What is a VEBA medical plan?
“To sum it up…”
- VEBA stands for voluntary employee beneficiary association
- It is a type of health reimbursement arrangement in which employers can set aside money in a trust for their employees to use for certain medical expenses
- It is different than a health savings account and a flexible spending account
- However, you can combine your VEBA with your health savings account if you have a qualifying plan
- There are several different types of VEBA plans
What does VEBA mean in regards to health expenses?
Your employer can set up a voluntary employee beneficiary association (VEBA) for you to help offset the cost of medical expenses. It is a trust set aside that your employer contributes money to.
It cannot be set up by anyone other than an employer and if you are an active employee, you must be registered in your employer-based health insurance plan.
Retired employees are also often eligible to use a VEBA account. However, money cannot be added to the account after an employee retires unless it can be attributed to severance, vacation, or sick pay.
There is no minimum or maximum amount that your employer must contribute to the account. If you do not spend the money within a year, it should roll over into the following year’s balance.
If there is more than $1,000 in the VEBA account, it can be transferred into an investment account. Qualifying expenses can vary, but co-payments, deductibles, prescription and vision costs are often included.
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What types of VEBA plans are there?
There are a few different types of voluntary employee beneficiary association accounts that your employer might set up. These include general purpose VEBA accounts, post-deductible VEBA accounts, post-employment VEBA accounts, and limited VEBA accounts.
General purpose VEBA accounts typically cover the most and have the least restrictions. They usually cover medical expenses, as well as dental vision, and some other expenses.
As the name suggests, post-deductible VEBA accounts only cover medical expenses after your health insurance deductible has been met. However, you can get vision and dental expenses reimbursed prior to meeting your deductible.
With a limited VEBA account, you are not able to get reimbursed for any typical medical expenses, only vision and dental.
A post-employment VEBA account is specifically for those who have retired or left their place of employment.
How do I use my VEBA account and get reimbursed?
Different VEBA accounts might work in different ways. Debit cards and crossovers are two common ways to use your VEBA account to pay for medical expenses.
You cannot have both a crossover and a debit card. With a cross over plan, your health insurance company will directly submit claims to your VEBA account. You do not have to submit claims on your own.
With a debit card, money will be transferred directly from your VEBA account to your provider. You do not need to be reimbursed or submit a claim. In most cases, you can request more than one debit card for your spouse or dependents, if necessary.
If you have a debit card associated with your VEBA account, you most likely will not be able to withdraw money from an ATM with it.
You should keep the receipt of any medical purchase you make with this debit card in case you need to verify it and provide documentation to your account or employer. With most plans, if you pay for a qualifying expense out of pocket, you can submit a claim and receive reimbursement.
What is a Health Savings Account?
It is possible to set up a VEBA account that is combined with a Health Savings Account, but they are not the same thing. If you combine a VEBA account with a Health Savings Account, you will really only be able to use your VEBA account for eligible dental and vision costs until you meet your health insurance deductible.
A Health Savings Account is a type of medical savings account that you can deposit and withdraw money from tax-free for specific medical expenses. You cannot use a Health Savings Account to pay for your monthly insurance premium, but you can use it for many other out-of-pocket expenses, including dental and vision.
There are limits on the type of plans that are compatible with health savings account. They are mostly used together with High Deductible Health Insurance plans. You do not lose your health savings account money at the end of the year. You can transfer it to another account or roll it over to the next year.
What is a VEBA medical plan?
A voluntary employee beneficiary association is a type of health reimbursement arrangement that your employer sets up for you to help offset the costs of your medical expenses.
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