Using Tiers in HCSP Contracts

HCSP contracts can be established using tiers, also known as contribution scales. Tiers enable employers/unions to gradually increase the HCSP contribution amount so employees with more years of service can take advantage of tax-free savings offered by the Plan.

Writing HCSP contracts with tiers can be complex. Your MSRS Field Representative is available to review your proposal and provide feedback.
 

Tiers may not be appropriate for all employers. The more complex the HCSP contract, the more difficult it may be for an employer/payroll to administer. Rule of thumb – if using tiers, go with as few as possible.
 

The size of the employee group determines whether tiers should be used. If your group is fewer than 10 employees, please contact your MSRS Field Representative to discuss whether tiers are suitable and your options.


Tiers cannot accommodate, nor have the appearance of accommodating, one or more employees. 

• The contribution amount should gradually increase. Employees with more years of service should contribute more than those with less years of service.

• Tiers must be broken down in equal increments (for example, 5 or 10 years of service increments).

• Employees within a tier cannot decide the contribution amount without regard to the overall plan. For example, all tiers must use either % or $ amount of pay and should be gradually increased with years of service.

• Age cannot be used to determine the breakdown of tiers.

Examples of HCSP Contracts with Tiers
Below is an example of an acceptable and unacceptable contract using tiers for ongoing payroll deductions. Keep in mind that these are examples and do not imply that all employers/unions should use tiers.