U.S. Sen. Maria Cantwell (D-WA) joined Sen. Mike Crapo (R-Idaho) in introducing bipartisan legislation on Wednesday that would eliminate an inequity that is preventing tens of thousands of state public employees from passing on their hard-earned health reimbursement savings to their loved ones once they pass away.
Sen. Patty Murray (D-WA) cosponsored the legislation.
The legislation would make a technical fix to laws governing health reimbursement arrangements provided to governmental employees in order to ensure equitable treatment for all public sector employees. The technical fix would protect the health savings accounts for employees/retirees of such entities as the City of Auburn, Auburn School District and the Valley Regional Fire Authority.
Currently, only employees and retirees of state-run public retirement systems receive this benefit, but employees and retirees of political subdivisions are excluded. These include counties, cities, ports, public utility districts (PUDs) and school districts.
In Washington state, approximately 55,000 participating employees and 600 employers would benefit from this fix. In the Pacific Northwest (Washington, Oregon and Idaho), 776 employers and nearly 80,000 employees would benefit. Nationwide, more than half a million employees would benefit.
“This bill will protect the health benefits that thousands of hardworking Washingtonians have earned over their careers,” said Cantwell (pictured left). “Employees holding health reimbursement plans offered by the City of Vancouver, the Richland School District, the Port of Kennewick, and Pierce County, to name a few, are at risk of not being able to pass on their health savings due to this inequity. I am introducing this technical fix to correct an unintended consequence of past legislation that is putting at risk thousands of Washingtonians’ hard-earned benefits within this key retiree medical savings tool.”
At issue are health reimbursement arrangements (HRAs) provided by voluntary employees’ beneficiary association (VEBA) trusts, plans which are widely used – particularly throughout the Pacific Northwest – to provide health benefits to employees and retirees of state-run public retirement systems as well as political subdivisions, including counties, cities, ports, PUDs, and school districts. Funds that accumulate within HRAs can be transferred to a designated beneficiary upon the death of the plan’s primary beneficiary.
However, currently only participants with HRAs offered through state-run public retirement systems can pass their health savings to non-dependent beneficiaries after a participant’s death; participants with HRAs established by or on behalf of a political subdivision cannot. The Cantwell-Crapo bill would correct this inequity and ensure equitable treatment for all public sector employees.
