Employer Update

At its November meeting, the VRS Board of Trustees approved an increase to the premium for the Line of Duty Death and Health Benefits Trust Fund. Effective July 1, 2023, participating employers will pay $830 per full-time equivalent employee, up from $681.84.

By statute, LODA Fund benefits are funded on a “pay-as-you-go” basis, covering the health care premiums for current beneficiaries as well projected costs of any new benefit claims.

What’s driving the increase? In the past year, the number of full-time equivalent employees fell by more than 6%, from 19,087 to 17,900, as detailed in the FY 2022 valuation prepared by VRS plan actuary Gabriel, Roeder, Smith & Company. The lower headcount (fewer premiums coming in) coupled with an increase in approved claims last year means the LODA Fund will require more funding to pay benefits for the upcoming year.

Because the LODA Fund is not part of the VRS pension plan, under the Internal Revenue Code’s exclusive benefit rule, the VRS trust fund cannot be used to cover LODA benefits. Premiums paid by employers cover the costs of benefits and administrative fees.

Next steps: VRS will contact LODA Fund participating employersto ensure they are aware of the premium increase for budgeting purposes. Invoices sent to employers in July 2023 will reflect the higher premium amount.