Post Employment Health Plan

Post Employment Health Plan (PEHP) FAQ’s

A PEHP account provides funds for reimbursements of eligible medical expenses at the separation of employment. Funds contributed to the account are not taxable to the employee and are invested within the account. Investment earnings are also not taxable to the employee. Upon separation of employment, funds taken out of the account for eligible medical expenses are also not taxable.

City of Scottsdale has a PEHP account with Nationwide Retirement Solutions along with the Deferred Compensation 457(b) retirement savings plan. Prior to Feb. 16, 2024, the only funds contributed to the PEHP were on behalf of employees who retire from their respective pension system and had at least 300 hours (420 hours - (56) Fire) of sick leave hours accrued upon retirement. Employees meeting the eligibility criteria receive 50% of their sick leave hours balance in to the PEHP account for reimbursement of medical expenses after separation of employment for retirement. Employees with prior medical leave balances receive 100% of their base pay at separation for retirement. For specific details on prior and current medical leave payments at retirement see Scottsdale Revised Code, Chapter 14, Article V, Section 14-83.

The PEHP account allows contributions to be made on a tax-free basis. These funds can grow through investment earnings also on a tax-free basis. Finally, when funds are taken out of the account for eligible expenses, they are not considered income, so the funds come out of the account also on a tax-free basis.

City of Scottsdale is pleased to begin employer contributions to the PEHP account while employees are actively employed. Each pay period, eligible employees will receive a contribution to their PEHP account. For fiscal year 2023-24, the contribution amount is $10 per pay period, or $260 for the fiscal year.

Employees who are in a benefits eligible position will receive the employer contribution to the PEHP account.
For employees who are in a variable hour position and become eligible for certain benefits (medical, dental and vision), employer contributions to the PEHP account will not be a part of benefits offered.
For part-time employees who are grandfathered as benefits eligible, employer contributions to the PEHP will be a part of their benefits package.
For re-hired City of Scottsdale retirees in a benefits eligible position, employer contributions to the PEHP account will be a part of their benefits package, however, distributions from the PEHP account will stop since the retiree is back employed with City of Scottsdale.

Employees eligible for contributions to the PEHP account will have the same investment options as the Deferred Compensation 457(b) Plan. The PEHP account has the same investment and administrative costs as well.

There is a one-year vesting period for the employer contributions to the PEHP account. Employees who already have at least one year of service with City of Scottsdale will automatically meet the vesting requirement. Prospective employees will have to fulfill one year of service with City of Scottsdale to meet the vesting requirement.

If an employee has one year of service with City of Scottsdale, they are vested (or have a permanent right) to the funds within their PEHP account. The employee would file a claim for reimbursement with Nationwide Retirement Solutions to seek reimbursement for eligible medical expenses from their account.

Yes, if an employee retires from City of Scottsdale, their sick leave payment will combine with the PEHP contributions while they were actively employed. The employee will have just one PEHP account with Nationwide.

If you pass away as an active employee, your PEHP account would pass to an eligible dependent as defined by the IRS (generally a dependent for whom you claim for tax filing purposes).

For accounts in this type of scenario, the funds will be distributed amongst all other plan participants.

No, you do not have to be enrolled in the Deferred Compensation 457(b) Plan to be eligible for employer contributions to the PEHP account. If you are enrolled in the Deferred Compensation 457(b) Plan you will see an account link for the 457(b) and a separate account link for the PEHP. If you are not enrolled in the 457(b), you can easily establish your PEHP account with Nationwide Retirement Solutions and access your account to select investment options and designate a beneficiary. You can enroll in the 457(b) Deferred Compensation Plan at any time.

To access funds within the PEHP account you must separate service with City of Scottsdale.

Each year the IRS publishes a listing of eligible medical expenses called IRS Publication 213(d). Generally, eligible expenses for reimbursement include: copayments, deductibles, dental and vision expenses, Medicare Part B premiums, Medicare supplemental premiums and various other medical and health related items.

Currently the City of Scottsdale’s PEHP is not set up for employee pre-tax contributions. The City can explore options for employee pre-tax contributions at a later time based on IRS regulations governing employee pre-tax contributions to post employment health plans.

At each fiscal year budget review, the City will consider what is appropriate for funding of the PEHP account on behalf of eligible employees. There is no guarantee for future funding of the PEHP accounts.

Employees can contact Nationwide Retirement Solutions regarding account access and investment options at: 1-855-826-5400. City of Scottsdale has dedicated account representatives who can help with both the 457(b) Deferred Compensation and PEHP account.
Employees can contact City of Scottsdale’s benefits team at: 480-312-7600; or [email protected]