Some insurance companies market individual account reimbursement plans that offer each employee an account so they can draw payments for medical expenses after retirement.

Professionally managed collective trust instrument returns are generally superior to individual account investment returns.

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Why Choose a Retiree Medical Trust (RMT)

Comparison with Individual Account Plans

Drawbacks to Individual Account

Significant drawbacks to Individual Account Plans include:

The account balance often hits zero before the retiree's death. These individual accounts are similar to traditional defined contribution plans, as funds can be depleted during the life of the retiree.

The plan design and its investments are controlled by the commercial insurance company, rather than a municipality or an employee group.

There may be buried costs in the investment structure - even though these plans are advertised at minimal to zero administrative costs. [In general, administrative expenses tend to be higher for individual account plans]

Legal authority is unclear on the tax advantages in relation to individual participation elections, which some insurers offer.

Senior members approaching the end of their career cannot accumulate many dollars before retirement date under an individual account plan. Under an RMT, these members and employees may receive full benefits.