Minnesota Service Cooperatives VEBA Plan Frequently Asked Questions for Participants Updated on 11/06/06 When choosing a health plan, you need all the information you can get. That s why the Minnesota Service Cooperatives and Blue Cross and Blue Shield of Minnesota have compiled the following list of frequently asked questions about the VEBA Plan. If you don t find what you re looking for, talk to your Minnesota Service Cooperatives representative. In the meantime, you ll find the following categories of information here: Page General questions about the VEBA Plan 1 4 Questions about account contributions 5 Questions about the VEBA account 5 7 Questions about health benefits 7 9 Questions about claims 9 10 GENERAL QUESTIONS ABOUT THE VEBA PLAN 1. What is the VEBA Plan? The Minnesota Service Cooperatives VEBA Plan is a health reimbursement account that provides for individual, employer-funded accounts that you can use to help pay for eligible medical expenses. For active employees, the VEBA Plan is used in combination with a highdeductible health plan. Upon retirement from public service, you, your spouse and dependents may be reimbursed from the VEBA Plan for medical expenses, including premium contributions for Medicare Part B. Medical expenses reimbursed by the VEBA Plan include the cost of deductibles, co-pays or coinsurance, and prescription drugs. When used for retirees, the VEBA Plan is often funded with contributions from accumulated severance pay, sick pay and similar longevity-based benefits. Contributions may also be funded over the course of your employment. The VEBA Plan gives you more control over if and when you spend your health care dollars. You can spend your money on eligible expenses, or you can save it to help pay for health care expenses in retirement. Contributions are made entirely by your employer. As your health plan administrator, Blue Cross will help you manage your health and health benefits through our online member service center. Just visit www.bluecrossmn.com/mnservcoop and you ll find tools that help you make Page 1 of 10
decisions about health care providers, treatments, prescription drugs and health improvement. 2. What does VEBA stand for? A VEBA is a Voluntary Employees Beneficiary Association, which is an IRSregulated, tax-exempt trust for funding health benefits. 3. Who is eligible to participate? To be eligible to participate in the VEBA Plan, you must: Be an active employee or retiree of a public entity, such as a school, city or municipality Have a high-deductible health plan, if you re an active employee Be in a bargaining unit that has agreed to offer the VEBA Plan. If you re not part of a bargaining unit, your employer must have a personnel policy regarding participation in the VEBA Plan. 4. Do all employees and retirees have to participate? If your bargaining unit has adopted the VEBA Plan, or if your employer has a personnel policy regarding participation, then you are required to participate if you elect coverage under your employer s group health plan. You may not elect cash instead of a contribution to the VEBA Plan. If your employer offers more than one health plan, however, and you elect coverage under a health plan that is not intended to be paired with the VEBA, you will not receive a contribution to the VEBA Plan. 5. Do all bargaining units have to adopt the plan? All bargaining units within an organization do not have to adopt the VEBA plan; however, all bargaining units must agree to adopt the same benefit plan. Individual bargaining units can negotiate their own contribution strategies and can move to the VEBA Plan at any time. 6. What does crossover mean? Crossover is the convenient electronic feature of the VEBA Plan that connects your health plan, your VEBA account and other reimbursement accounts that are administered by SelectAccount SM. If you have crossover, claims are submitted electronically from your health plan to your accounts, which means less paperwork for you. You can add to this convenience by signing up for electronic funds transfer and having reimbursements deposited directly into your checking or savings account, without completing any paperwork. 7. How do I access the money in my account? Your employer deposits money into your VEBA account on a regular basis. You can save your money or use it to pay for your portion of your eligible health care expenses, as determined by Section 213(d) of the Internal Revenue Code. The way in which your claims are paid will depend on whether you choose the electronic claims crossover feature. Page 2 of 10
Medical claims If you elect crossover: 1. You receive care. 2. Your provider submits a claim to Blue Cross on your behalf. 3. Blue Cross processes the claim and sends you an Explanation of Benefits (EOB). 4. Blue Cross sends the claim to SelectAccount, your VEBA account administrator. 5. SelectAccount withdraws the funds from your account and pays you for your portion of the expense via check. If you elect electronic funds transfer, SelectAccount can deposit your reimbursement directly into your checking or savings account. 6. When you receive this check, you pay your health care provider. You re responsible for paying your health care provider and may need to do so before being reimbursed from your VEBA account. 7. If the balance in your account is not sufficient to cover the cost of the claim, the claim will pend (be set aside) for 12 months and pay out as contributions are made to your account. 8. If, after 12 months, there are not sufficient funds in your VEBA account to cover the cost of the claim, SelectAccount will deny the claim. You will then need to re-submit the claim to be considered for payment. If you do not elect crossover: 1. You receive care. 2. Your provider submits a claim to Blue Cross on your behalf. 3. Blue Cross processes the claims and sends you an EOB. 4. You send the EOB and a claim form to SelectAccount. 5. SelectAccount withdraws the funds from your account and pays you for your portion of the expense via check. If you elect electronic funds transfer, SelectAccount can deposit your reimbursement directly into your checking or savings account. 6. When you receive this check, you pay your health care provider. You re responsible for paying your health care provider and may need to do so before being reimbursed from your VEBA account. Page 3 of 10
