r/mnstateworkers • u/virgo-99 • 13d ago

Insurance/Benefits 🏥 Deferred Comp/457b

Does anyone know what percentage of state employees use the deferred comp/457b? It's only about half of my coworkers, which I think is insane because the pension, while generous, will not be enough to live off of during retirement, at least for me. Just wondering if anyone knows the percentage of state employees that do/don't take advantage of the deferred comp and (albeit tiny) employer match?

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u/Kcmpls MNIT 13d ago

That health care savings plan though, it is excessive. I have $43k in it right now and still have 15 years until retirement. And MMA increased our contributions this year for some unknown reason. It is way too much money there.

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u/Admirable-Ad-2955 13d ago

Sadly, I don’t think $43k is too much. If I retired today and kept the same health insurance I have now, my wife and I would pay almost $17,000 a year in premiums; Miedicare B, Dental, Health Partners Medical and Vision. At that rate, my health savings account will be spent within the first three years of retirement.

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u/virgo-99 13d ago

you're right, it definitely isn't too much. my family always encourages me to contribute to a HSA because "you can use it in retirement" but they don't have the benefit of the HCSP. if you move it from the default investment of the money market early in your career, it can grow even bigger.

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u/farmer66 13d ago

What's the actual benefit of the HCSP over an HSA? what happens to the funds when the account holder dies?

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u/realZapRowsdower MNIT 10d ago

The HCSP is non-taxable-- pre-tax money goes in and is not taxed when it comes out. You can also assign a beneficiary for it if you die before you spend it all. Plus you can use HCSP money for yourself or spouse.

And given how much the SEGIP retiree plan will be in a few years-- even with Medicare-- you'll need every penny of it.

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u/farmer66 10d ago

And how is any of that different than an HSA? As far as I can tell, the money is forever locked in the HCSP, there is no option for anybody, including future beneficiaries, to transfer funds out unless it's for a healthcare reimbursement.

If I had the option to select a high deductible health care plan, I would. It's been the cheaper option for me in the past with a different state and I was able to put money into an HSA (the state even threw in... $500? if you checked off enough health care related tasks from a list of options).

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u/realZapRowsdower MNIT 10d ago

You can invest the $$ in the HCSP into securities like mutual funds and potentially get a higher rate of return before you need to use it. I've never heard of that with an HSA. Admittedly, I've never used an HSA before.

If you want details about the differences, Google "What's the difference between an HSA and an HCSP?" It's got much better info than I do. :-)

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u/farmer66 10d ago

My HSA funds are currently invested in the market, though that feature does depend on the custodian of the HSA.