VRS Health Insurance Credit: Rates, Eligibility and How to Claim It

What the Health Insurance Credit Actually Pays

The VRS Health Insurance Credit (HIC) is a monthly tax-free reimbursement toward qualifying health insurance premiums in retirement. It's not a health plan. Confirm with VRS that your coverage qualifies before relying on the credit.

The amount depends on your employer category and years of creditable service. You need at least 15 years of creditable service to qualify at all.

Rates by Employer Type

State employees: $4.25 per month for each year of creditable service, with no maximum dollar cap. A 30-year state retiree receives $127.50 per month ($4.25 × 30).

Public school teachers: $4.00 per month per year of service, also with no cap. A teacher retiring with 28 years gets $112.00 per month.

Non-teacher school division employees: $1.50 per month per year of service. If the local school board elected the $1.00 enhancement, the rate rises to $2.50. Maximum monthly benefit is $45 at the standard rate or $75 at the enhanced rate.

Political subdivision employees (counties, cities, towns, authorities): Same structure as non-teacher school staff — $1.50 standard or $2.50 enhanced, capped at $45 or $75 per month. Whether a political subdivision participates in HIC at all is the employer's decision, and not every local government has opted in.

The credit cannot exceed your actual monthly health insurance premium. If your premium is $100 and your HIC is $127.50, VRS pays $100.

How to Claim It

For state employees whose health premiums are deducted directly from their VRS pension check, the credit is applied automatically — no separate form required. If VRS doesn't deduct your qualifying premiums directly, file Form VRS-45 with proof of coverage. VRS then adds the credit amount to your monthly pension deposit.

Submit VRS-45 with your retirement application or as soon as you have coverage in place after retirement. If your coverage changes (new carrier, Medicare enrollment), update VRS to keep the credit flowing.

The 31-Day Health Enrollment Window

State employees face a separate, critical deadline: you have 31 days from your retirement effective date to enroll in or waive the State Retiree Health Benefits Program using Form A10741. Missing this window forfeits your eligibility for the state retiree plan permanently, unless you maintained continuous coverage under a spouse's active state employee plan.

This window is separate from the HIC itself. You can receive the Health Insurance Credit with non-state coverage even if you waive the state plan — but you can't get back into the state plan after the 31 days pass.

Common Mistakes

Retirees from political subdivisions sometimes assume they qualify for HIC when their employer never elected the program. Check with your local HR department before factoring the credit into your retirement budget.

Teachers occasionally confuse the teacher rate ($4.00) with the state employee rate ($4.25) — the difference matters over 25+ years of retirement.

The Virginia VRS Retirement Guide includes the complete HIC rate table, the Form VRS-45 filing steps, and a worksheet for calculating your specific monthly credit.

See more Virginia guides →