Unified Fire Authority
VEBA Plan FAQ ’ s
Updated April 2022 The following information is meant to provide an overview of Unified Fire Authority ’ s VEBA Plan .
What is a VEBA plan and what can it be used for ? A Voluntary Employees ’ Beneficiary Association ( VEBA ) plan is a type of tax-exempt trust used to reimburse medical expenses of employees and eligible dependents post-retirement or after separation from UFA . Eligible medical expenses include but are not limited to : health insurance premiums ; Medicare Part B and supplemental plans ; out-of-pocket medical , dental , prescription , and vision expenses , etc . ( cosmetic procedures are excluded ). The IRS defines qualifying eligible expenses in IRS Code – Section 213 ( d ), Eligible Medical Expenses . The plan is funded through UFA contributions on the employee ’ s behalf , as described below . For additional information , visit IRS VEBA-501 ( c ) ( 9 ).
The 2020 Utah Retirement Systems Annual Report indicates that firefighters retire at an average age of 53 and civilians retire at an average age of 64 ( 2020 URS Annual Report ). The VEBA plan is a valuable tool to help employees save for medical expenses occurring post-retirement or after separation . In general , if an individual or couple retires at age 65 , financial planners recommend having in savings a minimum of $ 150,000 for an individual and / or $ 300,000 per couple for medical expenses .
Do I pay taxes on the money that UFA puts into my account ? No . You do not pay taxes on contributions to your VEBA account , nor is the money counted as part of your gross income .
Do I pay taxes on withdrawals ? No . If you withdraw funds to pay for IRS Section 213 ( d ) expenses for yourself , your spouse , or a tax dependent , you will not pay taxes on those funds .
How can I make contributions into VEBA ? UFA currently has two methods by which you can have contributions made into your VEBA account :
Retirement At the employee ’ s request , UFA may deposit all or a portion of the cash value of the vacation / sick leave payment into the employee ’ s VEBA account in accordance with the plan document in effect on the date of retirement .
Separation Payouts At the employee ’ s request , UFA may deposit all or a portion of the cash value of the vacation leave payment into the employee ’ s VEBA account in accordance with the plan document in effect on the date of termination .
Sick Leave Buyback Program Employees shall continue to accrue sick leave once they reach their cap of 640 hours for eligible 8-hour ( day shift ) non-firefighter employees or 960 hours for firefighter employees . Each year , any hours that the employee has accrued above the established caps of 640 or 960 hours , effective January 1st , will be “ purchased ” by UFA at a rate established by the Board by prior resolution . The current rate is 60 %. The amount will be calculated on the March 25th payroll and deposited into the employee ’ s VEBA account , normally within two weeks . To take advantage of the time value of money , it is to the employee ’ s advantage to save sick leave and reach the “ buyback ” cap as early in one ’ s career as possible .
These contributions are treated as deposits into your account and are reflected with a “ Sick Buyout ” transaction code on your online statement .
How do I know if I have funds in the VEBA account and how can I review my statement ? The VEBA Board of Trustees has contracted with CompuSys , also known as “ The Trust Fund ” as a third-party claims processor that administers our VEBA plan . Statements of employee ’ s individual VEBA account balance and transactions are available on the VEBA page of our website .
When can I access funds from my VEBA account ? Funds can be accessed as soon as the employee separates employment with UFA ( retirement , resignation , disability , or termination ). In addition , there is no limit to the dollar amount of a one-time reimbursement for qualifying expenditures from the employee ’ s VEBA account . Hardship withdrawals may be allowed under IRS regulations .
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