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Commonwealth's Counties

LODA Fund Premiums Set to Increase in FY 2024

As part of their November 15 meeting, Virginia Retirement System (VRS) Board of Trustees approved an increase to the premium for the Line of Duty Death and Health Benefits Trust Fund. The Board of Trustees typically sets Line of Duty Act (LODA) rates for participating employers on a biennial basis. Last year, at its November 16, 2021 meeting, the VRS Board of Trustees certified a full-time equivalent premium rate of $681.84 for the Line of Duty Death and Health Benefits Trust Fund for the FY 2023-2024 biennium, effective July 1, 2022. The Plan Actuary, however, has subsequently determined that given the LODA Fund’s statutorily required pay-as-you-go status, additional funds are required in order to prevent the potential for negative cash flow in fiscal year 2024. As such, the Board of Trustees approved an increase in the FY 2024 full-time equivalent premium rate to $830.00, effective July 1, 2023.

The increase can be attributed to several factors, with the most impactful being a more than 6% decrease in the full-time equivalent (FTE) headcount from 19,087 FTEs to 17,900 FTEs, as detailed in the FY 2022 valuation prepared by VRS plan actuary Gabriel, Roeder, Smith & Company. The lower headcount (fewer premiums coming in) coupled with an increase in approved claims last year means the LODA Fund will require more funding to pay benefits for the upcoming year. Generally, the required dollars collected from premiums will remain relatively level over the biennium if the headcounts are static. However, because this plan has no pre-funding, in the case of a substantial drop in the FTE headcounts or unfavorable plan experience, the premium level needs to increase to collect the required funding to pay expected benefits for the upcoming year. Because LODA is not part of the VRS pension plan, under the Internal Revenue Code’s exclusive benefit rule the VRS trust fund cannot be used to fund benefits and there is no other source of funds to make benefit payments other than the annual premiums, Health Insurance Credit reimbursements, administrative fees, and any investment earnings. More information about LODA can be found here.

VRS will contact LODA Fund participating employers  (which includes eight counties) to ensure they are aware of the premium increase for budgeting purposes. Invoices sent to employers in July 2023 will reflect the higher premium amount. Non-participating employers with additional questions on impact to premiums should contact their risk insurance providers (such as VAcorp). Generally speaking, such premiums are substantially lower than the VRS rate.

VACo Contact: Jeremy R. Bennett



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