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Blue Cross and Blue Shield of Vermont Learning Center

An Introduction to VEBAs

Learn general information about VEBA accounts, including who is eligible and how to spend the money in the account.


A Voluntary Employees' Benefit Association account (VEBA) is a tax-free health care savings plan funded entirely by your employer.  As soon as your employer contributes to your VEBA account, the money belongs to you.  You pay no taxes on the balance, the interest earned, or on withdrawals.

Using your VEBA account

You can use the funds in your VEBA account in many ways:

  • Out-of-pocket expenses until you reach your deductible
  • Eligible medical expenses like co-payments, co-insurance, and prescription drugs (See Eligible Expenses for a searchable list of eligible medical expenses)
  • Health insurance premiums for programs like COBRA or Medicare when transitioning between jobs or after retirement
  • Health expenses that your plan doesn't cover, like dental and vision care

Ineligible expenses

You can't use VEBA account money to pay for the following types of expenses:

  • Health insurance premiums while working for this employer
  • Expenses that aren't IRS-qualified medical expenses 

Eligibility for a VEBA account

Your employer must offer a VEBA account in order for you to enroll in it.  You must be an active employee and covered under an employer-sponsored medical health plan. 

Using your VEBA account after leaving your employer

You can still spend VEBA account funds on eligible medical expenses after leaving your employer, retiring, or if you're not longer part of the group's health plan.

During retirement, or a transition into retirement, the funds in your account can be used by you, your spouse, or eligible dependents to pay for medical expenses. 

If the VEBA account is paired with an HSA, the VEBA account will be limited to eligible dental and vision expenses until the medical health plan deductible is met.

Your VEBA credit rates

Blue Cross and Blue Shield of Vermont keeps VEBA credit rates simple so you earn the stated rate on the entire account balance. Some banks pay interest based on the balance and rate in each balance tier.

Interest rates and balance tiers are subject to change without notice.

  Base Balance

Plan Type






BasicSaver VEBA 0.15% 0.15% 0.20% 0.30% 0.45%

*These rates may vary depending on group contracts and previous plan availability.

Investing with your VEBA account

Your VEBA account has a built-in investment account that you can activate when your base balance exceeds $1,000. Although there is always risk when investing money, this can be a great way to grow your money over the long term. 

See Investment Options for Your VEBA Account to learn more.

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