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Home / Forms / Summary of the Plan / Complete Version of the Plan / IPA Home
Welcome to the Irvine Employees Benefit Trust webpage.
As you may know, the nation has witnessed a period of steady increases in the cost of medical coverage, with an accompanying increase in the number of Americans without health insurance. The nation’s demographics are making it more difficult to subsidize health coverage for the growing number of retirees. City and state budgets are under pressure from a variety of sources. As a result, public sector employees and retirees can no longer assume that state, county, or local government will continue offering benefits once taken for granted. The Irvine Employees Benefit Trust provides a method for eligible plan participants to pay, on a non-taxable basis, for qualified expenses including medical, dental and long term care premiums (as defined in the Internal Revenue Code (IRC) Section 213) that are otherwise reimbursed by insurance.
A. Why was the Irvine Employees Benefit Trust created?
The Irvine Police Association (“IPA”) had established a medical expense reimbursement trust in 1998 to address the rising cost of health care. This same concern motivated the Irvine City Employees Association (“ICEA”) and the Association of Supervisory and Administrative Personnel (“ASAP”) to eventually join the “Irvine Employees Benefit Trust” (the “Trust”) also. The Board of Trustees is a nine-member board, with three representatives from the three bargaining units. They developed the Plan to help the members of participating bargaining groups accumulate funds to help pay for medical expenses during retirement.
Although you have a pension or a deferred compensation (“457”) plan, you may find that you are not fully prepared to financially shoulder the rising cost of health care expenses. Even if you have carefully designed a retirement budget, you may find yourself in a difficult situation if you do not have sufficient funds dedicated to health care expenses. You may have to use funds already dedicated to other retirement expenses, or you may even have to postpone your retirement.
B. Why are post-retirement medical costs on the rise?
• You need more medical services as you age
• You pay higher insurance premiums as you get older
• The cost of health care is rising faster than the inflation rate
The Plan is designed so that you contribute a small fraction of your salary during active employment. After retirement, if you meet the eligibility requirements of the Plan, you may be reimbursed for certain health care expenses.
A.When do I start getting reimbursed?
You will be able to qualify for reimbursement of certain medical expenses after you have done all of the following:
• Work full-time for the City for at least 5 years;
• Make contributions to the Trust for all periods of employment on or after July 1, 1998 for members of IPA, or July 1, 1999 for members of ICEA or ASAP;
• Retire;
• Become eligible to receive benefits from CalPERS (or other retirement system); and
• Reach the age requirement that applies to your bargaining group
Irvine Police Association - Age 50
Irvine City Employees Association – Age 55
Association of Supervisory and Administrative Personnel – Age 55
B. For what health care expenses will the Trust reimburse me?
If you meet eligibility requirements for the Plan, you may be reimbursed for the following “Covered Expenses”:
• Medical premiums (e.g., health plan, dental insurance, Medicare supplement policies, vision care or prescription drug policies, etc.),
• Miscellaneous medical expenses (e.g., eyeglasses, deductibles, drugs, etc.).
• Long-term care insurance premiums (under Internal Revenue Code Sec. 7702)
C. For how much can I be reimbursed?
You may be reimbursed for Covered Expenses up to your individual monthly Benefit Level. The amount for which you are reimbursed may not exceed the actual cost of your Covered Expenses. Your benefit will be based on:
• Your length of employment while covered by the Plan;
• The Benefit Amount for your Association; and
• The year that you retire.
• What if I have a Covered Expense that is more than my monthly Benefit Amount? A Covered Expense that exceeds your monthly Benefit Level may be submitted once, and then reimbursed over time, on a monthly basis, until you are fully reimbursed. However, the amount of this expense cannot exceed 12 times your monthly Benefit Level.
• What if I don’t use the full amount I have available to me for the month? Any unused balance of your monthly Benefit Level will be carried over to the next month. However, the Plan will pay no more than 12 times your monthly Benefit Level for any calendar year, and it must be for expenses incurred in that year.
Your fellow employees who serve as Trustees have worked with benefit professionals to design a Plan that works for you. The Board of Trustees is made up of Association members (elected by an Association or appointed by the Board of Directors of an Association), who went to great lengths to design a Plan that would make the most of the hard earned money that you contribute – providing you some financial assistance for your post-retirement medical expenses.
A. Tax Advantages - The Plan is designed to give you the following tax advantages:
• You do not pay income tax on your contributions to the Trust
• Trust earnings are not taxed – the more money that is in the Trust, the more money the Plan will have available to help pay for your post-retirement medical expenses
• You do not pay income tax on the money reimbursed to you for your health care costs
B. What are the benefits of a pooled account?
The Plan is designed so that contributions are held and invested collectively in a “pooled account.” The following are examples of benefits to pooling funds:
• Continuing income to the Trust. This Plan is somewhat different than an individual account “Health Reimbursement Arrangement” (“HRA”) that you might hear about. This Plan pools all contributions, and invests them on a long-term time horizon. This means two things: 1) The Trustees can reasonably adopt a higher earnings assumption than an employee might reasonably choose for an individual account, because the long term nature of the investment allows for some smoothing over the volatility of the market. 2) After retirement, an employee could not assume any further income to his account, whereas the pooled plan is continually receiving a stream of contributions.
• Lifetime benefit payments. This Plan is designed to provide a monthly stream of benefit payments for the retiree's lifetime, plus a continuing benefit payment stream to the surviving spouse until his or her death. This will become very important in your later years, when an individual account HRA might run out. (This plan design is not vested, and is subject to Trustee modification.)
The information contained on this webpage has been designed to provide you with a general description of the provisions of the “Restated Medical Expense Reimbursement Plan of the Irvine Employees Benefit Trust, effective March 1, 2009,” (03/24/09 Ed., including Amendment Nos. 1-7, the “Plan”). The information contained herein does not provide all the details and limitations of the Plan. Please refer to the Plan for exact specifications, which will prevail if there is a conflict with this website.
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