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- Retirement Health Savings Plan (RHS)
Retirement Health Savings Plan (RHS)
What is VantageCare RHS?
The VantageCare Retirement Health Savings (RHS) Plan is a tax-advantaged investment plan dedicated to funding one of your most significant financial exposures -- healthcare costs.
An RHS plan provides regular active full-time employees of the City hired after February 28, 2010, the ability to accumulate assets on a tax-free basis, for reimbursements of qualified medical expenses during retirement.
Important Transition Information
Updates to the ICMA-RC VantageCare Retirement Health Savings (RHS) Plan
On June 18, 2021:
A RHS plan fund line-up change will occur; all Vantagepoint and VantageTrust Funds held in the RHS plan will transition to Vanguard Target Date Funds. *A brief “blackout period” will occur during this transaction, which is anticipated to be as short as one day*. During the “blackout period”, transactions such as fund transfers, account rebalances, and allocation changes will be limited until the fund mapping is complete (anticipated to be complete with the open of the market on Monday June 21, 2021).
Why the fund transition?
An independent review of the current ICMA-RC VantageCare Retirement Health Savings (RHS) Plan investment lineup and fee structure revealed that transitioning to Vanguard Target Date Funds will:
- Reduce the total fees paid by participants by approximately 30%
- Improve the plan performance and offer better returns to participants
- Decrease the layers of plan management and provide more transparency to participants regarding the plan’s fee structure
Some of the benefits of the RHS plan include:
- Tax-free contributions
- Tax-free investment growth
- Tax-free healthcare benefit reimbursements
- Vanguard Target Date Funds that seek to help you accumulate savings throughout your career and preserve savings in retirement
- Quarterly account statements
- No forfeiture of assets upon your death – the assets are passed along to your spouse or eligible dependents for their continuing use of healthcare reimbursements
- Experienced health benefit claims processing
How are the fees changing?
|Fee Type||Current Line-Up||
|Account Administration Fee||$25 per year||$25 per year|
|ICMA-RC Recordkeeping Fees||
0.45% of assets
0.40% of assets
|Investment Management Fees||0.51% of assets||0.15% of assets|
What else should I know?
As a result of this transition, RHS plan paper statements will also be discontinued, and statements will now be transmitted electronically. Participants will continue to pay a $25 annual account administration fee, which will be charged quarterly, and an annual asset fee of 0.40% (40 basis points) will be charged to each participant’s account on a monthly basis based on the average balance for the previous month.
ICMA-RC will provide all eligible participants with a Fund Line-up Change (FLC) Notice advising of exactly what is changing and how specific assets will be mapped from one fund to another. Other than the funds available for investment, no functionality will change due to the fund line-up changes. No action is required by you.
Learn More About RHS
The City funds each eligible employee’s RHS plan account on a pre-tax basis. No Social Security, Medicare, or income taxes are payable on these amounts.
The City contributes 3% of average earnings on behalf of each Participant. The current FY21 annualized City contribution is $1,617 or $134.75 per month. Beginning July 1, 2021 (FY22), the annualized City contribution will increase to $1,645 or $137.08 per month.
Vested employees (5 years of completed service with the city) are eligible to submit claims for reimbursement of healthcare benefits at retirement. Employees will also become eligible for benefits if they become disabled as defined by the Virginia Retirement System (VRS). If a vested employee terminates employment prior to retirement eligibility, he/she will be eligible to receive benefits at age 55.
All Medical Expenses eligible under IRC Section 213 other than direct long-term care expenses and non-prescribed medicines and drugs (other than insulin).
- Medical Insurance Premiums
- Medical Out-of-Pocket Expenses
- Medicare Part B Insurance Premiums
- Medicare Part D Insurance Premiums
- Medicare Supplemental Insurance Premiums
- Prescription Drug Insurance Premiums
- COBRA Insurance Premiums
- Dental Insurance Premiums
- Dental Out-of-Pocket Expenses
- Vision Insurance Premiums
- Vision Out-of-Pocket Expenses
- Qualified Long-Term Care Insurance Premiums
- Non-Prescription medications allowed under IRS guidance