Background & Plan Services

Background

The Montana Voluntary Employees’ Beneficiary Association Health Reimbursement Account or the Montana VEBA HRA is a post-employment medical expense reimbursement program. 

In 2000, the Montana Legislative Services Division recommended to an interim committee of the State of Administration, Public Retirement Systems, Veteran Affairs Interim Committee that the legislature take action to provide a means for public employees in Montana to set aside tax-advantaged funds to help pay for the rapidly rising costs of retiree health care.

After public hearings, input from public employees, union leaders, and health care consultants, the legislature passed Senate Bill 51 that authorized the Montana Voluntary Employees’ Beneficiary Association Act (the “Act”). Thereafter, the Department of Administration, Employee Benefits Bureau created the Montana VEBA Advisory Council consisting of public employers and union leaders to assist with the final design of the plan.

The Department of Administration (DOA) made application to the Internal Revenue Service (IRS) for a determination of the tax status of the program under IRC 501(c)(9). The IRS notified the DOA in July 2003 that the agency’s application had been approved and the Montana VEBA HRA trust was determined tax-exempt under IRC 501(c)(9).

In 2003, the DOA sought a private letter ruling from the IRS to permit use of residual account funds by a beneficiary of the estate if a participant died with residual account funds and no surviving spouse or qualified tax-dependent child. The IRS denied the DOA’s request for a favorable private letter ruling. Following that decision by the IRS, the DOA, with the advice of its consultant, limited the use of account funds to tax-qualified dependents, including a spouse.  

The legislature amended the Act in 2007 to allow for employer contributions of accrued annual leave and again in 2021 to conform with federal tax code changes for health reimbursement arrangements.

Participation by state employees in the Montana VEBA HRA program was initially governed by a state of Montana management operations manual policy. In 2005, that policy was replaced by administrative rules to extend access to the employees of other Montana public employers electing to participate in the program. The DOA amended the administrative rules in June 2013 and December 2019 to address the use of the program by all Montana public employers, increase the minimum group size to five members, and make other conforming changes to the program to address the federal tax code changes in late 2013.

Plan Services

A.W. Rehn & Associates provides claims administration and accounting/record keeping for the Montana VEBA HRA plan:

Rehn & Associates, Inc.
P.O. Box 5433
Spokane, WA 99205-0433
1-800-VEBA101 (832-2101) or (509) 534-0600

 

Washington Trust Bank, Spokane, Washington, is the trustee for the Montana VEBA HRA trust and the investment manager:

Washington Trust Bank
Attn: Private Banking
717 W. Sprague Avenue
PO Box 2127
Spokane, WA 99210-2127

 

The Health Care and Benefits Division provides group member and employer education and consulting services:

Health Care and Benefits Division
P.O. Box 200130
100 N Park Avenue, Suite 320
Helena, MT 59601

(800) 287-8266 or TTY (406) 444-1421

 

 

 

 

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