Post Employment Health Plans
The NACo Financial Services Center (FSC), Nationwide Retirement Solutions (NRS) and state associations of counties, in partnership, provide county employees with a Post Employment Health Plan (PEHP) program. This program allows a county to create a tax-free trust fund for employees that can be used to pay for health-related costs after the employee retires or leaves employment. Employers can use paid time off, a percentage of payroll, a constant dollar contribution or a combination of these options to fund the plans. Employers may offer this benefit to all employees or to employees in similar classifications in states that sanction collective bargaining. In states that do not have collective bargaining, the county must offer the plan to all employees.
The county does not pay FICA taxes and the employees do not pay income taxes on these funds. The employee may only use these funds to pay for qualified medical costs, such as health insurance premiums, hospitalization, prescription drugs, and skilled nursing care. Dependents of the employee may also qualify to use the funds. The program also gives county governments an additional benefit to offer to their employees.
Benefits to Local Government
• Provides employers with a long-term solution to retiree health care
• Creates a tax-free benefit for employees
• Assures health care for employees after they leave employment
• Allows a county to set up early retirement incentives for specific classifications
• Requires a minimum amount of administrative time by the county
For more information on Post Employment Health Plans, please contact Lisa Cole at 202.942.4270 or lcole@naco.org.
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