Retiree Medical Savings Account (RMSA)
If you are eligible for PG&E-sponsored retiree medical coverage and you retired in 2011 or later, you and PG&E will share the cost of Retiree Medical Plan coverage. To help you and your eligible spouse or registered domestic partner pay for Retiree Medical Plan premiums, PG&E offers a Retiree Medical Savings Account (RMSA).
What Is the RMSA?
The RMSA is a notional account that you can use to reimburse yourself for the cost of Retiree Medical Plan premiums. When you retire, PG&E establishes separate RMSAs for you and your eligible spouse or registered domestic partner. RMSA funds are available only to help pay for your PG&E-sponsored retiree medical coverage. The account cannot be used for anything else.
Other RMSA Facts
  • You never pay taxes on PG&E's contributions to your account because the RMSA has no cash value.
  • Only PG&E can credit your RMSA with contributions; you may not contribute to your account.
  • You forfeit your unused RMSA balance when you die. Your enrolled surviving spouse or registered domestic partner's RMSA will continue to help pay for his or her PG&E-sponsored retiree medical coverage until the account is depleted or until your spouse or registered domestic partner becomes eligible for Medicare, remarries or enters into a registered domestic partnership, becomes eligible for other employer-sponsored medical coverage, or chooses to decline PG&E-sponsored medical coverage.
  • Your spouse or registered domestic partner's RMSA ends if you and your spouse divorce, if your domestic partnership is terminated, or if your spouse or registered domestic partner dies.
  • If you marry, remarry or enter into a registered domestic partnership after you retire, your new spouse or registered domestic partner will not get a RMSA. In addition, your new spouse or registered domestic partner cannot use any remaining balance in a RMSA that belonged to your previous spouse or registered domestic partner.
Building Your RMSA While Employed at PG&E
The total value of your RMSA is within your control — the longer you work, the more you'll have when you retire. How much your account is worth when you retire depends on your age and years of service. The more years of service you have and the older you are, the higher the value of your RMSA. Although this program began in 2011, if you retire in 2011 or later, your account value will be based on your total years of service.
Here's how the RMSA can grow the longer you work at PG&E.
Your Account — PG&E Contributes:
Your Spouse or Registered Domestic Partner's Account* — PG&E Contributes
$5,000 a year to your account for each year you're employed by PG&E, starting when you reach age 45 (or later if hired after age 45). Any full calendar year you were not employed by PG&E will be excluded from the $5,000 allocation.
$5,000 a year to your spouse or registered domestic partner's account for each year you're employed by PG&E, starting when you reach age 45 (or later if hired after age 45). Any full calendar year you were not employed by PG&E will be excluded from the $5,000 allocation.
Additional $1,000 a year to your account for each year of credited service beyond 15 years (including credited service before age 45) – credited at retirement.
Not applicable
Up to an additional lump sum of $7,500 to your account based on your years of credited service, prorated from 10 to 25 years of service — credited at retirement (equivalent to the Retiree Premium Offset Account).
Not applicable
4.5% interest to your account compounded annually beginning at the end of the year in which you reach age 46.
4.5% interest to your spouse or registered domestic partner's account compounded annually beginning at the end of the year in which you reach age 46.
* For your spouse or registered domestic partner to be eligible for the RMSA, you must be married or in a registered domestic partnership on your retirement date.
RMSA Example
PG&E will credit interest on the existing RMSA balances for you and your spouse or registered domestic partner starting at the end of the year in which you reach age 46 and continuing until you die. This credited interest is intended to help keep up with or offset medical inflation.
Here's an example of how interest can add up under the RMSA.
Joe was born June 1, 1951, and was hired by PG&E June 1, 1981. He reached age 45 June 1, 1996, and retires June 1, 2013 at age 62. Joe's wife Jane was born November 1, 1953. This example assumes:
  • Joe is credited with the full, $5,000 annual RMSA allotment at the end of the year in which he reaches age 45 (there is no proration for mid-year birthdates). Jane also receives a $5,000 credit for her RMSA.
  • Joe is credited with another $5,000 for each year he's employed by PG&E until he retires — including the year in which he works his last day. Jane also receives a $5,000 credit for each year of Joe's PG&E employment.
  • 4.5 percent interest is credited to each of their accounts at the end of each year, starting when Joe reaches age 46.
  • Joe is credited with a maximum lump-sum allotment of $7,500 at retirement. Jane does not receive this credit.
  • An additional $1,000 per year of credited service beyond 15 years is credited to Joe's account at retirement. Jane does not receive these credits.
  • Joe and Jane both enroll for PG&E-sponsored retiree medical coverage at the same time. Their RMSAs also begin paying for a portion of their coverage costs at the same time.
Year
Joe's Years of Service (YOS)
4.5% Interest
New Allocation
Joe's Balance
12/31/1996
15
 
