MPSERS Personal Healthcare Fund: How PHF Works and What It Means for Your Retirement

If you hold the Personal Healthcare Fund under MPSERS, your retirement healthcare situation is fundamentally different from colleagues who kept the Premium Subsidy. Understanding the difference before you retire prevents budget surprises that can cost thousands of dollars a year.

Who Has the PHF

The Personal Healthcare Fund was created under Public Act 300 of 2012 as part of the broader reform that restructured MPSERS benefits. Members who elected the PHF during their PA 300 election window — and all Pension Plus 2 members hired on or after February 1, 2018 — hold the PHF instead of the traditional Premium Subsidy benefit.

Your healthcare framework appears on your miAccount Member Statement. If you're unsure which one you have, log in and check before you get into retirement planning.

How the PHF Account Works

The PHF is a tax-advantaged healthcare savings account managed by Voya Financial, separate from any DC pension component. The employer contributes a 2% match based on your compensation. These funds accumulate during your career and can be used in retirement to pay health insurance premiums or qualified medical expenses.

The PHF balance at retirement is yours — it doesn't disappear. But unlike the Premium Subsidy, there is no ongoing state subsidy of your health insurance premiums. The PHF balance is a finite pool that depletes as you draw from it.

What PHF Members Do Not Get

No premium subsidy. Premium Subsidy members have the state covering 30% to 80% of their retiree health insurance premium depending on years of service. PHF members get none of that. If you enroll in MPSERS retiree health coverage, you pay 100% of the premium.

No graded scale. The graded premium subsidy — 30% at 10 years, 4% per additional year up to 80% at 23 years — does not apply to PHF holders. Your years of service don't change your healthcare subsidy percentage because there is no subsidy.

The 3% healthcare contribution elimination under Public Act 127 of 2024 (effective October 1, 2025) applies to Premium Subsidy members, not PHF holders. PHF members were never subject to the 3% deduction in the first place.

The Permanent Disenrollment Rule

PHF members can enroll in MPSERS health coverage at retirement and pay the full premium. But the rule that catches people is this: if you ever disenroll from MPSERS coverage after retirement, the disenrollment is permanent for you and all enrolled dependents. You cannot re-enroll, period.

This means you need to think carefully before dropping MPSERS coverage for what looks like a cheaper option. If that alternative falls through — your spouse's employer plan changes, your ACA marketplace plan becomes unaffordable, you move to a state with fewer options — you cannot fall back to MPSERS coverage.

Planning Around the PHF

PHF members face a different retirement math than Premium Subsidy members. Your retirement budget needs to account for 100% of health insurance premiums, which can run several hundred dollars per month for single coverage and significantly more for family coverage.

Several approaches to bridge the gap:

• Draw from the PHF Voya account to cover premiums in the early years of retirement
• Transition to Medicare at 65 — Medicare Part B plus a supplemental plan is typically less expensive than pre-65 health coverage
• Maximize the PHF balance before retirement by ensuring your employer's 2% match is fully captured each year
• Evaluate marketplace (ACA) plans against MPSERS coverage costs — without a state subsidy, the MPSERS plan is not automatically the cheapest option

The MPSERS Retirement Guide includes a healthcare decision worksheet that helps PHF members map their costs year by year and compare MPSERS coverage against alternative options.

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