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Understanding the LACERS Retiree Medical Subsidy

There are three basic components to LACERS retiree medical subsidy benefit
(Article 3, Chapter 11 of the Los Angeles Administrative Code):

(1)

The existing maximum medical subsidy amount (currently $1,190 per month)
(LAAC Section 4.1103.1 and Board Resolution 100914-A); and,

   
(2) The percent of the medical subsidy earned (LAAC Section 4.1103.2);
   

The retiree medical subsidy benefit earned is 40% of the maximum available subsidy upon reaching 10 years of Service (10 years of Service Credit for part-time employees who became LACERS members after April 22, 1990) and an additional 4% per year for every subsequent year of Service/Service Credit up to a maximum of 100% of the current maximum subsidy amount.

The percentage of subsidy earned during a career is multiplied by the maximum subsidy amount (currently $1,190 per month).  The resulting dollar amount can be applied toward the premium cost of a LACERS medical plan.
   

Example: 

   

20 years of service credit
20 x 4% = 80%
80% x 1,190 = $952 (maximum subsidy amount with 20 years)

(3) The potential for future increases in the maximum medical subsidy amount (LAAC Section 4.1103.1).
   

The best information we at LACERS have indicates that the existing maximum subsidy amount (1) and the percent of subsidy earned (2) are likely to be considered vested benefits. 

Whether the potential for future increases in the maximum medical subsidy amount is a vested benefit is much more questionable, in part because the discretion granted to LACERS Board of Administration has been amended periodically.

LACERS does not participate in the negotiation of retirement benefits except to serve as subject matter experts.  We do not take sides during the negotiation or ratification processes.  We are, however, eager to provide factual information relating to all of the benefits we administer.