$5,000
$5,000.00
12/31/1997
 
$225.00
 
$5,225.00
12/31/1997
16
 
$5,000
$10,225.00
12/31/1998
 
$460.13
 
$10,685.13
12/31/1998
17
 
$5,000
$15,685.13
12/31/1999
 
$705.83
 
$16,390.96
12/31/1999
18
 
$5,000
$21,390.96
12/31/2000
 
$962.59
 
$22,353.55
12/31/2000
19
 
$5,000
$27,353.55
12/31/2001
 
$1,230.91
 
$28,584.46
12/31/2001
20
 
$5,000
$33,584.46
12/31/2002
 
$1,511.30
 
$35,095.76
12/31/2002
21
 
$5,000
$40,095.76
12/31/2003
 
$1,804.31
$41,900.07
12/31/2003
22
 
$5,000
$46,900.07
12/31/2004
 
$2,110.50
$49,010.57
12/31/2004
23
 
$5,000
$54,010.57
12/31/2005
 
$2,430.48
$56,441.05
12/31/2005
24
 
$5,000
$61,441.05
12/31/2006
 
$2,764.85
 
$64,205.89
12/31/2006
25
 
$5,000
$69,205.89
12/31/2007
 
$3,114.27
 
$72.320.16
12/31/2007
26
 
$5,000
$77,320.16
12/31/2008
 
$3,479.41
 
$80,779.57
12/31/2008
27
 
$5,000
$85,799.57
12/31/2009
 
$3,860.98
 
$89,660.55
12/31/2009
28
 
$5,000
$94,660.55
12/31/2010
 
$4,259.72
 
$98,920.27
12/31/2010
29
 
$5,000
$103,920.27
12/31/2011
 
$4,676.41
 
$108,596.68
12/31/2011
30
 
$5,000
$113,596.68
12/31/2012
 
$5,111.85
 
$118,708.53
12/31/2012
31
 
$5,000
$123,708.53
6/1/2013
Joe retires
   
$5,000
$128,708.53
Allotment for over 25 years of service
   
$7,500
$136,208.53
Additional $1,000/years of service > 15 YOS
   
$17,000
$153,208.53
Joe's beginning account balance at retirement
     
$153,208.53
By the time he retires in 2013, Joe has a RMSA balance of $153,208.53 to use for his retiree medical premiums until the account is depleted. In this example, Joe uses $5,000 of his RMSA in 2013, the year he retires:
Year
Joe's Years of Service (YOS)
4.5% Interest
Drawdown
Joe's Balance
12/31/2013
   
<$5,000>*
$148,208.53
Interest
 
$6,669.38
 
$154,877.92
* Drawdown figure is for example only and does not represent an actual projection.
In this case, even though Joe used $5,000 from his account in 2013, his account is worth more at the end of 2013 than it was on his retirement date — $154,877.92 on December 31, 2013, compared to $153,208.53 on June 1, 2013. That's because Joe's RMSA helped pay for seven months of retiree medical premiums during his first year of retirement, and at the same time, PG&E continued to credit Joe's account with annual interest to help counterbalance rising medical premium costs.
Jane's RMSA
Jane's initial RMSA balance will be $128,707.53, equal to Joe's $5,000 annual allotment and accrued interest through 2012, plus the final $5,000 allotted on Joe's retirement date. In this example, Jane spends $5,000 of her RMSA in 2013, the year Joe retires:
Year
Joe's Years of Service (YOS)
4.5% Interest
Drawdown
Joe's Balance
12/31/2012 (year before Joe retires)
31
   
