Impact Award

Employer Name:

Alger County

Key Takeaways:

  • Proactively addressed retiree health care costs by adopting the MERS Retiree Health Funding Vehicle.
  • Paired the MERS Health Care Exchange and Health Care Savings Program, providing employees with a stipend resulting in an immediate reduction of OPEB liabilities by
    nearly 50%.
  • The reduction in OPEB liabilities has allowed consistent contributions above the minimum required for eight consecutive years.

MERS Programs:

  • Health Care Savings Program
  • Retiree Health Funding Vehicle
  • Health Care Exchange

MERS Resources:

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Results

  • County’s OPEB liability is approximately 75% funded.
  • OPEB liabilities were reduced by nearly 50%.
  • Eight years of contributions above the minimum requirement.
  • Demonstrated commitment to employees and long-term financial responsibility.

Situation

Alger County is undergoing a transition period with several employees expected to retire within the next two years. The county is moving away from offering traditional health care insurance while wanting to provide a post-employment health-related benefit to future retirees.

Process

In 2017, Alger County adopted the MERS RHFV to begin prefunding retiree health care obligations. In 2018, the County became the first municipality to implement the MERS Health
Care Exchange option, pairing it with the MERS HCSP, into which it provided employees with a stipend to enable retirees to enroll in coverage through the exchange. The switch from
offering traditional post-employment health care insurance to this approach reduced OPEB liabilities by nearly 50%, to $1.89 million in 2024, from $3.96 million in 2016. Alger County used the extra funds to increase contributions to the RHFV and set the stage for long-term financial planning.

Strategy

  • Phasing out retiree health insurance, while adopting RHFV to pre-fund existing retiree healthcare costs. Continued contributions above the minimum requirement to accelerate funding progress.
  • Pairing the MERS Health Care Exchange option with the MERS HCSP into which the County provides employees with a stipend ($270 for those with 100% insurance coverage and $135 for those with 50% coverage), allowed the County to reduce liabilities and realize significant cost savings while providing equal or better coverage.
  • Engaging in long-term financial planning to ensure sustainability for both current and future employees.