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Retirement Health Savings Plan (RHSP) |
Background
To help employees save for the health care expenses they will face in retirement, the County offered the VantageCare Retirement Health Savings Plan (RHSP). This plan allowed employees to set aside money while still working, on a tax-favored basis.
Plan Changes
There have been major changes since the inception of this plan as a result of an IRS ruling that the following elective features of types of plans like the Retirement Health Savings Plan (RHSP) are not permitted after December 31, 2007.
- Irrevocable elections to contribute a percentage of salary, accrued annual or accrued extended illness leave
- Revocable elections to contribute annual leave, personal days or floating holidays on a prospective (as earned) basis
Therefore, employees may not make further contributions and there will be no new enrollments in the plan.
Do changes affect the funds already contributed to your RHS account?
No, ICMA and the IRS reached a settlement preserving the existing favorable tax treatment.
Why has the plan been amended rather than terminated?
Terminating the plan would require funds be returned to current participants as a taxable event. The settlement agreement preserves the favorable tax treatment for current participants. Current participants have access to a full range of ICMA-RC investment options and contributions can benefit from tax-free growth. You will continue to receive quarterly statements on the performance within your account and make changes to your investment choices through the Vantage Line toll free phone number or Vantage Link online member services.
RHSP account proceeds can be used tax free for reimbursement of health care expenses. After you retire or terminate employment, healthcare expenses for yourself, your spouse and eligible dependent family members will be reimbursed through the plan. This includes all IRS qualifying medical and dental expenses such as health and dental insurance premiums, copayments, coinsurance amounts and other out of pocket expenses.
Other factors affecting the RHSP
Unrelated to the changes above, a revenue ruling by the United States Treasury Department will change who can be a beneficiary for the RHS plan proceeds beginning January 1, 2009. Beginning on that date only your spouse, a dependent child or other dependent as defined by Section 152 of the Tax Code will be eligible to have qualifying expenses reimbursed by the plan.
Select RHSP Plan Summary  to view the plan as it was originally offered. Select Deferred Compensation to learn how to save for retirement on a tax-deferred basis. Deferred Compensation withdrawals after termination of employment may be used for anything you choose, including but not limited to health care expenses.
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