$123,708.53
6/1/2013 (Joe retires)
2013 Allotment: $5,000
     
$128,708.53
Jane's beginning account balance when Joe retires
     
$128,708.53
12/31/2013
   
<$5,000>*
$123,708.53
Interest
 
$5,566.88
 
$129,275.42
* Drawdown figure is for example only and does not represent an actual projection.
Using Your RMSA Balance During Retirement
Each year, the RMSA will pay a monthly percentage of your retiree medical premium costs until your account is depleted. At that point, you pay 100 percent of the premium cost. The percentage the RMSA will pay depends on what year it is.
  • In 2013, the RMSA will pay 61 percent of the cost of non-Medicare retiree medical coverage and 31 percent of the cost of Medicare retiree medical coverage.
The percentage the RMSA will pay decreases over the next few years until:
  • 2016, when it will remain at 55 percent for non-Medicare retirees
  • 2014, when it will remain at 30 percent for Medicare retirees
The RMSA payment percentage will stay at these levels in future years.
Although the payment percentage initially decreases, the actual dollar amount paid by the RMSA is likely to increase as medical inflation increases.
Here's how the payment percentage decreases over time:
Year
Non-Medicare Retirees and Spouses/Registered Domestic Partners
Medicare Retirees and Spouses/Registered Domestic Partners
 
The RMSA will pay this percentage of retiree medical premiums:
2013
61%
31%
2014
59%
30%
2015
57%
30%
2016
55%
30%
2017
55%
30%
2018
55%
30%
You will be responsible for paying the balance of the monthly premium after your RMSA has been applied. For example, let's say you retire in 2013 and you and your spouse are not on Medicare. You elect the Network Access Plan (NAP) for you and your spouse:
If the total monthly premium for 2013 is:
$2,513.89
Your RMSA will pay this amount (61% of the premium):
$1,533.47
You will pay this amount out of pocket:
$980.42
To estimate how much you and PG&E may pay for your retiree medical coverage when you plan to retire, access the Retiree Medical Estimator by logging onto the PG&E@Work For Me intranet site or https://myportal.pge.com on the Internet. Click on "About Me" then "My Retirement" to find the Estimator.
The Retiree Medical Estimator does not take into account coverage for children or special situations such as breaks in service or early Medicare eligibility. Contact the PG&E Benefits Service Center to have an estimate run if one of these exceptions applies to you.
For additional information about the Retiree Medical Plan, see the Summary of Benefits Handbook for Retirees and Surviving Spouses in the Benefit Plan Documents section of the PG&E@Work intranet.
If Both You and Your Spouse are PG&E Employees
An employee can only have one RMSA. You can have either a retiree RMSA or a spousal RMSA, but not both:
  • If you're working and your spouse is retired, your spouse can be covered as a dependent under your active employee plan and defer using his or her PG&E-sponsored retiree medical coverage until you retire. Typically, this is the most cost effective choice. Your spouse's RMSA will not start paying benefits until your spouse enrolls for retiree medical coverage.
  • When you retire and you both need to start using PG&E-sponsored retiree medical coverage, you'll have a choice:
    • You each can choose to have your own, individual retiree RMSAs. In this case, you each would need to elect your own retiree medical plan coverage as primary retirees. Neither you nor your spouse would be enrolled as dependents under the other's retiree medical plan. If you each choose your own retiree RMSAs, then your separate RMSA balances will be calculated based on each of your individual employment records.

      OR
    • One of you can make a one-time, irrevocable election to receive a spousal RMSA instead of a retiree RMSA. Whoever elects the spousal RMSA will be covered as a dependent under the primary retiree's medical plan. If the primary retiree dies, the dependent spouse with the spousal RMSA will be subject to the provisions applicable to surviving spouses.
  • If one of you elects a spousal RMSA instead of a separate retiree RMSA, then the spousal RMSA will be subject to the rules governing all other spousal RMSAs.
Your spouse or registered domestic partner's RMSA will end when his or her account is depleted. In addition, your spouse or registered domestic partner's RMSA will end if you divorce or terminate your registered domestic partnership, or after your death, when he or she:
    • Becomes eligible for Medicare;
    • Remarries or enters into a registered domestic partnership;
    • Becomes eligible for other employer-sponsored medical coverage; or
    • Chooses to decline PG&E-sponsored medical coverage.
PG&E will continue to credit the account with 4.5 percent annual interest until the account ends. Eligible Medicare spouses and Medicare registered domestic partners must pay the full cost of PG&E-sponsored medical coverage for themselves and for their enrolled children.