on the liability for selecting the investment options, monitoring fund performance, and ensuring fees are reasonable. Click to learn more.

Health Care Savings Program

Quick Links

 Plan Handbook

MERS Social Media MERS Facebook MERS TwitterMERS LinkedInMERS Youtube

Disclaimer
The information contained in this Web site is being made available as a public service. The information is not intended to constitute legal or investment advice, or to replace official versions of that information. Benefit Estimates or Service Credit Purchase estimates requested through this Web site are not official descriptions of any benefits, and do not represent a promise by MERS to provide any benefit(s) to any person(s). No one can detrimentally rely upon the information provided in, or requested through this Web site. MERS reserves the right to correct any errors, and presents this information without warranties, express or implied, regarding the information?s accuracy, timeliness or completeness. If you believe the information is inaccurate, out-of-date, or incomplete, or if you have problems accessing or reading the information, please call MERS at 800.767.MERS (6377).