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VEBA Plan Overview & Administrative Updates February 11, 2011 Sponsored by AWSP, WASA, and WASBO since 1984 Presented by: Brian Riehs, Service Representative VEBA Service Group, LLC Mike Smolko, Service Representative VEBA Service Group, LLC Slide 2 Todays topics VEBA Plan overview Administrative updates Online resources Q&A Slide 3 VEBA Plan Overview What is the VEBA Plan? Sponsors, trustees, service providers Projected retiree healthcare costs Key benefits Getting money in Investment options Getting money out Typical group adoption process Slide 4 Account-based health plan Funded by employer Tax-free money for future health care costs What is the VEBA Plan? Health Reimbursement Arrangement Slide 5 John Knutson, Kent SD Wayne Leonard, Mead SD Gordon Grassi, Central Valley SD Paula Bond, Tacoma SD Dr. Steve Rasmussen, Issaquah SD Dr. Polly Crowley, West Valley SD (Spokane) Sponsors and trustees Slide 6 T R U S T E E S Arnerich Massena & Associates, Inc. Katten Muchin Rosenman LLP Russell Greenblatt Schoedel & Schoedel Certified Public Accounts VEBA SERVICE GROUP, LLC Local Service / Presentations Plan Adoption Assistance Technical Support MERITAIN HEALTH Customer Service Claims / Systematic Payments Account Administration THIRD-PARTY ADMINISTRATOR PLAN CONSULTANT INVESTMENT CONSULTANTLEGAL COUNSELAUDITOR Service providers Slide 7 26+ years of experience Nationally recognized 1-800-888-VEBA (8322) Plan consultant Onsite service Education Group adoption Technical support hraconsultants.org Slide 8 Claims Customer service Account administration - Contributions - Investment changes 1-888-828-4953 employersupport@meritain.com Third-party administrator Slide 9 Find your current age below: How much will you spend? Current Age Slide 10 How will you pay for it? Pension 457 403(b) Other savings VEBA Plan Slide 11 pay no taxcan use your account anytimechoose your investments Key benefits You Slide 12 Key benefits unused balance carries overno annual use-it- or-lose-it spouse and dependents are coveredeven if you die Your Slide 13 Getting money in Leave cash outs (sick leave, vacation, personal, other) Mandatory employee contributions Future COLAs; pay increases Early retirement/separation incentives No individual choice; all employee group members defined as eligible must participate per IRS rules. Slide 14 Employees and employers Pay No Tax Win-win tax advantage Slide 15 Save tax. Keep more. WITHOUT VEBA: WITH VEBA: You keep 100% You keep 67% Slide 16 Six asset classes Build your own portfolio Option A: Do-it-yourself Four pre-mixes Professionally managed Option B: Choose a pre-mix Investment options Slide 17 Getting money out You Spouse Dependent(s) Whos covered? Deductibles Copays Prescriptions Expenses Medical, dental, vision Long-term care Medicare plans Premiums Slide 18 AUTO DEDUCT from pension check DIRECT DEPOSIT from VEBA to bank account SIMPLE, EFFICIENT, SECURE Systematic premium reimbursements Systematic Premium Reimbursement Form available online at veba.org Provides reimbursement to participants for qualified premiums only No direct payments to insurance companies or providers Slide 19 Welcome packets Employer contributions Enrollment Written agreement/policy Group vote Education Typical group adoption process Slide 20 Provide copies to VSG (IRS recommendation) Use model language in handbook Creative language usually a problem No one year on/one year off Written agreements; policies Slide 21 Avoid groups with less than five voting members Combine small groups into a single, larger group for VEBA purposes Small group guidance Slide 22 Administrative updates New Claim Form Coordination of benefits with Medicare Participant Status Change Form Over-the-counter (OTC) medicines & drugs Extended dependent coverage Participant effective dates Form W-2 reporting Slide 23 Updated 12/2010 to comply with new federal reporting rules (i.e. Medicare secondary payer) Please discard all outdated versions Participants submit one Claim Form per covered individual New forms will be sent with statements in mid-January Effective March 1, 2011, claims received on outdated forms will be denied Standard claims processing takes up to seven business days Five business days from date of receipt to process, plus two business days to execute the necessary investment fund trades New Claim Form Slide 24 Slide 25 Help your separated participants on Medicare avoid denied benefits Meritain Health needs separation dates for separated employees/participants If Meritain Health doesnt know a participant is separated, and has reported them to Medicare as an active employee, Medicare may Consider HRA (VEBA) account primary to Medicare Deny Medicare benefits at point of service Recent emails from VSG and Meritain Health contained more details Medicare coordination of benefits Slide 26 Participant Status Change Form Submit Participant Status Change Form when active employees/participants Separate and/or Experience COBRA qualifying events which affect their receipt of future contributions (e.g. monthly contributions) Slide 27 > Slide 28 Over-the-counter (OTC) medicines and drugs Still covered Beginning January 1, 2011, prescription or note from medical practitioner required Applies only to medicines and drugs (except insulin); not to other types of OTC items like bandages, crutches, etc. See Qualified Expenses and Premiums for more details Slide 29 Extended dependent coverage Effective September 1, 2010 Young adult children covered through end of calendar year in which they turn age 26 Other health plans may have different effective dates or eligibility criteria See Definition of Dependent for more details Slide 30 ACH or wire transfer is recommended Electronic contributions visible to participants online within five business days from receipt Mail paper checks to the Trusts lockbox; contribution data reports to Meritain Health Paper check contributions visible to participants online within nine business days from receipt Contribution remittance Slide 31 Updated Enrollment Form permits an employer to specify a newly-enrolling participants effective date as long as such date is Not prior to participants hire date Not prior to September 1, 2010 If no date is specified on Enrollment Form, employee shall become a participant the latter date upon which both an Enrollment Form and contribution have been received Participant effective dates Slide 32 Slide 33 Employer tax reporting Tax Year 2010: Do not report contributions on Form W-2 Tax Year 2011: Value of coverage reporting on Form W-2 is not required Tax Year 2012: Value of coverage reportable on Form W-2; awaiting further guidance from IRS on how to calculate value of coverage Form W-2 reporting Slide 34 Online resources Online employer portal Online participant portal (myVEBA Plan online) Slide 35 View posted contributions Upload contribution data reports View and print employer reports Access the VEBA Employer Handbook Step-by-step adoption/renewal process Section 4.5 Sample language Sections 4.7 - 4.8 Electronic remittance instructions Sections 6.3 - 6.4 Applicable laws and rules Section 9 Online employer portal veba.org Slide 36 myVEBA Plan online View account detail Track status of claims View claims history; look up EOBs Update personal/spouse/dependent information, investment allocations, etc. Online participant portal veba.org Slide 37 Questions?