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Retirees
Voluntary Employee Beneficiary Association (VEBA)

UNDERSTAND

A VEBA is a tax-free health reimbursement account funded by the 25% sick leave cash-out upon your retirement from the UW. As a retiree, you and your eligible dependents can use it to pay qualified health expenses after your retirement. It is operated under rules established in the Internal Revenue Code (IRC).

Eligibility

You are eligible to participate in a VEBA if you accrue sick leave, and if your employee voting group approved participation. Those groups include:

Under IRC rules, a VEBA is implemented only if a vote by retirement-eligible employees in a voting group determines that a majority of those employees wish to participate in such a program.

Eligible Dependents

Generally, dependents must satisfy the definition of Qualifying Child or Qualifying Relative as of the end of the calendar year in which expenses were incurred to be eligible for benefits under your VEBA plan. These requirements are defined by Internal Revenue Code § 152 and summarized below:

Participation

If VEBA is approved in your employee voting group, participation is mandatory for everyone retiring in that group in the calendar year. See “Background” below for more information and a list of current participating groups.

Contributions

When adopted by your employee group, your 25% sick leave cash-out at retirement funds a tax-exempt health reimbursement account.

If VEBA has not been adopted by your employee group, your sick leave will be cashed out and you will need to pay federal income and FICA on your 25% sick leave cash-out payment at retirement. HB 2371 allows you to place an amount equal to your sick leave cash-out in a VEBA account without paying federal taxes.

Unused Funds

If you have a VEBA and are survived by your spouse or dependent children (or other dependents as defined by the IRS), they will be able to use the remaining funds in the account for their eligible health care expenses. If you have no surviving spouse or dependent(s), any remaining funds will be forfeited and redistributed pro rata among the remaining participants from your employer.

NOTE:  IRS Revenue Ruling 2006-36 does not permit the payment of benefits to non-dependent heirs in the event a deceased participant has no surviving spouse or dependent(s).

ACT

Visit the VEBA Trust website for more information including current earnings, forms, and contacts for additional questions.

Eligible Expenses

Using these tax exempt monies, your VEBA could pay for out-of-pocket health-related expenses including:

EXPLORE

VEBA Background and Vote

HB 2371, passed during the 1998 Legislative Session, enables state agencies and institutions of higher education to offer eligible employees the option of using their unused sick leave cash payments at retirement to purchase a medical expense plan.

At the October 15, 1999 meeting, the Board of Regents authorized the University to offer a VEBA-MEP (VEBA) to employees who earn sick leave.

UW Benefits conducted the voting process for the following employment groups:

All three employment groups polled accepted the VEBA, and it went into effect on December 1, 1999. In addition, all three groups voted that future re-votes will occur only if 5% of an eligible group requests it.

Labor unions representing WPRB-Classified and Contract-Classified Staff conducted their own votes and notified the UW of the results.

The following labor unions have accepted the VEBA, and unless noted otherwise, future re-votes will occur only if 5% of the unions' members request it.

The following labor union has not conducted a vote to date on the VEBA:

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