Indiana will close its Retirement Medical Benefits Account plan for state employees on Dec. 31, 2026, and most workers already on the payroll have to decide what happens to their balance. The Indiana Public Retirement System, which runs the plan, says in its 2026 legislative update that fall open enrollment offers two options. The change applies to employees hired before March 14, 2026.

What the account was

The accounts, known as RMBAs, were set up in 2007 to help retired state workers pay health insurance premiums. Tony Green, deputy executive director of the retirement system, told the Indiana Capital Chronicle in December 2025 that they were meant to “enable or even incentivize” early retirement. The state puts money in on each employee’s behalf. According to the retirement system’s RMBA page, the yearly contribution runs $500 for workers under 30, $800 for ages 30 to 39, $1,100 for ages 40 to 49 and $1,400 for those 50 and older.

A state worker who leaves before becoming retirement-eligible forfeits the money. That rule is why the choice carries weight.

The two options

Public Law 104 ends the current plan on Dec. 31, 2026 and requires a new 2027 plan by Jan. 1, 2027, the retirement system’s election guide says. The guide lists the two choices.

• Option 1: a one-time deposit. The state makes a one-time, non-matching employer contribution to a Hoosier START 401(a) account, equal to the worker’s RMBA contributions. Earnings are left out. The worker is vested right away, and the money can be used for any purpose when withdrawn.
• Option 2: the 2027 RMBA. The whole balance, earnings included, moves into the new 2027 plan. Annual contributions continue under the plan’s rules, and the money can be used only for health insurance premiums. A worker who leaves state service before becoming retirement-eligible forfeits the entire balance.

Option 1 is the default for anyone who makes no election. The choice is one-time and cannot be undone.

For a state worker deciding by the deadline, the question is how long they expect to stay and whether the money is meant for health premiums or something else.

The number that sets the one-time deposit is each worker’s RMBA contribution balance, which has grown by $500 to $1,400 a year depending on age.

Get each new number in one short weekday email →

A worked example

The guide gives a sample worker, Nora, age 40 with 13 years of service. Her RMBA holds $10,100 in contributions and $854.47 in interest, for $10,954.47. Under Option 1 she would get a $10,100 deposit in early 2027 and the interest would not come along. Under Option 2 she would keep $10,954.47 plus new contributions and earnings, but she would lose all of it if she left state service before retirement eligibility.

Who does not get to choose

Not every state employee faces the decision. Workers with 15 years of applicable service who were eligible for full retirement as of June 30, 2017 are enrolled in the 2027 RMBA automatically, the guide says. So are elected officials with at least 10 years of service in that position. Employees on long-term disability when the one-time deposit is paid are also moved into the 2027 plan, and the RMBA page tells them to contact their HR director during open enrollment.

Retirees and their survivors are not affected. They can keep using their accounts until the money runs out.

Employees hired after March 14

The old plan is closed to anyone hired on or after March 14, 2026. Those employees go into the Hoosier START deferred compensation plan instead. The legislative update says the state’s contribution to that plan may not exceed $28 per payroll warrant, the state’s term for a pay period’s payment.

Dates still to come

The retirement system has not posted the open enrollment dates. Its RMBA page said a balance lookup would be available by Oct. 5 and that a required learning assignment would arrive in SuccessFactors, the state’s employee system, in mid-October. Employees without SuccessFactors access will get a paper form. The one-time deposit is expected in early 2027.

The same legislative update covers other changes for Indiana public workers, including a plan to require a cryptocurrency option in the PERF and teachers’ retirement plans starting July 1, 2027. Those do not change the RMBA decision.

Making the RMBA choice before Dec. 31

The retirement system is the place to start. Its RMBA page has the hotline, (317) 233-6085, and the member advocate line, (844) 464-6777, open 8 a.m. to 8 p.m. Questions can also go to [email protected].

Before open enrollment starts, a worker can write down three things: the RMBA balance from the lookup, how many years until retirement eligibility, and whether the money is expected to go toward health premiums. The guide’s example shows why the middle item matters. A worker who might leave state service early has a very different risk under Option 2 than one who is close to retirement.

The guide notes that the deposit amount may be reduced to meet federal tax code limits. Employees should read it in full before the window closes.

More Financial Reading

• 24 Ways to Stretch a $2,087 Social Security Check
• 17 Places to Find Your Share of the $4.25 Billion States Give Back
• 22 Ways Retirees Can Raise $1,000 Fast Without a Job

This article was produced with AI assistance and edited for accuracy against the sources linked above.