Contributions to the HCSP are employer mandated and must be written in a personnel policy, bargaining agreement, or Memorandum of Understanding/Agreement. All employees must participate in the HCSP adopted by their employer or bargaining unit unless they are eligible to waive participation.

Writing HCSP contracts can be complicated. Each contract is unique due to the many funding sources that can be used.  It's important that employers understand the options available and the contract rules. Your MSRS field representative (pdf)  is available to explain the plan features and assist in drafting language.  
 

Word of caution: The more complex the HCSP language, the more difficult it may be for the employer to administer. We encourage employers to keep it simple. Review the contract language carefully to ensure it will be interpreted as intended by the employer, employees, current & future payroll personnel, and MSRS.

HCSP language must include these elements:

Examples of funding sources mechanisms:

  • severance (unused sick leave)

  • ongoing bi-weekly contributions

  • early retirement incentive 

  • unused vacation, PTO or comp time

Examples:

  • 1% of pay per pay period or $50 per month
     
  • 100% of unused sick leave
     
  • 50% unused vacation

Examples:

  • contribution will be made each pay period

  • contribution will be made pay period following termination date

  • annual contribution will be made each year in February

While the following elements are not required, we highly recommend that they be included with the HCSP contract language to provide clarity to the employer, employees, and other interested parties.

  • Employee's death. MSRS cannot accept a contribution after an employee's death. HCSP contracts should indicate how or if money will be paid upon the death of an employee, especially if payout is a series of lump sum payments.  

    Sample language:
    Upon an employee's death, contributions owed but not yet paid to the HCSP will be paid in cash to the employee's beneficiary.
         OR
    Upon an employee's death, contributions can no longer be made to the HCSP.

  • Severance or lump sum payments. Indicate whether there is a minimum payment amount. For example, "Employees whose severance is less than $200 will receive  payment in cash." 

  • Years of service. Define whether years of service must be continuous. Also, whether years of service has to be with the same employer. For example, "employee must have 20 years of continuous service with the district to qualify for participation in the HCSP."

  • Waiving participation. If employee is eligible and has been approved by MSRS to waive participation, indicate how or if the payment will be made. For example, "if employee has been approved by MSRS to waive participation, severance will be paid in cash." 
     

Please contact your MSRS Field Representative to discuss contract language options. The rep is available to review contract language and provide feedback.  

More about writing HCSP contract language