HCSP & MSRS (Post-Retirement Health Care Savings Plan & Minnesota State Retirement System)
The post retirement Health Care Savings Plan (HCSP) is an employer-sponsored program that provides funds to be used to pay medical insurance premiums and/or out-of-pocket medical expenses after termination of employment. The deposits made into the HCSP, earnings from investments, and medical expense reimbursements are tax-free.
Contributions to the plan may include:
- Employer Payments
- Severance/Retirement Pay
- Mandatory Employee Contributions
Contributions must be collectively bargained or stipulated by a personnel policy and cannot include individual options within the group. The employee Master Contract will stipulate the type of contributions that pertain to a specific employment group, as well as any eligibility requirements. To see if you are eligible for a contribution to a HCSP check your Master Agreement on the District's website.
The types of expenses that are eligible for reimbursement are defined by the Internal Revenue Code as those necessary for “diagnosis, care, treatment, or prevention of disease, but not for general well-being”. This includes various insurance premiums such as medical, dental, and vision, or out-of-pocket expenses of the individual, spouse, or individual’s dependent children. The IRS Publication 502 includes specific information regarding what constitutes a medical expense.
Because the fund is post retirement, reimbursement is not available until an individual:
- Terminates employment
- Is collecting a disability from a public pension plan
- Is on a medical leave for more than 6 months
- Is on a leave of absence for more than 1 year
Any funds remaining after the account holder’s death may be accessed by the spouse or dependents, or if none, a designated beneficiary.
Establishment of your account
ISD 728 will remit the benefit payment for all eligible employees to the Minnesota State Retirement System (MSRS). Upon receipt of the payment, MSRS will mail an enrollment packet to each new individual’s home address. The employee choose to invest the funds by selecting from seven different fund options, provided by the State of Minnesota Board of Investment. If no selection is made, the funds will be invested in the money market account. Any earnings become part of the individual’s account. A nominal administrative fee is charged by MSRS.