IRS regulation changes affect substantiation proof requirements

Speaker: Greg Markley, Chairman, IAFF MERP

Greg Markley: Hi, my name is Greg Markley and I'm the chair of the IAFF Medical Expense Reimbursement Plan, or IAFF MERP, as you know it. I serve as one of 13 trustees who are firefighters, either retired or active. I'm a proud member of local 1747 and work for Puget Sound Fire just south of Seattle. The MERP was started in 1999 and we've made a number of changes to it and we've always tried to keep you informed and today I wanna talk about a few of those changes as we move forward that affect you, IAFF members, and those eligible to draw on your MERP plan, either as a retiree or somebody who is separated from service.

Greg Markley: Over 3000 of you received a letter in mid-December, describing some important changes to your MERP plan. One of those changes was medical premiums substantiation related to being reimbursed. Whereas in the past, you just had to provide a yearly verification that one you had a medical plan and the premiums associated to that plan. And that changed. That didn't change because the board of trustees wanted to change it. We changed it because the IRS laws changed, and it's going to create more work for you. So basically that change is you have to provide monthly substantiation for your premiums that are paid for your medical plan and you can batch those from month to month, you can batch them six months at a time. So for example, let's say your medical premium was $1000 a month and your MERP benefit was $300 a month. If at any one time you were to provide substantiation of paying $1000 for your medical premium, your MERP payment would then pay out for the next three plus months until your 300 dollars a month equal that $1000 a month. So the important thing here is rest assured that you're not gonna lose any benefit. This isn't a use it or lose it type plan. When we first started this plan, it was that way, but we changed it. We listened to you. So, if you do not use your benefit in a single month, let's say a $300 benefit, and then you go into the next month, that $300 is available for reimbursement through substantiation as well as that month's $300 benefit. So a total of $600 would be available and that could go on for as long as a period that you did not put in for a claim.

Greg Markley: Addressing the letter that you received in mid-December that talked about upcoming changes to the IAFF MERP Plan. There was one change about monthly substantiation of premiums and what changed here? First, why did it change? It changed because the guidance and the laws through the IRS changed that said from this point forward, you have to provide monthly substantiation of medical claims. Now for all of the that have been putting in other items such as co-pays and other dental premiums or long term care premiums, those are all still fine, but we're talking about premiums related to your medical plan that you subscribe to now. So what changed was is they said rather than just providing yearly documentation that you have a plan, you need to provide monthly documentation that you have a plan and that you've paid those premiums for that plan. We know this is a burden on you. It's more work. It's a pain. I understand that completely, but we have to comply with the law. The danger if we don't comply with the law is they could find our plan in violation and basically make it a taxable plan rather than a tax free plan. So in the letter, it said starting January for your January 25th submittal and then to be paid out February 15th, you need to provide substantiation for your medical premiums and we had that deadline. So if you didn't do that, the letter stated, we couldn't pay your monthly benefit in February. We're going to extend that through April. So as far as this documentation goes, we are going to extend it to April 25th to get your substantiation in to be paid out May 15th. Now, what's that mean for your January disbursement? Basically, if you've put in your showing that you have medical insurance and the coverage, your benefit will pay out up through April 15th until we get to the next period. So if your benefits $300 a month and you've provided substantiation that you have a medical plan and you showed the premium, you'll get a $300 payment in February, March and April. But starting in April for that April 25th submittal, you have to provide proof of documentation that you have a medical premium and that it was paid. So that is really the major change. We wanted to give you more time. We understand you're frustrated with all the calls we received, but we wanted to give you more time to acclimate to this change.

Greg Markley: Another thing that you're required to do annually is to provide premium verification documentation. And that's a document that shows that you're on a health care plan. It has the effective dates of that plan. It has the premium that you're paying and it has your name on it as the subscriber. This is something you've done in the past on an annual basis. We're still continuing that what's changed here, as I had mentioned before is the fact that we're going to provide monthly substantiation then for those premium payments to be reimbursed with the change in the IRS guidance and laws.

Greg Markley: There are a couple exceptions to monthly substantiation. One of those, if you're on Medicare Part A and B, and you're receiving a check from Social Security, it will show that those premiums are being deducted from your social security check. You only have to provide that once a year for substantiation according to the IRS. The other exception is if you're on the IAFF Health and Wellness Trust, which our third party administrator, Vimly, also administers that Trust, you only have to provide yearly documentation and they will work through their system to cross reference your name. You may be on another Vimly monitored plan or administered plan. And if that is the case, you only need to do yearly verification of your one, the medical plan you're on and two the premiums that you're paying. Those are the two exceptions to providing monthly substantiation for your medical premium payments.

Greg Markley: the video. I know everything that I've laid out to you may be confusing or it's a lot of information. It's certainly going to be a change starting here by April 25th. But I wanted to let you know we have resources available to you. You can go to iaffmerp.org, iaffmerp.org. There are claims forms, there are documents, there are videos explaining how to submit claims right there on that site. Additionally, you can go call Vimly, our third party administrator, at 844-353-7839. And if they're busy, which has been a big workload, as you can imagine here the last two or three weeks, they will get back to you. So our goal is to provide the very best service we can to you as IAFF MERP retirees and or beneficiaries.

Greg Markley: So to reiterate starting April 25th 2024 you're going to have to provide premium payment substantiation to Vimly, our third party administrator. That can be a canceled check. That can be a bank statement. For those of you that are having your premiums withheld from your DRS, your Department of Retirement Systems retirement check. That is proof of payment and that's all you will need to do when you send in your claim for it and your substantiation each month. And like I said, you could batch these, you could wait several months and batch these together as well. And oftentimes in most instances, your medical premium is far more than your MERP benefits. So that'll carry over and continue to pay out. And of course, you can always look online on the SIMON platform.

Greg Markley: Finally, thank you for your time in watching this video. I hope it was helpful. The 13 of us, the trustees that are on in this plan, take our jobs and our roles very seriously to provide you with the best plan that we can based on the constraints of the law and is primarily IRS regulations and codes. We sit as fiduciaries of this plan so that it will be here for all of us for the rest of our lives after we retire and into the future for those members that are just now hiring on the fire department. I wish you well in your retirement and sorry for the upheaval related to these changes. They had to be made due to legal constraints, but we'll continue to do our very best to look out for the well being of the plan and make sure that that benefit is there for all of us for our lifetimes.