Group Structure Criteria for State of Montana VEBA Group

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Group participation is required due to IRS rules that prohibit individuals from choosing to participate, or not, in the program. Therefore, the following group formation guidelines are intended to eliminate the possibility of an employee moving from one group to another, or choosing to join or not to join a group so they can be included, or not included, in the Montana VEBA HRA Plan. The contributions to the program would no longer be considered tax-free, if individual choice occurs.

Groups should consider using existing group boundaries. Group means a collection of employees who are employed by the same employer under an existing organizational structure. The most common form of group formation (VEBA 1) will be employees eligible to retire (PERS) and voting on 25% sick-leave cash-out at retirement, or 25% sick-leave and 100% annual-leave cash-out at retirement. Another group formation (VEBA 2) is employees eligible for sick-leave ash-out or sick-leave and annual-leave cash-out at separation from service but are not yet eligible to retire. Groups may also be formed into smaller sub-units. Sub-unit means a collection of employees who are employed by the same employer under a recognized organizational division for the purposes of administration of the statutory or otherwise designated duties of the employer. A sub-unit must consist of at least 5 employees.

VEBA 1 – Eligible to Retire – Agency, Division, Level or Section.

Eligibility/criteria – Employee must be eligible for Retirement and pay into a given retirement system. Group payroll representative must obtain list from given retirement system of those currently eligible to retire given the criteria (yrs. Service/age, etc.) for retirement from retirement system, (PERS, TRS, GWPORES, PROR, JRS, etc.)

Employee must be:

  • Active in PERS
  • Eligible to earn Sick-leave
  • Eligible for benefits with the State of MT and
  • Receive State Share.

VEBA 2 – Any Separation – Agency, Division, Level or Section.

Eligibility/criteria - The group must have a Dept ID or organizational boundary. It must be an established Business Unit. The separation from service must be a separation from State government. If it is a transfer to another Agency, VEBA eligibility will be based on the new group and its VEBA criteria.

Employee must be:

  • Eligible to earn Sick-leave
  • Eligible for benefits with the State of MT and
  • Receive State Share.

VEBA 3 - Union – Bargained units within an Agency.

NOTE: Union group participation supersedes any other group participation. It is suggested that when Agency chooses to vote, they contact the union representatives for the agency to advise them of their options re: VEBA. If they would like to vote with the agency, they may do so, but should notify the Agency in writing of their intent. They may also vote separately as a union.

VEBA 4 - Non-Union within an Agency

Eligibility/criteria is the same as VEBA 1 and VEBA 2. The reason VEBA 4 exists is if an agency votes and separates the group into Union and Non-Union.

Eligibility for participation in a group AFTER the group has voted and VEBA is in place, may occur in the following ways:

  1. You become eligible to be a part of a voting group if you are hired in to a group that has already voted on the VEBA,
  2. You become eligible to retire during the period that the group is effective, you are then in the agency VEBA group (if group exists) in the agency based on “eligible to retire” criteria.
  3. If you transfer from an agency with a VEBA plan in place to an agency without a VEBA plan in place, you will be back to the cash-out option at separation.
  4. If you come into a position covered under a VEBA group in place and meet the individual eligibility criteria, you are in the VEBA.
  5. If you come into a position and do not meet the individual eligibility criteria or group definition criteria (e.g. are not eligible to retire) for belonging to a VEBA group, you will not be in a VEBA group.

Voting Rules & Best Practices