VEBA/115 Trust, 401(h), and HRAs

VEBA is an acronym for Voluntary Employees’ Beneficiary Association. It is a type of trust used to hold plan assets for the purpose of providing employee benefits. 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. Unused funds roll over from year to year. And, you have the option to invest a portion of your unused funds in the market which is a great way to save for retirement.

IRS rules require the VEBA to be funded only with employer contributions. Such employer contributions include:

  1. A specific dollar amount contributed on a specific interval (e.g., $X per pay period), and
  2. Mandatory conversion of accrued, unused sick leave balances upon termination of employment or other intervals.

Details of the employer contributions (e.g., amount, frequency, type, etc.) are matters of plan design. They must apply uniformly to all employees within an employee group but may differ between employee groups. Collectively bargained groups may have additional allowable employer contribution structures, such as percentage of pay.

The VEBA HRA saves you money. You pay zero tax on contributions from your employer, earnings, and withdrawals (claims). In other words, the money goes in tax free, is invested tax free, and comes out tax free. As an example, you’d save up to $300 or more in taxes for every $1,000 contributed by your employer to the VEBA HRA. It’s like free money to spend on health care expenses. (Tax savings are approximate and vary by individual.)

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

Access to your account is actually determined by the terms of your employer’s plan document. Sometimes it is the result of what has been negotiated in collective bargaining, and depending upon the plan provisions, the ability to submit claims for reimbursement can begin as soon as you receive your first contribution or it can be deferred until a later date, such as when you reach retirement age. You need to read your plan summary to find out when you can start incurring and receiving reimbursement for eligible health care expenses.

A 401(h) is a retiree medical benefit account that is set up within a defined benefit pension plan (or money purchase pension plan or annuity plan) to provide for the payment of benefits for qualified medical expenses (as defined by IRS code) for retired employees, their spouses and dependents. It functions like a claims reimbursement account for medical related expenses.

Depending on the terms of the plan set by your employer, a 401(h) account can receive employer and/or employee contributions. They may also by eligible to receive transfers of excess pension benefits, provided certain requirements are met. 401(h) account contributions are tax deductible; earnings are tax-deferred; and distributions may be tax free when used for qualified expenses.

401(h) account contributions are tax deductible; and distributions (and earnings) can be tax free if used for qualified expenses.

Yes, if allowed by the terms of your plan.

All of your plan details are readily available. Just select the Library tab and scroll down to Plan Documents and Notices to find a link to your full Summary Plan Description.

Eligible dependent is defined by the IRS, and generally includes your spouse and dependent child(ren). Dependents may also include grandparents and grandchildren if they meet the IRS definition of a dependent.

IRS guidelines prevent us from paying for services to dependents not listed in your profile. It’s important that you keep your dependent information up to date. To add/remove dependents:

  • Login to your account at
  • Select Access Claims Portal from the Home page
  • Select Access Reimbursement Account.
  • Select the profile link. You’ll be able to edit dependent data by clicking the view/update link under the dependent name or select Add Dependent to enter a new dependent to your plan. (You will need the SSN for each dependent to request reimbursements of eligible expenses.)

The Health Insurance Portability and Accountability Act of 1996 (HIPAA) was created to protect your health information. HIPAA was later expanded to safeguard individually identifiable information, called protected health information or PHI. PHI includes names of health care providers, dates of service, etc. So, under HIPAA, we can only discuss PHI with the individual patient and/or primary plan member unless you authorize us in writing to share the information with someone else, like your spouse. So, even if you tell us that it’s OK to share PHI with your spouse, we can’t legally discuss any information with him/her unless you sign the authorization. For your convenience, you may find an authorization form at

No. There is no requirement to access your assets within a time period following termination of employment. Assets can simply remain invested if you so choose.

Unused balances carryover from year to year.

Medical expenses as defined by IRS Code Section 213(d) expenses are eligible for reimbursement. You must also be enrolled in a group health plan. Examples of eligible expenses include:

  • Deductible expenses (the part of covered expenses you pay before your health or dental plan pays any benefits) or coinsurance amounts (the percentage of covered expenses you must pay, if any, after the deductible requirement has been met.)
  • Prescription drugs/co-pays
  • Medically necessary equipment or supplies
  • Dental procedures (non-cosmetic)
  • Vision care expenses, such as eye exams, eyeglasses/contacts, lens solution, laser surgery
  • Individual insurance premiums (i.e., dental, vision, long-term care) not under the Affordable Care Act.

For a more complete list of eligible expenses, see

No. Interest earned and payments for eligible medical expenses are excludable from gross income.

If you have a spouse and/or dependents at the time of your death, they may continue to use your account to pay any eligible health care expenses they incur until the account is exhausted. Please note that dependents must have been a “dependent” as defined by the IRS at the time of your death.


If you are still working and you, your spouse, or a dependent are on Medicare, you will be required to use up your VEBA account before Medicare will provide future benefits unless:

  1. You’re separated from the employer that made, or is making, contributions to your VEBA
  2. Your VEBA balance has always been and stays under $5,000; or
  3. You’ve elected limited VEBA coverage. If you’re still working and you elect limited VEBA coverage, Medicare will provide benefits without requiring that you use up your VEBA account first.

