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A proposal for postemployment health care costs

Civil Service Committee and OHR consider a HCSP

By Cathy Marquardt

Kathy Soupir and Nancy Fulton.
Kathy Soupir and Nancy Fulton researched the HCSP to develop a proposal for U of M civil service employees.

Brief, Jan. 16, 2008

A year ago, civil service staff member Kathy Soupir attended a retirement seminar sponsored by the Office of Human Resources. One of the topics that caught her attention was how to pay for retirement health care costs. She learned that the Teamsters union contract had a new benefit called the Health Care Savings Plan (HCSP).

Soupir, a student coordinator in Environmental Health Sciences, looked up the contract and investigated the details of the HCSP on the Minnesota State Retirement System (MSRS) Web site. Next she contacted Nancy Fulton, the Civil Service Committee (CSC) member who is the point person for benefits on the CSC Compensation subcommittee.

Fulton began gathering information on the HCSP and brought the issue to the CSC.

The CSC is now considering a proposal that, for all University civil service staff who have more than 10 years of service and more than 200 hours of accrued vacation time, their vacation pay-out at termination would go into a tax-free HCSP. Tax savings for the terminating staff member may be over 40 percent. The HCSP earns interest tax-free, based on the investment the employee chooses, and can be used to pay for qualifying health care expenses tax-free.


Let the Civil Service Committee know your thoughts about creating a HCSP for civil service staff members. E-mail

The Internal Revenue Service requires that, if implemented, participation be mandatory for everyone in the class of employees who qualify. Terminating civil service employees with more than 10 years of service who don't want a HCSP would need to end with less than 200 hours of accrued vacation.

"HCSP is not just for retirees," says Fulton. "Anyone with more than 10 years of service would be eligible."

Soupir likes the fact that an employee never pays taxes on the money in a HCSP.

"It is a very smart use of money to pay for health care expenses with pre-tax dollars," she says.

To help civil service staff learn about the HCSP and to solicit feedback, the CSC sponsored three forums in December, presented by Jackie Singer, OHR director of retirement programs. One forum was delivered live online via UM Connect and is available for viewing.

In the next week or so, civil service staff will receive a postcard listing resources available on the CSC Web site, including a short survey to provide feedback to the CSC.

A HCSP can be used to pay for COBRA medical and dental insurance, pay medical health care costs at a different employer, and pay health care costs for a spouse or dependent.

This is only a sampling of the wide variety of health care costs--such as chiropractic treatment, eyeglasses and contacts, and long-term care insurance--that can be paid tax-free with a HCSP.

Learn more now and give your feedback.

Cathy Marquardt, 2007-08 chair of the Civil Service Committee, is an administrative professional in the Office of Regulatory Affairs.