What is a VEBA account?
I am interested in learning more about a VEBA account. I have heard my friends talk a lot about these recently and went online to see if I could get more information. Unfortunately, this is very limited information around VEBA.
VEBA is an acronym for Voluntary Employee Beneficiary Asssociation. A VEBA account is a tax-free medical expense account for retired people and their eligible dependents. It is funded by unused sick leave that an employee may have accumulated at the time of retirement. The benefit of a VEBA is that unused sick leave at retirement is able to be utilized through a VEBA for future medical expenses in a manner that is tax-free.
I am 33 (not retired) and have a VEBA account through my employer. It pays for what my insurance does not pay for...ex. co-pays, deductible, glasses, dental, etc. They fund up to $5,000/year. If you are riembursed through a VEBA account you can not deduct your medical expenses on your taxes. If you employer does not offer this benefit and you have an HSA health plan you can open an HSA bank account and contribute $3,100/year or $6,250/year as a family. HSA are also used for medical expenses and can be funded through your employer or as an individual. HSA carry over year to year unlike an FSA where you use it or lose it. Hope this helps.
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