There will be times when we’ll require a receipt to comply with the IRS guidelines even for debit card purchases. It’s best to send an itemized statement or Explanation of Benefits (EOB) from your insurance carrier so we can verify that the service you received does comply with the IRS rules. If we do need a receipt for debit card purchase, we’ll send out three notices. If we don’t receive the receipt/documentation, we’ll have to temporarily deactivate your Card until we receive the complete substantiation required by the IRS. Please make sure we have your current email address. If we need an itemized receipt for a card purchase, we’ll send you an email notice after the debit purchase is made. Documentation can uploaded to your secure online account or sent to us via fax or mail. If you’ve lost documentation for a card purchase, you may contact the vendor for a reprint of your receipt.

The IRS requires that you use the plan debit card only for eligible expenses. Sometimes the bill from your doctor or dentist doesn’t provide us with enough information to determine whether the services you received are eligible for reimbursement. There may be times we’ll need to see an itemized receipt to verify that an expense is eligible. For example, if you use the debit card at the dentist, was it for a cleaning, which is eligible? Or for teeth whitening, which is ineligible? Or, if you had a procedure with your doctor, was it for a tummy tuck, which is ineligible? Or a biopsy, which is eligible? If it’s unclear, we’ll send you a receipt request to verify the expense. If you receive a receipt request, be sure to submit it as soon as possible to avoid having your card suspended.

On the Home Page of your secure online Claims Portal account, Under the Profile tab, click Banking/Cards from the menu on the left. Under the Debit Cards column, choose Lost/Stolen or Order Replacement and follow the instructions.

The home page displays your current account balance. The total Account Balance is the balance of your VEBA investment account. (The HRA Amount Available is 90% of your VEBA balance less any pending debit card authorizations and is the amount immediately available for reimbursement on your debit card.). You may also view investment and source information about your account balance by choosing My Account, then Summary, and selecting the Balance tab.

Choose My Account, then Investments, and select the Make Changes tab. Follow the options to realign your account, and choose the option to change how your future contributions are invested. You’ll see a grid displaying all investment offerings within the plan along with your current investment election percentages for future contributions. Simply enter your desired percentages next to each investment or use the +/- feature to change your number. The total must add up to 100%. Submit your changes. You’ll be prompted to confirm your entries before you commit to the change. Click Confirm to process your requested change and receive your transaction confirmation number. Note: If you don’t receive a confirmation number after clicking Confirm, your transaction request will not be processed. Please contact a BPAS Participant Services Representative at 1-866-401-5272 for additional assistance. All transactions must be initiated prior to the market close, generally 4 pm ET to be processed same day (except on days when the U.S. stock market closes before 4 p.m. ET).

The Participant Portal has a wealth of information available about the investments available in your Plan. To learn more, select My Account, then Investments, and choose the Research tab. You can view information including:

  • Fund fact sheets
  • Prospectus
  • Performance
  • Trading Restrictions

Many mutual fund companies have introduced trading restrictions to discourage short-term trading. When requesting a change to the allocation of your current account balance, the portal will indicate which investments impose a trading restriction. If you have recently submitted a transfer or rebalance request that resulted in a trading restriction, the investment that is temporarily restricted from future transfers will appear in red, reflecting the number of days remaining before a subsequent trade (or opposite way transfer request) can be made. If you have a pending trading restriction in one or more funds, you may still transfer other portions of your account by using the Transfer Investments option.

Select My Account, then Investments, and choose the Make Changes tab to find two methods to change the investment of your current account balance:

  • Transfer Investments. This option allows you to transfer money from one investment option to another. Start by following the option to transferring out by a dollar amount or a percentage. Select the investment from the drop-down menu that you wish to transfer money out of, and then indicate the percent or dollar amount you want to transfer. Now, enter the percentage(s) among the new investment(s) for which you wish to transfer; the total must add up to 100%. Submit your request and then Confirm. Please Note: This change will only affect the way your current account balance is invested; it will not change how future contributions are invested in your account.
  • Realign. This option allows you to realign your account in two different ways:
    1. Rebalance your current investments: provide specific percentages for each investment
    2. Rebalance your current and match your future contributions

For either option, enter your desired percentages next to each investment in the grid. The total must add up to 100%. In addition, if you would like your current account balance to be automatically rebalanced to these percentages, scroll down and click the box next to Automatically Rebalance My Account. Then select the frequency in which you would like your account to be automatically rebalanced and submit and confirm your request. Please note: Using the account rebalancing option will trigger a new set of trading restrictions initially and whenever your account is rebalanced. For this reason, some participants choose to use annual rebalancing rather than the quarterly option.

All participant statements will be mailed to your home address every quarter. To obtain an online copy, select My Account, then Summary, and choose Statements. Select an option to generate on-demand statement activity or view a quarterly benefit statement, organized by plan year. You may elect to have your quarterly statements, regulatory notices, and/or trade confirmations delivered electronically. Simply select My Profile, then choose the Go Green tab and change your preferences to electronic delivery.

Call the BPAS Participant Services Center at 1-866-401-5272. This US-based team is available Monday through Friday from 8 am to 8 pm ET.