Date post: | 29-Jul-2015 |
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Economy & Finance |
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STRONGER
together
Strategies for success
2015 Partner Conference
How to Add VEBA Plans to Your
Product Portfolio David Ritchie, VP, VEBA Sales
Gordon Goshong, CEBS, Account Executive
2015 Partner ConferenceStronger Together
Welcome
• What is a VEBA• Current VEBA landscape• Starting the conversation• VEBA talking points• Questions
2015 Partner ConferenceStronger Together
Code Section 501(c)(9)
Tax-Exempt Employee Benefits Trust
VEBAVoluntary
Employees Beneficiary
Association
2015 Partner ConferenceStronger Together
What is a VEBA?
• A tax-exempt irrevocable trust arrangement
• Funds deposited by the employer on behalf of the employee
• Funds may be used to pay for current or future out-of-pocket health-care-related expenses
• Timing and ability to access funds always based on the bargaining agreement
2015 Partner ConferenceStronger Together
Rev. Rul. 2002-41 & Notice 2002-45
HRAEstablished June 2002
• Health• Reimbursement• Arrangement
Individual Medical Reimbursement Accounts
2015 Partner ConferenceStronger Together
What is an HRA?
• Account-based health plan
• Participants use HRA funds to cover qualified health-care expenses and premiums
• Employer contributions, earnings, and withdrawals (claims) are exempt from taxes
2015 Partner ConferenceStronger Together
Two Separate Pieces Must Work Together
HRA• Rev. Rul. 2002-41
• Notice 2002-45
• Rev. Rul. 2005-24
• Rev. Rul. 2006-36
• Notice 2010-38
• Notice 2010-59
• Rev. Rul. 2010-23
VEBA• IRC Section 501(c)
(9)
• Funding Source for Participant Accounts VEBA
HRA
2015 Partner ConferenceStronger Together
Triple Tax Advantage
ContributionsEarningsWithdrawals
Income Replacement
Pension401(k)457401(a)403(b)IRARoth
Expense Management
Health Savings Account (HSA)VEBA-funded HRA
2015 Partner ConferenceStronger Together
VEBA Characteristics
• Separate legal entity —Irrevocable —Assets protected from creditors
• Can fund Health Reimbursement Arrangement (HRA) individual accounts• Directed investments• Triple-dip tax-advantaged accounts
2015 Partner ConferenceStronger Together
What’s Possible with a VEBA?
• Fund post-employment premiums and expenses‒ Retiree Medical Savings Accounts• Embed with High Deductible Health Plan for active
employees‒ Consumer-Directed Health Care• Hold health care “reserves” for future medical
expenditures‒ GASB 45 Pre-funding‒ Self-funded Plan Reserves
2015 Partner ConferenceStronger Together
Funding Sources
• Fringe Contributions• Function of Future Wage Increases
‒ Bargaining groups only• Recapture Strategies
‒ Accrued Sick/Vacation Time‒ Participation in High Deductible Health Plan (HDHP)
2015 Partner ConferenceStronger Together
Current VEBA Landscape
• $36 million in assets• 6,000 participants• 2016 is looking strong
2015 Partner ConferenceStronger Together
Current Medical Plan$1,500/month
$18,000/annually
Health Insurance
• Plan Design:— $500 Deductible— $20 Office Visit Copay— 80/20 Coinsurance— $2,500 Max Out-of-Pocket— RX 10/20/40
2015 Partner ConferenceStronger Together
New Plan
$1,200/ month$14,400/annual
$300/ month$3,600/annual
HealthInsurance
Plan Design:• $1,500 Deductible• $30 Office Visit Copay• 80/20 Coinsurance• $4,000 Max Out-of-Pocket• RX 10/20/40
HRAVEBA
Eligible Expenses:• Deductible• Copay• Coinsurance• RX Copays• Dental • Vision
Rollover unused balances to use during your lifetime. Post employment premiums
2015 Partner ConferenceStronger Together
Talking Points With Stakeholders
Public Entity Employer• Budget Crisis• Reducing Health Costs• Employee Accountability• Stabilization of Rates• Unfunded Liability
Union Employees• Wasted Premium $$• Post Employment Costs• Flexible Use• Investment Returns• Account Ownership
2015 Partner ConferenceStronger Together
Questions
Thank you
David Ritchie, VP, VEBA Sales
Gordon Goshong, CEBS, Account Executive