SJR 2 – FINAL VERSION
SENATE JOINT RESOLUTION 2
This joint resolution endorses the establishment of a statewide retiree medical trust to provide a funding source for reimbursement of post-retirement medical expenses of state, county, and municipal employees.
STATE OF NEW HAMPSHIRE
In the Year of Our Lord Two Thousand Ten
A RESOLUTION endorsing the establishment of a statewide retiree medical trust for public employee health care reimbursement benefits after retirement.
Be it Enacted by the Senate and House of Representatives in General Court convened:
Whereas, the legislature, in 2007, 355, established the commission to make recommendations to ensure the long-term viability of the New Hampshire retirement system; and
Whereas, the commission met and subsequently filed its report on January 2, 2008; and
Whereas, certain recommendations from the report of the commission were included in 2008, 300, relative to administration of the New Hampshire retirement system and benefits for members; and
Whereas, the legislature, in 2008, 355:13, established a commission to propose a retiree health care benefits funding model (hereinafter retiree health commission); and
Whereas, the retiree health commission met and studied alternative approaches to retiree health care funding; and
Whereas, the retiree health commission recommended the establishment of a retiree medical trust, according to applicable state and federal law, to provide a funding source for reimbursement of post-retirement medical expenses of state, county, and municipal employees; now, therefore, be it
Resolved by the Senate and House of Representatives in General Court convened:
That the general court hereby endorses the implementation of a retiree medical trust, to be established by public employee associations and/or unions, according to applicable state and federal law and regulations, to provide medical expense reimbursement benefits after retirement to retirees of local, county, and state governments, provided such retiree medical trust meets the following criteria:
I. Participation in such a trust is elective by option of an employee group, which includes an employee bargaining unit or other rational employee classification. The employee group will have the option to join the trust, and to select the employee contribution level. If an employee group decides to join the trust, then every employee in that group shall participate in the trust.
II. Contributions to such a trust are made during active employment for benefit payments after retirement, so that the trust is pre-funded and not pay-as-you-go funded. Employee and/or employer contributions shall be transferred to the trust by employers during the active working lives of employees, in the fixed amount negotiated in a collective bargaining agreement or set forth in an employer resolution or other written document for non-bargained employees.
III. The trust provides to participating retirees reimbursement payments toward the costs, in whole or in part, of health insurance premiums and miscellaneous medical expenses.
IV. All contributions to the trust are based on a defined contribution level set forth in a collective bargaining agreement, memorandum of understanding, or other written agreement to which a participating employer is signatory. There shall be no defined vested benefits.
V. Funding for the trust is negotiated and may include the following:
(a) From regular payroll. Each bargaining unit or other employee classification will decide the level of its employee contributions. The level of employee contributions will be uniform for all members of the association bargaining unit or employee classification.
(b) From transfer of sick leave and vacation leave. Each bargaining unit or other employee classification may provide that accumulated sick and/or vacation leave which is payable upon retirement be transferable to the trust on retirement.
(c) From participating employers. Contributions may be accepted from the local, county, and state governmental employers, as negotiated by the parties. These contributions may be either in a lump sum, or a regular monthly or annual contribution.
VI. The trust is structured to provide optimal tax advantages, which under current federal law include:
(a) Pretax contributions. All contributions made to the trust are not taxable income to the employee, even though they may be employee contributions.
(b) Tax free earnings. The earnings of the trust are exempt from tax, which enables higher benefits to retirees.
(c) Non-taxable distributions. Benefit payments from the trust to retirees are not taxable income to retirees.
VII. The trust is administered by a board of trustees, who are appointed or elected according to rules set by the sponsoring organizations.
VIII. The benefit plan and trust shall be designed so that participating employers avoid Governmental Accounting Standards Board (GASB) reporting obligations as a “defined benefit” plan. It is structured as a defined contribution plan.
Approved: August 23, 2010