Voluntary Employee’s Beneficiary Association (VEBA MEP)

What is VEBA MEP?

Participating state agencies and higher education institutions use sick leave cash out dollars to fund HRAs for eligible retirees (RCW 41.04.340). Contributions, investment earnings, if any, and withdrawals (claims) for qualified medical care expenses are tax free. A VEBA MEP account is funded with an employee’s sick leave cash-out upon retirement, meaning, 25 percent of sick hours are eligible for cash-out when the employee retirees. Note: the employee would have to retire to be eligible for VEBA. Employees who separate from service (and not retire) are not eligible.

The Health Care Authority's (HCA) role with VEBA MEP

Per RCW 41.04.340(7), when an agency head or designee has provided eligible employees with a benefit plan that provides for reimbursement for medical expenses, HCA adopts procedures for the implementation of those plans for eligible employees covered by chapter 41.06 RCW. As part of its statutory duties, HCA has contracted with the Voluntary Employees’ Beneficiary Association for Public Employees of the State of Washington (VEBA Trust) to provide a health reimbursement arrangement plan titled “VEBA MEP” to general government agencies and higher education institutions.

Actions for employers who have already adopted VEBA MEP

State agencies and higher education institutions who have an adopted VEBA MEP in place need to:

• Execute a Policy. Complete the VEBA MEP administrative policy template to document your procedures and requirements in providing VEBA MEP pursuant to RCW 41.04.340(7) - (9), WAC 357-31-150, and WAC 357-31, 375.
  • For nonrepresented employees, your agency’s policy should include confirmation of decisions made defining your employee groups, consultation with affected employee groups, and plan adoption and voting procedures, if applicable.
  • For bargaining units, participation in VEBA MEP is usually determined by the terms of the collective bargaining agreement.
• Collect a Hold Harmless Agreement form (if you don't already have one on file) for any current participants in your VEBA MEP.
• Follow the VEBA MEP enrollment/status change instructions and use the VEBA MEP enrollment/status change template to enroll employees/retirees and submit status changes electronically in lieu of paper forms.
• Refer to the VEBA MEP Plan Administration Guide for additional guidance.

Steps for employers newly adopting VEBA MEP

State agencies and higher education institutions who are considering adopting VEBA MEP need to:

Step 1: Contact a Gallagher representative to start VEBA MEP plan adoption.

• VEBA Trust has engaged Gallagher Benefit Services, Inc. (Gallagher) to help state agencies and higher education institutions with program adoption, technical support, employee education, and local service.
• Gallagher will provide you with the VEBA MEP Employer Adoption Agreement (EAA) which you will need to complete and return to Gallagher.

• Plan adoption, funding method, group structure, employee education or related regulatory questions should be directed to a Gallagher representative at 1-800-888-8322.

Step 2: Execute a Policy.

• HCA has created a fillable VEBA MEP administrative policy template for agency heads to utilize and document its procedures and requirements in providing VEBA MEP pursuant to RCW 41.04.340(7) – (9), WAC 357-31-150, and WAC 357-31-375.
• For nonrepresented employees, your agency’s policy should include confirmation of decisions made defining your employee groups, consultation with affected employee groups, and plan adoption and voting procedures, if applicable.
• For bargaining units, participation in VEBA MEP is usually determined by the terms of the collective bargaining agreement.

Step 3: Work with your Gallagher representative on your VEBA MEP Employer Adoption Agreement (EAA).

• When ready, email your completed EAA package to your Gallagher representative. Gallagher will send you a welcome email within about seven to ten days after your EAA has been accepted by VEBA Trust. This email will include your Employer ID Number, copies of your countersigned EAA, official Plan documents for your files, and next steps.
• Next steps will include registering online and enrolling eligible employees. Contact your Gallagher representative if you need to expedite this process or if you have any questions.
• For more information, please refer to the VEBA MEP Plan Adoption and Enrollment Guide.

Required Hold Harmless Agreement

Retiring eligible employees are required to sign and submit to their employing agency a Hold Harmless Agreement. The employing agency is responsible for collecting and maintaining these Hold Harmless Agreements under RCW 41.05.340(9) and WAC 357-31-375(3). As per statute, failure of a retiring eligible employee in a group, where VEBA MEP is in effect, to sign the Hold Harmless Agreement results in forfeiture by the employee of all unused sick leave eligible for remuneration. Forfeiture may occur if the signed Hold Harmless Agreement is not received by the employing agency within 90 calendar days of the eligible employee’s separation date from agency.

For policy questions, contact HCA.