Learn about the funding mechanisms and contribution models available to you.
Understanding the Medical Expense Reimbursement Plan (MERP)
The International Association of Fire Fighters (IAFF) Medical Expense Reimbursement Plan (MERP) was established in 1999 as a 501(c)(9) tax-exempt union sponsored plan to allow fire fighters to plan for retirement medical expenses in a highly tax-advantaged manner. The IAFF MERP is a multiemployer VEBA Retiree Medical Trust designed to provide a tax-free lifetime benefit to offset the inevitable medical and other long-term healthcare expenses all firefighters will face.
Governed by fire fighter fiduciary trustees with professional service providers, the Plan has grown to more than 15,000 active and retired firefighter participants, disbursing over $7M in annual benefit payments. Endorsed by the IAFF and open to any publicly funded IAFF Participating Local, the Plan is committed to being the retirement medical funding solution of choice for fire fighters throughout the United States.
Funding the Plan
Pursuant to the terms of the collective bargaining agreement (or similar), pre-tax deferrals are withheld from regular payroll and transferred from the employer to the MERP Trust Administrator. Employee and Employer contributions are permissible. All members within the bargaining unit or defined eligible class must participate at the same amount. The Plan can also accept pre-tax transfers of:
- Accrued sick and vacation leave
- Other eligible Lump Sums
- “In-lieu” or “opt-out” incentives for waiving employer sponsored health insurance
- Surplus Flexible Benefits allowances
The minimum monthly contribution amount is $75 per month. There is no maximum contribution level, except for management employees who cannot contribute more than regular fire fighter employees.
Can you choose to contribute more?
No, the IRS mandates that there can be no individual election for contributions due to the highly tax favored status of the Plan. Contributions to IAFF MERP are defined by the bargaining unit or eligible class and must be the same for all employees in that bargaining unit or class.
What if I can’t use my full monthly benefit every month after retirement?
Any unused benefit will rollover from month to month into your Accumulated Benefit “bank.” Funds in your Accumulated Benefit bank can be accessed at any time for reimbursement of eligible expenses. Your Accumulated Benefit bank balance can be viewed in the SIMON online Member Portal.
Monthly Benefit Levels
The Lifetime Monthly Benefit* is determined by the number of Active Service Units one has accrued during his/her active employment (or has accrued because of conversion of leave transfer, other Lump Sum Transfer, or Individual Account balance) and the Unit Multiplier. The Unit Multiplier is an actuarially derived number based on the Trust plan design, investment performance, and various demographic factors. Higher contribution rates and longer plan participation mean more Active Service Units which equate to higher benefit levels after retirement.
An employee actively working for a participating employer generally makes monthly contributions in multiples of $25, with each $25 contribution on your behalf equaling one (1) Active Service Unit. For example, if you contribute $100 per month, you are earning four (4) Active Service Units per month or forty-eight (48) per year.
Lump Sum Transfers, which are converted to Active Service Units, are done so using the age-based Lump Sum Conversion Table which can be found in Appendix C of the IAFF MERP Summary Plan Description. Lump Sum Transfers may also be transferred directly into Individual Accounts.
*Monthly Benefit Levels are intended to last for the lifetime of the Eligible Retiree. However, benefits are not vested, and the Trustees have the right to increase, decrease or terminate benefits at anytime to preserve the financial stability of the Plan.
Contribution Rates & Benefit Levels with 25 Years in the Plan
| Monthly Contribution Amount During Active Employment | Monthly Benefit During Retirement After 25 Years of Contributions* |
|---|---|
| $75 | $369 |
| $100 | $492 |
| $150 | $738 |
* These amounts are effective July 1, 2015 and are subject to change. Note at retirement, you will be offered the choice of taking a consistent Monthly Benefit Level or one of three additional options that provides a higher benefit prior to age 65 and lower benefit after age 65. Survivor benefit options also impact the Monthly Benefit Level.
Lifetime Benefit Eligibility
In order to be eligible for the Lifetime Monthly Benefit*, a Retiree must:
- Be at least 53 years old*,
- Have at least five (5) years [or 60 months] of contributions, and
- Have separated service from the participating employer group.
Retirees who do not meet these eligibility requirements will be eligible for a Short-Service Benefit which allows them to receive reimbursement of eligible medical expenses up to the amount of contributions that have been made on their behalf at the time they retire.
*Early Benefit Access: The Plan allows early access (prior to age 53) to the Lifetime Monthly Benefit* with the following conditions:
- You must meet your State’s definition of Retirement or Disability Retirement.
- Monthly benefits taken prior to age 53 will be actuarially adjusted using the Early Retirement Factors in Appendix E of the Summary Plan Description. Please note that the actuarial value of the monthly benefit is the same as if you had waited until age 53.
- Electing to take your MERP benefit early is optional. Members can choose to wait until age 53 when their benefit will be whole.
*Monthly Benefit Levels are intended to last for the lifetime of the Eligible Retiree. However, benefits are not vested, and the Trustees have the right to increase, decrease or terminate benefits at anytime to preserve the financial stability of the Plan.
Trust Office
Vimly Benefit Solutions is our Trust Office. Their Vimly SIMON Member Portal Platform is available to active members, retirees and employers:
- Active Members – View your personal account information online and utilize benefit calculators as you plan for retirement.
- Retired Members – View your benefit information (pooled and Individual Account balances), upload claims, view claims status and more.
- Employers – View/pay your monthly contributions online, update eligibility and contact information for Participating Members.
When you go to the Vimly SIMON Member Portal, click “Register” and follow the instructions. (MERP Registration Code = MERP16)