Some King County retirees are eligible for a health reimbursement arrangement (HRA) authorized by the voluntary employees’ beneficiary association plan (VEBA). An HRA VEBA is a tax-free, post-retirement medical expense account used by retirees and their eligible dependents to pay for qualified medical expenses.
HRA VEBA contributions are exempt from Social Security, Medicare, and federal income taxes. Investment earnings and withdrawals for qualified health care expenses and premiums are also tax-free.
The HRA VEBA plan is funded by a percentage of unused sick leave and/or vacation hours an employee has accrued at the time of retirement, which King County contributes into the plan. Each employee group votes to participate in either or both of the following HRA VEBA funding sources at retirement (see Participating Employee Groups, below):
- 35% sick leave cash out
- Vacation cash out (50% to HRA VEBA; 50% paid as regular taxable wages)
If you’re an eligible participant, you must enroll within 12 months of your retirement date.