Pharmacy claims You will need to present your member ID card when picking up prescriptions so the pharmacist can correctly price the prescription and tell you what you owe. If you elect crossover and there is enough money in your account to pay the cost, you won t have to pay anything when picking up your prescription. Likewise, if there is only enough money in your account to cover a portion of the expense, you will be asked to pay the remaining portion to the pharmacist. If you elect crossover: 1. You receive a prescription from your health care provider and have it filled at your pharmacy. 2. The pharmacy verifies coverage and whether funds are available to cover the expense. 3. If funds are available either for part or all of the expense the claim is processed and the pharmacy is paid on your behalf. If you do not elect crossover: 1. You receive a prescription from your health care provider and have it filled at your pharmacy. 2. The pharmacy verifies coverage and your payment responsibility. 3. You pay the pharmacy for your portion of the expense. 4. You submit a claim to SelectAccount for reimbursement from your VEBA account. 8. Who do I call if I have questions? If you have questions about your health plan, please call the number on the back of your member ID card. For questions about your VEBA account or claims, please call SelectAccount between 7 a.m. and 7 p.m., Monday through Thursday, and 7 a.m. to 5:30 p.m. on Friday toll free at 1-800-859-2144 in greater Minnesota, or (651) 662-5065 in the Twin Cities metro area. 9. If I have a post-retirement VEBA Plan, when can I begin to use the money in my account? Employees become eligible for reimbursement from the VEBA account after retirement on the earliest of the following dates: Date of termination Retirement date The date an employee becomes disabled When a medical leave of absence (or expected duration) is six months or longer When a leave of absence is one year or longer (or other approved duration) Your retirement date may vary depending on the agreement that has been reached with your collective bargaining unit or on your company s personnel policy. Page 4 of 10
QUESTIONS ABOUT ACCOUNT CONTRIBUTIONS 10. Who puts the money into my VEBA account? Your employer funds your VEBA account. In addition, if you have a postretirement VEBA Plan, once you retire, all or a portion of your sick pay, vacation pay and severance pay will be deposited into your account if provided for in your collective bargaining agreement or personnel policy. Contributions to your VEBA account are not included in your gross income. You may not select cash in lieu of your VEBA contribution. 11. Can I make personal contributions to my VEBA account? Employees and retirees cannot contribute to the VEBA account. 12. Is there a limit to how much my employer can contribute on an annual or lifetime basis? There is no contribution limit neither minimum nor maximum for the VEBA account. However, your VEBA account is subject to rules that require similarly situated employees to receive the same level of contributions. QUESTIONS ABOUT THE VEBA ACCOUNT 13. What can the money be used for? Your VEBA account dollars can be used to pay for eligible medical expenses as outlined in Section 213(d) of the Internal Revenue Code. Over-the-counter drugs are also covered as an eligible medical expense. However, there are limits to what is defined as an eligible over-the-counter drug; for example, toiletries (such as toothpaste), cosmetics (such as facial creams), vitamins and dietary supplements are not eligible for reimbursement. Payment of medical insurance premiums for COBRA continuation, insurance premiums (other than premiums paid through a salary reduction arrangement), long-term care, Medicare Part B and Medicare Supplemental coverage are among the eligible expenses. We ll administer requests for payment of long-term care insurance premiums, but encourage you to seek legal or tax advice to make sure this is advisable. You cannot use your VEBA account to pay premiums for health plans that do not reimburse actual medical expenses (for example, policies that pay a fixed dollar amount upon diagnosis of cancer without regard to medical expenses incurred). 14. What if I have an expense that exceeds the amount of money in my account? Withdrawals cannot exceed the available balance in your VEBA account. If your portion of expenses for a particular claim is greater than your available VEBA account balance, that claim will be pended (set aside) for 12 months until sufficient funds are available. As money is deposited into your VEBA account, partial payments may be made on the claim. If, after 12 months, there are not sufficient funds in your VEBA account to cover the cost of the claim, SelectAccount will deny the claim. You will then need to re-submit the claim to be considered for payment. However, you re still responsible for paying your health Page 5 of 10
