Plan Design &
The California Firefighters Benefit Trust (CFBT) was established in 2005 by firefighters as a way to proactively plan for the inevitable costs of retiree healthcare. CFBT is a Retiree Medical Trust (RMT), also referred to as Medical Expense Reimbursement Plan (MERP) allowing firefighter bargaining groups the ability to save in a highly tax-favored way. All CFBT contributions, earnings, and benefits are tax-exempt for the reimbursement of qualified medical expenses for the firefighter participant, spouse, and eligible dependents. Qualified expenses are defined in IRC 213(d) and include premiums for health, dental, vision, and long-term care insurance as well as deductibles, copays, RX and associated costs.
CFBT’s tax-exempt status offers a superior alternative to 457(b) or 401(k) tax-deferred plans when used for retiree healthcare expenses.
Career firefighters often retire earlier than most and prior to Medicare eligibility. They’ll have a longer time horizon of needing to fund and provide healthcare coverage. Firefighter Locals, representing thousands of professional firefighters, have joined CFBT to meet this challenge head-on!
The CFBT “Plan” design consists of two components:
The Pooled Account is the backbone of the Plan. It’s designed to provide a lifetime* stream of benefits. This account is funded through recurring employee and/or employer payroll deductions as per your MOU. Contribution levels are set and may be adjusted by each Local. Once a firefighter separates service and meets eligibility rules, benefits commence. Benefit levels vary by participant depending on cumulative contributions to the plan. An actuarial analysis of the Pooled Account is completed periodically to review, validate, and adjust benefit levels. Spousal and child survivor benefits continue following the passing of the firefighter participant.
There’s no “Use it or lose it” with CFBT benefits. At the end of each plan year, any unused Pooled Account benefit will rollover to an Individual Employee Account. This is an important feature for the firefighter retiree who’d rather defer and accumulate CFBT payments due to a working spouse providing benefits.
Individual Employee Account
The Individual Employee Accounts are an optional part of the CFBT plan design but are an exceptional enhancement to the Pooled Account. These accounts are funded through the transfer of accrued leave dollars and other collectively bargained lump-sum contributions during active service and/or at separation. The tax-exempt transfers of sick and/or vacation leave must be stipulated in the MOU and mandatory for all employees. Similar to a Retiree Health Savings Account (RHSA), participants may withdraw funds in any increments up to the entire account balance for the reimbursement of qualified medical expenses. Surviving spouses and eligible dependents may continue to access the funds in the Individual Employee Account following the death of the firefighter participant.
CFBT participants have the option to transfer funds from their Individual Employee Account to the Pooled Account as a means of “annuitizing” these assets into lifetime income.
Collecting benefits is easy! Retirees simply submit documentation of covered expenses and receive reimbursement via direct deposit or mailed check.
* This is presented as information only and is not a guarantee of benefits. See official Summary Plan Description (SPD) and other plan documents for current binding plan information. The Trustees reserve the right to modify the plan as needed to maintain financial sustainability.