Creating a Retiree Medical Trust: A Fresh Look at a Proven Solution
Retiree Medical Trusts (RMTs) offer a tax-advantaged way for employers and employees to save together for future healthcare needs.
Healthcare costs continue to climb faster than wages, leaving many retirees worried about affording medical care when they need it most. But there's a solution that's already helping thousands of public employees prepare for these expenses. NCPERS’ guide, How Employers and Employees Can Use Pre-Tax Dollars to Fund Retiree Medical Expenses, shows how.
Retiree Medical Trusts (RMTs) offer a tax-advantaged way for employers and employees to save together for future healthcare needs. Think of it as harnessing the power of collective investing—similar to how pensions work—but specifically designed to help cover medical costs in retirement.
Why Retiree Medical Trusts (RMTs) Work
Right now, RMTs are paying monthly benefits ranging from $150 to $1,300 for life to retirees across the country. These payments help cover insurance premiums, out-of-pocket costs, prescription drugs, and other medical expenses—all tax-free.
The best part? Both employer and employee contributions are made with pre-tax dollars, and the trust itself grows tax-free. That means more money available when retirees need it most.
Key Benefits at a Glance
Real Results: With modest contributions during working years, career employees can receive substantial monthly benefits throughout retirement. For example, a contribution of $192 per month can grow to provide over $850 per month in retirement benefits—for life.
For Employees:
Pre-tax contributions reduce taxable income today
Lifetime monthly payments for medical expenses in retirement
Tax-free benefits when you need them
Survivor benefits for spouses
For Employers:
No payroll taxes on contributions
May minimize or avoid GASB liability reporting
Fixed, predictable contributions
Helps attract and retain quality public servants
Download the Guide: How Employers and Employees Can Use Pre-Tax Dollars to Fund Retiree Medical Expenses
This comprehensive guide explains how RMTs work, who they benefit, and how to implement them. You'll find:
- Detailed explanations of RMT structure and governance
- Real-world contribution and benefit examples from operating trusts
- Tax advantages for employers, employees, and retirees
- Implementation guidance and frequently asked questions
- Expert resources to help you get started
Whether you're a pension trustee, union official, plan administrator, or public employer, this report provides the information you need to evaluate whether an RMT could help your organization address rising healthcare costs.
Download the full report to discover how your organization can help employees save for healthcare in retirement while potentially reducing your own liabilities.