care provider and may need to do so before being reimbursed from your VEBA account. 15. Does the money earn interest? Yes. The money in your VEBA account accrues interest at a current money market rate. If you choose to invest your account dollars in mutual funds, the account will earn or lose money depending on the rates that those funds are achieving. 16. Can I invest the money if I don t use it for health care expenses? Once the balance in your VEBA account reaches $1,000, you can invest anything that exceeds this amount in a variety of investment options that are offered through Wells Fargo (the administrator of the financial account). 17. Do I pay taxes on the money that my employer puts in my account? No. You do not pay taxes on contributions to your VEBA account, nor is the money counted as part of your gross income. 18. Do I pay taxes on withdrawals? If you withdraw funds to pay for Section 213(d) expenses for yourself, your spouse or eligible dependent, you will not pay taxes on those dollars. Withdrawals for non-eligible expenses are not allowed. However, if a participant dies without a spouse or eligible dependent, his or her beneficiary may not be reimbursed for medical expenses from the remainder of the participant s account. New IRS rulings limit medical expense reimbursement from your VEBA account only to spouse and tax-dependent beneficiaries. 19. What happens to the money in my account if I quit my job or retire? If you re covered under the VEBA Plan and you have a positive account balance when you leave, you can continue to use your account to pay for eligible medical expenses, including individual health care premiums, COBRA continuation, longterm care and Medicare Supplemental coverage. Administrative fees for SelectAccount and Wells Fargo may also be paid from your account, even though they aren t eligible expenses under Section 213(d). 20. What happens to the money in my VEBA account if I die? If a VEBA participant dies, his or her spouse or eligible tax-dependents may continue to use the VEBA account for tax-free reimbursement of the qualified medical expenses they incur or those that the participant may have incurred before his or her death. Keep in mind the following exceptions: If a participant dies without a spouse or eligible dependent, his or her beneficiary may not be reimbursed for medical expenses from the remainder of the participant s account. New IRS rulings limit medical expense reimbursement from your VEBA account only to the spouse and eligible dependents, meaning tax-dependent beneficiaries. If there is a positive balance in the VEBA account when the participant dies and there is no spouse, eligible dependent or tax-dependent beneficiary, the money will revert to the VEBA trust. Page 6 of 10
21. How soon can I begin requesting reimbursement for qualified expenses? If your employer adopts and funds a VEBA account on your behalf, you can begin requesting reimbursement for qualified medical expenses as soon as there is a positive balance in the account. 22. What if I don t want to use the money in my account to pay claims? If you do not want to use the money in the VEBA account for paying claims, you should not elect crossover. In addition, you should request that the VEBA account be blocked from all claims by completing the VEBA Account Access Form found on www.bluecrossmn.com/mnservcoop. QUESTIONS ABOUT HEALTH BENEFITS 23. Will I have the same type of health care coverage that I m used to? The VEBA Plan features a comprehensive, high-deductible health plan from Blue Cross and Blue Shield of Minnesota. Your VEBA Plan includes the kind of coverage you and your family have come to rely on. Coverage for everything from doctor visits to preventive care, X-rays and lab tests, to emergency care and hospital stays. 24. Can I see the doctors that I want to see? As a participant of the VEBA Plan, you have access to the Minnesota Provider Network, which features 96 percent of doctors and specialists throughout Minnesota and all hospitals in the state. You can also rest easy knowing that with the BlueCard national network, your health care needs will be covered when you travel outside the state or around the world. 25. Is my personal health information protected? The VEBA Plan complies with all state and federal regulations for protecting the privacy of our members, so you can rest assured that your personal information is secure. 26. How can I learn about the cost of health care services before I spend money from my VEBA account? It s a new era in health care one that requires greater involvement by health plan members. That starts with asking questions. Whether it s your primary care provider, pediatrician, a specialist or your pharmacist, it pays to ask about the cost of the services and medications that they recommend. Visit www.bluecrossmn.com/mnservcoop to use the tools in our online member service center to research medical costs, drug costs, and provider quality. Keep in mind that your health rather than costs should be the determining factor in receiving any type of care. 27. Will Blue Cross help me manage my health, as well as my health benefits? Absolutely. You need accurate information about health care quality and costs so you can make informed decisions about your health and how you spend your money. That s why the VEBA Plan offers a variety of decision tools and information resources through the Blue Cross online member service center. These tools help you live better and manage your benefits. Whether it s provider quality information, our prescription drug cost calculator, cost-of-care examples, Page 7 of 10
