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February 11, 2011. VEBA Plan Overview & Administrative Updates. Presented by:. Brian Riehs, Service Representative VEBA Service Group, LLC. Mike Smolko, Service Representative VEBA Service Group, LLC. Sponsored by AWSP, WASA, and WASBO since 1984. Today’s topics. VEBA Plan overview

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VEBA Plan Overview & Administrative Updates

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veba plan overview administrative updates

February 11, 2011

VEBA Plan Overview& Administrative Updates

Presented by:

Brian Riehs, Service Representative

VEBA Service Group, LLC

Mike Smolko, Service Representative

VEBA Service Group, LLC

Sponsored by AWSP, WASA, and WASBO since 1984


Today’s topics

  • VEBA Plan overview
  • Administrative updates
  • Online resources
  • Q&A

VEBA Plan Overview

  • What is the VEBA Plan?
  • Sponsors, trustees, service providers
  • Projected retiree healthcare costs
  • Key benefits
  • Getting money in
  • Investment options
  • Getting money out
  • Typical group adoption process
what is the veba plan
What is the VEBA Plan?

Health Reimbursement Arrangement

  • “Account-based” health plan
  • Funded by employer
  • Tax-free money for future health care costs

Sponsors and trustees

John Knutson, Kent SD

Wayne Leonard, Mead SD

Gordon Grassi, Central Valley SD

Paula Bond, Tacoma SD

Dr. Steve Rasmussen, Issaquah SD

Dr. Polly Crowley, West Valley SD (Spokane)


Service providers








Plan consultant

  • 26+ years of experience
  • Nationally recognized

1-800-888-VEBA (8322)


Third-party administrator

  • Claims
  • Customer service
  • Account administration
  • - Contributions
  • - Investment changes


getting money in
Getting money in
  • Leave cash outs (sick leave, vacation, personal, other)
  • Mandatory employee contributions
  • Future COLAs; pay increases
  • Early retirement/separation incentives
  • No individual choice; all employee group members defined as eligible must participate per IRS rules.
win win tax advantage
“Win-win” tax advantage

Employees and employers

Pay No Tax


Save tax. Keep more.



You keep


You keep 67%


Systematic premium reimbursements

  • Systematic Premium Reimbursement Form available online at
  • Provides reimbursement to participants for qualified premiums only
  • No direct payments to insurance companies or providers

Written agreements; policies

  • Provide copies to VSG (IRS recommendation)
  • Use model language in handbook
  • Creative language usually a problem
  • No one year on/one year off

Small group guidance

  • Avoid groups with less than five voting members
  • Combine small groups into a single, larger group for VEBA purposes

Administrative updates

  • New Claim Form
  • Coordination of benefits with Medicare
  • Participant Status Change Form
  • Over-the-counter (OTC) medicines & drugs
  • Extended dependent coverage
  • Participant effective dates
  • Form W-2 reporting

New Claim Form

  • Updated 12/2010 to comply with new federal reporting rules (i.e. Medicare secondary payer)
    • Please discard all outdated versions
    • Participants submit one Claim Form per covered individual
    • New forms will be sent with statements in mid-January
  • Effective March 1, 2011, claims received on outdated forms will be denied
  • Standard claims processing takes up to seven business days
    • Five business days from date of receipt to process, plus two business days to execute the necessary investment fund trades

Medicare coordination of benefits

  • Help your separated participants on Medicare avoid denied benefits
  • Meritain Health needs separation dates for separated employees/participants
  • If Meritain Health doesn’t know a participant is separated, and has reported them to Medicare as an active employee, Medicare may
    • Consider HRA (VEBA) account primary to Medicare
    • Deny Medicare benefits at point of service
  • Recent emails from VSG and Meritain Health contained more details

Participant Status Change Form

  • Submit Participant Status Change Form when active employees/participants
    • Separate and/or
    • Experience COBRA qualifying events which affect their receipt of future contributions (e.g. monthly contributions)

Over-the-counter (OTC) medicines and drugs

  • Still covered
  • Beginning January 1, 2011, prescription or note from medical practitioner required
  • Applies only to medicines and drugs (except insulin); not to other types of OTC items like bandages, crutches, etc.
  • See Qualified Expenses and Premiums for more details

Extended dependent coverage

  • Effective September 1, 2010
  • Young adult children covered through end of calendar year in which they turn age 26
  • Other health plans may have different effective dates or eligibility criteria
  • See Definition of Dependent for more details

Contribution remittance

  • ACH or wire transfer is recommended
    • Electronic contributions visible to participants online within five business days from receipt
  • Mail paper checks to the Trust’s lockbox; contribution data reports to Meritain Health
    • Paper check contributions visible to participants online within nine business days from receipt

Participant effective dates

  • Updated Enrollment Form permits an employer to specify a newly-enrolling participant’s effective date as long as such date is
    • Not prior to participant’s hire date
    • Not prior to September 1, 2010
  • If no date is specified on Enrollment Form, employee shall become a participant the latter date upon which both an Enrollment Form and contribution have been received

Form W-2 reporting

  • Employer tax reporting
    • Tax Year 2010: Do not report contributions on Form W-2
    • Tax Year 2011: Value of coverage reporting on Form W-2 is not required
    • Tax Year 2012: Value of coverage reportable on Form W-2; awaiting further guidance from IRS on how to calculate value of coverage

Online resources

  • Online employer portal
  • Online participant portal (myVEBA Plan online)

Online employer portal

  • View posted contributions
  • Upload contribution data reports
  • View and print employer reports
  • Access the VEBA Employer Handbook
    • Step-by-step adoption/renewal processSection 4.5
    • Sample languageSections 4.7 - 4.8
    • Electronic remittance instructions Sections 6.3 - 6.4
    • Applicable laws and rules Section 9

Online participant portal

  • myVEBA Plan online
    • View account detail
    • Track status of claims
    • View claims history; look up EOBs
    • Update personal/spouse/dependent information, investment allocations, etc.