LASIK Reimbursement Inside VEBA

[Christine Roberts]

I have the very helpful EBIA HIPAA manual but could not construe a clear answer to the following questions:

A local governmental entity contributes towards a VEBA trust that primarily provides short and long-term disability and hardship loans (e.g. for medical, funeral expenses) to certain groups of gov't. employees.

All benefits except for long term disability are self-funded; the LTD benefit is insured. Sort of a modern version of "widows and orphans" fund.

A few years back the VEBA was amended to allow up to $500 reimbursement towards the costs of LASIK surgery. The VEBA reimburses eligible participants who provide proof of payment for the LASIK procedure, up to the dollar amount. For purposes of HIPAA compliance (portability, privacy) - is it an excepted FSA? Other type of limited purpose excepted benefit?

Or, if not excepted - is an "opt-out" not available because, though a governmental plan, its not fully self-funded?