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VEBA or HRA? Are They the Same?

Is a VEBA an HRA? This is a common question and an even more common misconception among employers and employees. In actuality, VEBA is a trust which the YourWay HRA leverages so employees can make tax-free withdrawals to pay for qualified healthcare expenses.

Let’s talk about VEBAs and HRAs, as you may be under the assumption that they’re one in the same. Well, not exactly.

VEBA, which stands for “Voluntary Employees Beneficiary Association,” is one type of tax-exempt trust established by governmental employers to hold the contributions or plan assets of qualified health and welfare benefit plans, including HRAs. 

The HRA, on the other hand, is a type of tax-exempt benefit plan that allows employers to contribute pre-tax dollars that employees can use to cover qualified, out-of-pocket medical expenses.

The innovative YourWay HRA leverages VEBAs and other forms of tax-exempt trusts to deliver a Funded HRA model that benefits both employers and employees.

Picture it this way — the VEBA is like a garage; the structure that gives us the ability to store vehicles. The ‘vehicles’ in this case are individual HRA plans.

The VEBA garage—the trust established by public sector employers— is the “structure” that houses the funded HRA plan.

By using a VEBA or other tax-exempt trust to “park” the employer’s contributions to the HRA plan, the YourWay Funded Health Reimbursement Arrangement allows employees to own their HRA funds, keeping them even after separation, with the added ability to invest and grow their HRA funds, tax-free. 

This transforms the traditional HRA plan from a nominal, transient benefit to a lifetime retirement savings vehicle for employees.

But unlike retirement plans, withdrawals from the VEBA funded HRA plan are not taxable, so long as those funds are used to pay for qualified healthcare expenses and/or premiums.

So, why choose the YourWay HRA powered by OneBridge over other funded HRA providers?

When you choose OneBridge, you’re getting industry-leading technology, including a single sign-on portal and mobile app, plus white-glove account management, friendly personalized customer care support, full-service compliance, and more. 

This is why we are the largest funded HRA administrator in the country.