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?

Already posted to Health/COBRA/HIPAA Board with no reply...

[Ron Snyder]

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 "widows and orphans" fund would, of course, provide death, not disability, benefits. Otherwise the would not be widows or orphans but dependents.

For purposes of HIPAA compliance (portability, privacy) - is it an excepted FSA? Other type of limited purpose excepted benefit?

This is a good question, first because it is not an FSA benefit at all, and second, because DOL has not bothered to provide an overdue similar exception for HRA or MERP benefits. I believe that even the DOL would not claim this was subject to HIPAA portability rules, but would likely would be subject to the privacy rules. I had a similar problem with a DOL audit of funded post-retirement HRA benefits in which the DOL required us to provide HIPAA portability notices even though the VEBA did not provide current health coverage.

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

I believe that as a governmental plan, the plan is exempt from portability rules (along with other ERISA requirements). Being self-funded does NOT get them off the hook, however.

Already posted to Health/COBRA/HIPAA Board with no reply...

Not much luck here either, unless you count me.

[Christine Roberts]

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 "widows and orphans" fund would, of course, provide death, not disability, benefits. Otherwise the would not be widows or orphans but dependents.

For purposes of HIPAA compliance (portability, privacy) - is it an excepted FSA? Other type of limited purpose excepted benefit?

This is a good question, first because it is not an FSA benefit at all, and second, because DOL has not bothered to provide an overdue similar exception for HRA or MERP benefits. I believe that even the DOL would not claim this was subject to HIPAA portability rules, but would likely would be subject to the privacy rules. I had a similar problem with a DOL audit of funded post-retirement HRA benefits in which the DOL required us to provide HIPAA portability notices even though the VEBA did not provide current health coverage.

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

I believe that as a governmental plan, the plan is exempt from portability rules (along with other ERISA requirements). Being self-funded does NOT get them off the hook, however.

Already posted to Health/COBRA/HIPAA Board with no reply...

Not much luck here either, unless you count me.

Thanks for your response!