§ 5069. Insurance

(a) The Board may enter into insurance arrangements to provide health and medical benefits for retired members and their dependents. The Board may enter into insurance arrangements to provide dental coverage for retired members and their dependents, provided the municipalities or the System has no legal obligation to pay any portion of the dental benefit premiums.

(b) The Board may, to the extent that it may be funded as described in this subsection, establish an uninsured program for the reimbursement of certain health care costs of retired members and their dependents pursuant to the following:

(1) Benefits under an uninsured program shall be funded by redirecting a portion of contributions from employers. Employer contributions shall only be so redirected to the extent that those contributions offset an existing actuarially determined surplus with respect to the actuarial cost method and funding adopted by the Board. The Board may establish a trust to hold and invest employer contributions and to pay the benefits and administrative expenses of the program. The benefits or administrative expenses of this program shall not be paid from the Annuity Fund, the Pension Fund, or the Expense Fund.

(2) The Board shall have the discretion to determine the method for allocating the fund balance to retired members; provided, however, that the aggregate benefits payable under this program may not exceed the aggregate contributions made by employers and earnings, if any, on those contributions. Prior to July 1 of each year, the Board shall notify each retired member of the amount available for reimbursement over the succeeding 12 months and the procedures by which the retired member or dependent may request reimbursement.

(3) Retired members and their dependents shall be required to provide substantiation of their health care expense claims to the extent required by the Internal Revenue Service for tax-favored treatment of their reimbursements. The Board may enter into an agreement with a third party administrator to process the expense claims of retired members and their dependents.

(c) As an alternative to providing health care insurance, the Board, in its discretion, may assist retired members of the System with the cost of health care by authorizing payment of a health care stipend to retired members in an amount to be determined by the Board. In the event the Board determines to provide such a stipend, it shall annually review the stipend, in consultation with the actuary designated pursuant to subsection 5062(j) of this title, and determine whether to continue to provide the stipend and the amount to be paid. If authorized by the Board, a stipend shall be paid in 12 monthly installments commencing on July 1 of that year. (Added 1991, No. 233 (Adj. Sess.), § 9; amended 1999, No. 158 (Adj. Sess.), § 15; 2005, No. 197 (Adj. Sess.), § 10; 2009, No. 24, § 13.)