What is HRA VEBA?
The City of Tacoma provides to eligible employees an employer-paid health reimbursement account (HRA) benefit post retirement. This is an IRS defined “account-based” group health plan and it is often referred to as “VEBA” because its assets are held in a tax-exempt, voluntary employees’ beneficiary association (VEBA) trust that is authorized under Section 501(c)(9) of the IRS Code. The City of Tacoma provides this benefit by depositing Sick Leave and Personal Time Off (PTO) severance payments tax-free into the account at the time of your retirement or death. **
An HRA VEBA account is a special type of health plan arrangement that is similar to a Health Savings Account (HSA) or Flexible Spending Account (FSA) by allowing individuals to use the funds to pay for or reimburse themselves for out-of-pocket health expenses and premiums. But unlike some of the features with these other type of health arrangements you can invest the funds, there are no contribution limits, there is no annual use-it-or lose it rule, you can pass the funds on to a beneficiary at time of death, and the money is deposited, invested, and withdrawn tax-free allowing your money to go much further.
Eligibility
Non-represented employees* and certain represented employees** in which the collective bargaining agreement (CBA) provides for the benefit. Please refer to Tacoma Municipal Code Section 1.12.229, and/or the applicable collective bargaining agreement for specific details.
*The Tacoma Municipal Code 1.12.229 provides this contribution is in effect each year unless at least 20 percent of non-represented employees who are eligible to retire in the next calendar year request a vote be conducted. If the 20 percent threshold is met, eligible employees will be notified of a vote to be conducted. The results of the vote will determine whether to suspend the VEBA deposit for the next calendar year only, which will be determined by a majority of the returned ballots. If the 20 percent threshold is not met, no vote will be conducted, and the VEBA deposit will be in place for the next calendar year.
**Some Employee Groups/CBAs allow for contributions to an HRA VEBA prior to retirement. For these groups, if an employee wishes to sign for up a high-deductible health plan (HDHP) with a Health Savings Account (HSA), they will be required to complete a Limited Purpose Election form with HRA VEBA to put their VEBA account in limited coverage (e.g., dental and vision benefits only). The IRS requires this action take place in order for an individual to be eligible to make or receive contributions to an HSA. Your limited-purpose coverage election will remain in force until you make a change. You can make one limited-purpose coverage election change per calendar year. Please contact the Benefits Office for the Limited Purpose Election form.
How is the HRA VEBA Funded?
Types of Covered Expenses
Funds deposited into a VEBA can be used for qualified out-of-pocket expenses including co-pays, coinsurance, deductibles, over-the-counter health care expenses, retiree insurance premiums (including Medicare Part B and Part D and Medicare supplement plans), TRICARE premiums and expenses, and tax-qualified long-term care insurance premiums (subject to annual IRS limits). Refer to IRS Publication 502 Medical and Dental Expenses and Section 213(d) of the Internal Revenue Code (IRC) for more details.
Note: HRA VEBA can reimburse qualified healthcare expenses incurred by the participant, spouse, and qualified dependents.
Beneficiaries
If you pass away, your HRA can transfer to your surviving spouse, children, designated beneficiaries, or other eligible survivors. You can designate your beneficiaries once your account is funded.
Helpful Links/Information:
City of Tacoma Webinar (August 2023)
HRA VEBA Plan Brochure
Health Reimbursement Account (HRA) Basics
Eligible Medical Care Expenses
HRA VEBA Investment Fund Overview
Contact HRA VEBA / More Information
www.hraveba.org
888-659-8828