up
Budget Year / Version:
FY 26
RECOMMENDED
anchor

Program Description

  Retiree Health Benefits Trust

The County's approach to address retiree health benefits funding has been to determine an amount which, if set aside on an annual basis and actively invested through a trust vehicle, will build up over time and provide sufficient funds to pay future retiree health benefits and any accrued interest on unfunded liability. This amount, known as an Actuarially Determined Contribution or "ADC", is estimated at $70.4 million. This amount normally consists of two pieces - the annual amount the County would usually pay out for health benefits for current retirees (the pay-as-you-go amount), plus the additional amount estimated to fund retirees' future health benefits (the pre-funding portion). The pay-as-you-go amount can be reasonably projected based on known facts about current retirees, and the pre-funding portion is estimated on an actuarial basis.

The County's policy has been to pay the full amount of ADC each year. In FY11, the County Council enacted Bill 17-11 which established the Consolidated Retiree Health Benefits Trust. The Bill amended existing law and provided a funding mechanism to pay for other post employment benefits (OPEB) for employees of MCPS and MC. In FY15, the County and all other agencies implemented the Medicare Part D Employer Group Waiver Program for Medicare eligible retirees/survivors effective January 1, 2015. This has reduced retiree drug insurance costs and the County's OPEB liability. The County achieved full pre-funding in FY15, consistent with Council resolution No. 16-555. In FY24, the County General Fund fully funded the pay-as-you-go amount, funding in excess of the ADC by $17.4 million, as the pay-as-you-go amount was determined to be in excess of the ADC, and the prefunding contributions were budgeted at $62.3 million for the MCPS Consolidated Trust. No prefunding amount was required for Montgomery County Government or the MC Consolidated Trust.

Explore
anchor
Program Contacts

Contact Julie Knight of the Office of Management and Budget at 240-777-2760 for more information regarding the operating budget for the Non-Departmental Accounts.

anchor

Program Budget Changes

FY26 Recommended ChangesExpendituresFTEs
FY25 Approved$00
FY26 Recommended$00