Segal Company

Retiree Health VEBAs

A voluntary employees' beneficiary association (VEBA) is one option for organizations that are looking for a new way to handle the rising costs and obligations of retiree health benefits, especially when these benefits are collectively bargained or the company is in bankruptcy.

What is a VEBA?

A VEBA is a trust that is established to provide tax-free retiree health benefits to current and/or future retirees. Characteristics of a VEBA include:

  • Assets are held in trust to provide qualifying health benefits (i.e., medical, dental, prescription drugs, health insurance premiums, Medicare supplemental premiums), and cannot be reverted to the employer or used for any other purpose
  • Run by a board of trustees, who determine the policies of the trust and manage the investment of funds
  • Can be defined-benefit and/or defined-contribution type plans
  • Contributions to the trust can come from an employer, a debtor or successor company, or after-tax retiree contributions
  • Allow tax-exempt investment earnings on plan assets
  • Funding limitations do not apply if the trust meets collective bargaining standards

How can Segal help?

Segal has experience with over 25 retiree health VEBA clients - some of which have been around for more than 25 years. This significant, in-depth experience in the creation, design, implementation, communication and administration of VEBAs is unparalleled. Our consultants are available to assist you and your attorneys in addressing the following aspects of a VEBA:

  • Establishing plan administration
  • Determining plan design
  • Determining funding options
  • Developing policies and procedures
  • Selecting, retaining and managing service providers
  • Investment consulting (provided by Segal Rogerscasey, our SEC-registered investment consulting affiliate)
  • Preparing documentation and participant communications
  • Preparing filings and disclosures
  • Obtaining fiduciary liability insurance

Contact us today if you are considering a VEBA to maintain benefits for your participants.

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