VEBA info & testimonials

Our VEBA (Voluntary Employee Benefits Account) plan that is regulated by IRC code and state law requires that we offer a VEBA medical expense plan to faculty as ONE of two ways to receive remuneration for unused sick leave upon retirement. The SECOND way that faculty may receive remuneration is to receive a cash out. However, faculty cannot individually choose between the two options. You must decide which of the two options the ENTIRE group of retirees will participate in each year.

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. 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. While Clark and CCAHE have determined that retirement-eligible employees are 55 and older, we only encourage those who are actually retiring in 2023 to participate in this vote. 

What is a VEBA medical expense plan or a VEBA account? A VEBA is a tax-free health reimbursement account which can continue year over year (unlike a Flexible Spending Account). A VEBA can be used by you and your eligible dependents to reimburse qualified health expenses after your retirement. Eligible expenses include qualified medical, dental, and vision expenses not covered by your insurance plans, Medicare and other tax qualified long-term care insurance premiums. 

Remuneration for the hours in both OPTIONS above is calculated using the SAME formula: # of compensable sick leave hours remaining X 25% of the employee’s current hourly rate of pay. This rate is then applied to the total eligible sick leave hours to arrive at the gross amount due to the employee. You will be voting on whether that gross amount goes into a VEBA account or is just cashed out. (Write back if you have questions about how payroll calculates our per hour rate of pay.)

Each option is treated differently for tax purposes.  Remuneration that is applied to a VEBA account is not taxed.  Remuneration of sick leave that is paid out in the form of cash is taxed.

To restate the purpose of the vote ... you have the choice to cast your vote for ONE of the following options for 2023 (the option that receives the most votes is the option that all retirees in 2023 will receive):

1) To receive remuneration for unused sick leave upon retirement as a deposit into a VEBA account. (This option is not taxed.)

2) To receive remuneration for unused sick leave upon retirement as a cash out. (This option is taxed.)

Following are a few testimonials from faculty who are recently retired and who have provided information about VEBA.

I waited for a resolution to an issue I had with VEBA before answering your question. They twice denied a charge to my benefits card even though it was a legitimate charge and properly documented. The problem was resolved today, and my overall experience has been positive. 

My best,

MitziSchragg

Greetings, friends!  Before this year's retiring faculty vote on how they want to spend their accrued sick leave dollars, I wanted to let you know the real deal on the cash out vs. using a Veba account.

People think that the Veba account will behave like their HSA did: it won't.  The Veba account cannot be used for wellness care, everyday health supplies, or anything else that has not been specifically prescribed by a doctor to address a specific medical condition.  Even then, each expense has to be verified with a volley of paperwork, which may or may not be approved.  For ongoing conditions, any prescription has to also be renewed annually with a new letter going to Veba, otherwise the user will have to reimburse Veba.  I am currently trying to get Veba to pay an expense from the end of last year that was not accompanied by a letter; usually letters of explanation can be considered after the fact, but apparently not this time.

Other drawbacks: while Veba will usually pay a user's co-pay, there are limits.  The Veba account only makes available $5000 at one time, regardless of the size of the account.  The amount in a user's account overall will fluctuate depending on how Veba has been investing the user's money.  My account has gone down rather than up.  

I realize that cashing out sick leave [which was my vote] means that the money will be taxed and that is a serious drawback for many people.  On the other hand, the money could then be put in an actual investment account, or even in a savings account over which the user has actual control.  The reason that I had a large amount of sick leave to cash out [despite having donated a lot of it away at one point when Paula Cole needed it] was because I focus on wellness, which I could cover with my HSA and cannot cover with my Veba account.  

Veba is a racket that does not work in the user's best interest.  Faculty should do their own research before they choose this option, rather than simply focusing on the taxed vs. non-taxed part of the question.

Cheers,

Katherine Sadler


Overall my experience has been positive, but as I go to a naturopath, I have to justify everything with a treatment plan from my naturopath and she needs to write me up an annual plan.  I have to scan and submit the invoice for medications and the plan every time I purchase medications.  It is a little bit of a pain, but so far the charges I have used my VEBA card for have not been denied and using VEBA has saved me more than $2000. So it is worth the hassle from my perspective.

 
Sincerely,
Jackie Allen-bond