Is the Employee Benefit Trust Working for You?

Daniel Coyne

A lot of you probably don’t know much about the Employee Benefit Trust or even that you pay into it out of every paycheck — but you do. If you look at the top right-hand of your paystub, you will see LVMEBT — RHS, and the amount of $70.46 is deducted. This is the amount that you pay every check to the trust. When you have paid a total of 20 years into the trust, you will have maxed out your benefit, and when you retire, the trust will reimburse you the max of $400 a month for medical costs.  

The trust is a great concept and a huge help to its members as many of us haven’t planned for the costs of medical insurance in retirement, which are very costly. The current cost for retiree medical insurance is $883.50 a month for single coverage and $1,400 a month for family coverage through the LVMPD Health Trust.

So, now let’s look deeper into the numbers. You pay in for 20 years before you max out, but what happens after your 20-year max benefit is met? Well, the answer is that you continue to pay that $70.46 out of every check, but that $70.46 does not purchase you any further benefit. 

You continue to pay for as many years as you continue to work for LVMPD, and the monthly benefit remains at $400. It seems to me that someone who pays into the trust for 21, 25 or 30 years should receive a higher monthly benefit than someone who paid into the trust for 20 years. That would be common sense or, for the most part, fair. 

Well, what’s fair to those who are currently funding the trust is not what is happening. Right now, any amount of money that you are paying into the trust over the 20-year mark is being inequitably paid to members of the trust who only paid in for 20 or fewer years.

I have researched several other benefit trusts that are structured based on a credit system that compensates its members differently for every month longer they contribute to the trust. I believe our trustees need to take a serious look at the fairness of the current structure and consider a different calculation for our members who contribute longer than 20 years. Most of these other trusts allow their members to elect a higher contribution for a higher payout as well. This would be a great option if you want to plan to cover all your medical expenses in retirement. 

After researching other law enforcement benefit trusts and comparing them to ours, it is clear that we need to improve and update our model. I wish the PPA had the power to correct this model to one that fairly compensates our members for the actual number of years they pay. However, we only have one E-Board member sitting on the trust. That trustee is Scott Nicholas, and I assure you that he is voicing our members’ concerns, but he needs your help in the form of your votes. We will send out a reminder the next time an open trustee spot comes up so we can make sure your concerns are being taken seriously.

No one should be OK with paying in for 30 years but being compensated the same as someone who contributed less than them. Make sure when the next EBT election comes up, you make your vote heard and demand a fair compensation model.