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NH Plan for Retiree Medical Funds Draws National Interest

Published Tuesday Sep 21, 2010

New Hampshire's adoption of a groundbreaking plan to allow local, county and state employee groups to set up medical trust funds for retirees has attracted national interest.

The National Retiree Healthcare Summit in Washington D.C. asked Senator Harold Janeway (D-Webster) to attend a conference in December to talk about the state's efforts.

"Such an initiative is exceptional and highly noteworthy," Senior Conference Manager Alec Moore wrote in his invitation to Janeway. Moore noted that NH is the first state in the nation to adopt retiree medical trusts as a strategy to manage retiree health care costs. The effort grew out of the work of the Commission to Propose a Retiree Health Care Benefits Funding Model that Janeway led.

"This is somewhat analogous to a health savings account," Janeway said. "Employee groups can create these medical trust funds to provide benefits in their retirement. It does not cost the employer, though employers can agree to contribute. Everyone benefits because of how these funds are treated under our tax laws."

Employee groups that decide to set up such a fund ask workers to contribute a designated sum to the fund during their working years, either from regular payroll or from the transfer of sick leave or vacation time. Neither contributions nor the benefits paid out are taxed.

The money can be used after retirement to offset costs of health insurance or medical expenses. How the fund is used would be determined under the employee group's collective bargaining agreement. It is not considered a defined benefit.

"New Hampshire is leading the way again with some very creative thinking and I'm delighted that our state and our own Senator Janeway are getting national attention for this innovative approach," said Senate President Sylvia Larsen (D-Concord).

Janeway will be traveling to Washington D.C. to speak before a group of public and private sector employers who deal with issues around retirement benefits. The conference runs from December 7-9.

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