or general health information, we believe that if you have the right information and resources, you will make wise health care decisions. Simply visit www.bluecrossmn.com/mnservcoop to be on your way. 28. What additional support programs are offered as part of the health care coverage? BluePrint for Health Online An award-winning, round-the-clock web site gives you access to comprehensive, credible health and medical information to help you understand your health, make sound health decisions and become better health care consumers. Tobacco reduction BluePrint for Health stop-smoking program This telephone-based smoking cessation program helps tobacco users quit smoking on their terms and at their own pace. Personalized, one-on-one support is provided over the course of 12 months by an experienced tobacco cessation specialist. Case management A comprehensive, in-depth program helps you with complex medical problems manage your health, your health care and communication among family members, providers, hospitals, your health plan and more. Specially trained registered nurses guide care decisions as they help you find the best, most costeffective services. Health education materials Free of charge, our educational brochures help increase knowledge and awareness about employee health. Topics range from general self-care and prevention to specific conditions including diabetes, health screening guidelines and how to manage high blood pressure. Disease management BluePrint for Health care support A step up from traditional disease management programs, the care support program helps employees at all risk levels reach their health goals by helping low-risk members to stay in control of their health and high-risk members to achieve a more controlled state. The program reaches a broader spectrum of conditions, more closely aligned with best practices in medicine and has more potential to reduce health care costs. BluePrint for Health fitness discounts A fitness discount program designed to encourage members to engage in more physical activity. The program is available for eligible individuals that work out eight days per month at one of the participating fitness centers in our extensive network. Page 8 of 10
Self-care support 24-hour nurse-advice line A first line of defense program that gives you telephone access to professional advice for illnesses and injuries, 24 hours a day, seven days a week. Specially trained nurses help you safely care for symptoms at home, or get the right care from the right place at the right time. QUESTIONS ABOUT CLAIMS 29. Is there a lot of paperwork to complete? No. In fact, if you elect crossover and authorize electronic funds transfer between your VEBA account and your bank account, your experience will be virtually paper-free. This option is available to both active employees and retirees who are covered under the public employer s health plan. Crossover can be used to pay medical and pharmacy claims, as long as the prescription is covered by the health plan. There are a few things to keep in mind when selecting crossover: If your employer offers a medical flexible spending account (FSA) with SelectAccount in addition to a VEBA plan and you select crossover for one account, you will automatically be enrolled in crossover with the other account. If you see a doctor or specialist who does not participate in the Blue Cross network, you may need to submit a paper claim to receive reimbursement from your VEBA account. If you or your spouse has other health insurance, you should not elect crossover. This can lead to claims being paid incorrectly as benefits are coordinated between the two health plans. This includes Medicare coverage. 30. Will my health care provider be paid automatically by my accounts? No. You ll be responsible for paying your health care provider. You have the option to request that reimbursement amounts be deposited directly into your personal checking or savings account. Otherwise, you ll receive a check, payable to you, mailed to your home. 31. Will I have to pay my doctor before I receive my account money? We re committed to processing claims promptly. Even so, there may be situations in which you receive a bill from your doctor before receiving funds from your VEBA account. In these situations, we suggest you speak with your doctor regarding a mutually acceptable payment plan. If the balance in your account isn t sufficient to cover the cost of the claim, we will pend the claim for twelve months and pay you as contributions are made to your account. If, after 12 months, there are not sufficient funds in your VEBA account to cover the cost of the claim, SelectAccount will deny the claim. You will then need to re-submit the claim to be considered for payment. 32. How am I reimbursed for payments that I make to providers? If you have crossover, you ll receive reimbursements through an automated submission from SelectAccount. Otherwise, you ll need to complete a claim form Page 9 of 10
and mail it to the address provided on the form, along with a copy of your bill or EOB that shows the care you received and the charges that you re responsible for. You can find claim forms at www.bluecrossmn.com/mnservcoop. 33. Will I receive any information about my account and my claims to help me manage my money? Absolutely. When managing your health and your benefits, it s important that you have easy access to your personal information. That s why you ll receive the following information from us throughout the year: Verification form This form will confirm lots of valuable information, including your enrollment in the VEBA Plan and your participation in crossover and electronic funds transfer. Quarterly statement At the end of each quarter, you ll receive a statement that verifies contributions to your account, withdrawals and available balance. You will also receive a statement from Wells Fargo detailing your balances, how your money is allocated between various funds and your earnings or losses. Explanation of withdrawal Each time you request funds from your account, you ll receive a statement detailing the transaction and the remaining account balance. Account status report At any given time, you can receive a report that details recent activity on your account. Simply call SelectAccount between 7 a.m. and 7 p.m., Monday through Thursday, or from 7 a.m. to 5:30 p.m. on Friday toll free at 1-800-859-2144 in greater Minnesota, or (651) 662-5065 in the Twin Cities metro area. To learn more, contact your Minnesota Service Cooperatives representative. The VEBA Plan information provided in this document is not intended as legal or tax advice. Questions regarding tax ramifications, as they relate to a particular circumstance, should be directed to your tax advisor. Page 10 of 10