Are employee VEBA contributions tax deductible?

Funds in a VEBA grow tax free, and there are no tax penalties levied upon employees or VEBA members who take distributions from a VEBA for qualified medical expenses, which often include co-pays, co-insurance, and deductibles, as well as dental and vision payments.

Do I report VEBA on my tax return?

Funds in the possession of the VEBA are not taxable, nor is interest earned on those funds usually taxable, however, the benefits provided to the employees may, or may not, be taxable depending upon the type of benefit.

Is VEBA an HSA for tax purposes?

These are typically known as Health Reimbursement Arrangements (HRAs), funded exclusively with employer contributions. If this is a VEBA, the employees sometimes make contributions to a tax-exempt trust as well. In either case, the answer is neither.

Is VEBA an HSA or FSA?

Pairing a VEBA and FSA A voluntary employee beneficiary association (VEBA) account is a tax-free health care savings plan that, like an HRA, is funded entirely by the employer. Like an HSA, once an employer contributes to an employee’s VEBA account, the money belongs to the employee.

What is a VEBA contribution?

A voluntary employee beneficiary association (VEBA) account allows employers to contribute money to a trust on behalf of their employees. VEBAs can be used to help pay for current or future eligible medical expenses.

Can I opt out of VEBA?

Current VEBA Participants may opt-out during this Open Enrollment period. Choosing to opt-out will relinquish access to UNM’s post-retirement health benefits (medical and dental coverage).

Can VEBA be used to pay health insurance premiums?

Active VEBA accounts If you are an active employee, you can use your VEBA to pay for insurance premiums for stand alone policies like dental, vision, or other benefits policies not under guidance by the Affordable Care Act.

What is VEBA contribution?

Can I contribute to a VEBA?

There are no VEBA contribution limits and contributions are tax-deductible. The funds that grow are tax-free, and there are no tax penalties for a VEBA participant who withdraws from the account.

How does a VEBA plan work?

A Voluntary Employees’ Benefit Association account (VEBA) is a tax-free health care savings plan funded entirely by your employer. As soon as your employer contributes to your VEBA account, the money belongs to you. You pay no taxes on the balance, the interest earned, or on withdrawals.

What happens to my VEBA account when I retire?

You can still spend VEBA account funds on eligible medical expenses after leaving your employer, retiring, or if you’re not longer part of the group’s health plan.

Can I add money to my VEBA account?

May I voluntarily contribute additional amounts to the plan? No. IRS rules do not allow employee voluntary contributions. The VEBA must be funded only with employer contributions.

What can I use VEBA funds for?

VEBAs are authorized by Internal Revenue Code § 501(c)(9). Your VEBA is a health reimbursement arrangement (VEBA HRA) that allows your employer to contribute money to a trust on your behalf. You may use funds in the VEBA HRA to pay for eligible medical expenses now or in retirement.

Can employees contribute to a VEBA?

No. IRS rules do not allow employee voluntary contributions. The VEBA must be funded only with employer contributions.