With Open Enrollment just around the corner, your employer may offer “HRA VEBA” as one of your employee benefits options. HRA VEBAs may not be as common as they once were, but we still have three great reasons for you to consider them. Before we jump into that, let’s start with the question on everyone’s mind…
What is an HRA VEBA?
VEBA stands for “Voluntary Employees’ Beneficiary Association” and is a type of Health Reimbursement Account (HRA). Your employer contributes funds into a trust account, tax-free, for you to use towards eligible health care expenses. Between the long-term benefits and short-term flexibility of these accounts, we’re flabbergasted we don’t see them utilized more often!
Without further ado, here are three reasons we’re big fans of the HRA VEBA:
1. Benefits That Last a Lifetime
If we had to describe HRA VEBAs in two words, they would be “Lifetime Benefits.” Unlike an FSA, your funds roll over year to year and will not expire. You won’t have to go on a health care spending spree if you have a balance in your account at the end of your plan year.
Another way to guarantee your benefits will last as long as you need them is the trust component. In a worst-case scenario, if your employer declares bankruptcy, your HRA VEBA is untouchable because it is protected by the trust fund. This added layer of security gives you peace of mind that your funds will be there when needed, come rain or shine.
When it comes to Flexible Spending Accounts (FSAs), you lose your funds unless you elect COBRA when leaving an employer. With an HRA VEBA, you retain access to your funds, even without enrolling in COBRA.
2. Invested in Your Future
Similar to a regular HRA, your employer determines the contributions. However, unlike a regular HRA, you get more say in what those funds are doing. You can choose to let the contributions sit in a Stable Value Fund (SVF) and they will accrue minimal interest. You can also choose to invest your funds and grow those contributions faster. Are you a risk-taker? Do you like to play it safe? You get to decide what kind of investment strategy to implement with your HRA VEBA. Take this quiz to find out what your risk tolerance is!
Investments are a long-term strategy, so you can maximize your HRA VEBA’s potential by letting your funds grow. Not only are you getting free money by playing the Stocks and Bonds game, but you can use the additional interest tax-free!
3. Have Your Cake & Eat It Too
An HRA VEBA takes a lot of the best features from other health care reimbursement plans, adds some of its own, and rolls them all into one account. Similar to other HRAs the funds are provided entirely by the employer. Free money! Like an FSA, an HRA VEBA is compatible with any kind of health plan and may provide options to maintain eligibility to contribute to an HSA. Also, your funds follow you for a lifetime and are able to be invested, just like an HSA. Lastly, an HRA VEBA may also be designed to provide additional funds at retirement and/or options to convert unused vacation and sick time!