What is the VEBA Plan?

The VEBA Plan is a funded health reimbursement arrangement (HRA) program for employees of school districts, educational service districts, and community and technical colleges in the state of Washington. The VEBA Medical Expense Plan (MEP) is a similar program for state agencies and higher education institutions. Both plans are commonly referred to as the “VEBA Plan” or “VEBA Plans.”

To learn more, watch our Welcome! HRA Overview  video.

What is a VEBA?

A voluntary employees’ beneficiary association (VEBA) is a type of trust instrument authorized under Section 501(c)(9) of the Internal Revenue Code. VEBA Plan assets (participant account balances) are held in a VEBA trust. 

What is an HRA?

A health reimbursement arrangement (HRA) is an account-based health plan. You can use your HRA funds to reimburse out-of-pocket medical expenses and premiums.

Why are HRAs sometimes called VEBAs?

Many understand the term “VEBA” to mean a benefit plan that reimburses medical care expenses. This is because VEBA trusts are often used to hold plan assets (participant account balances). The technical term, as defined by the IRS, is “HRA.”

How do I benefit from the VEBA Plan?

You benefit by having an account you can use to cover out-of-pocket medical expenses, including retiree insurance premiums. Plus, you get to enjoy “triple” tax savings: (1) no taxes on contributions; (2) no taxes on investment earnings (if any); and (3) no taxes on claim reimbursements (withdrawals). This is the best possible tax advantage—even better than tax-deferred 457, 403(b), and 401(k) plans with taxable withdrawals.

How is my HRA different from a health savings account (HSA) or health flexible spending account (FSA)?

All three types of accounts reimburse medical expenses, but there are several differences. Here are three of the main ones: (1) HSAs and FSAs have annual contribution limits, your HRA does not; (2) HSAs require enrollment in a high-deductible health plan (HDHP), your HRA does not; and (3) FSAs have annual use-or-lose and/or carryover limits, your HRA does not.