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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