(1) The general assembly hereby finds and declares that:
It is essential for the state to be able to attract and retain qualified employees in orderto provide the highest quality of service to the people of Colorado.
The quality and flexibility of health and retirement benefits are important factors inhiring and retaining qualified state employees.
The cost of medical care rises every year and because medicare and state retireehealth benefits do not fully cover those costs, retirees are increasingly responsible for covering their medical costs after retirement.
A properly constructed program to help state employees prepare for the costs of medical expenses after retirement could be cash funded through contributions of state employees and could operate as an enterprise as defined in section 20 of article X of the state constitution.
(2) The general assembly further finds and declares that:
(a) A new concept for providing retirement health benefits for the employees of nonprofit entities, including state governments, is for the nonprofit entity to create a retirement health savings trust. Such trust offers the following advantages:
A retirement health savings trust is established by the nonprofit entity for the purposeof providing retirement health benefits to the employees of the entity.
The provision of retirement health benefits is considered an integral part of the nonprofit entity's activities.
A retirement health savings trust that makes the provision of retirement health benefits possible is considered a part of the nonprofit entity and therefore may be included in the entity's tax-exempt status.
A retirement health savings trust creates an individual account within the trust foreach employee who chooses to participate and allows the employer to make pretax contributions, including unused annual or sick leave, to an employee's account on behalf of the employee.
The nonprofit entity that creates a retirement health savings trust maintains substantial control of the trust in that it has the power to amend or terminate the trust and to appoint the trustees of the trust.
A retirement health savings trust allows each participating employee to determinehow his or her money will be invested.
All earnings in a retirement health savings trust grow on a tax-deferred basis, and aparticipating employee may make withdrawals on a tax-free basis after reaching a certain age, so long as the moneys are used for qualified medical expenses.
Any assets that remain in a participating employee's account at the time of theemployee's death may be used for qualified medical expenses by the employee's spouse, dependents, or other beneficiaries.
(b) The creation of a retirement health savings trust by the state for the benefit of state employees would give such employees an opportunity to prepare for health costs that they will incur during retirement and would be beneficial to the health and well-being of such employees.
Source: L. 2004: Entire article added, p. 869, § 1, effective August 4.