Voluntary Employees' Beneficiary Associations (VEBAs)The benefits and purposes of voluntary employees' beneficiary associations (VEBAs) have evolved over time. VEBAs now largely serve as mechanisms to cap the cost of retiree benefits to employers and to eliminate the necessity of reflecting future benefit obligations on GAAP compliant financial statements. VEBAs are also created frequently in the context of Chapter 11 bankruptcies when companies can no longer fund their benefit obligations.
Stahl Cowen is an experienced innovator with respect to VEBAs. We create VEBAs from the ground-up to serve as tax advantaged mechanisms that allow companies to lower their healthcare insurance costs and maximize the retiree benefits made available through such VEBAs. Stahl Cowen possesses the unique experience required to evaluate employer obligations to determine whether an employer can take advantage of VEBA trusts. Once we determine an employer can utilize a VEBA, we assist our clients with the requisite ERISA (Employee Retirement Income Security Act) notices to plan participants, creating VEBA trust documents, obtaining the IRS non-taxable status, designing the VEBA benefit plan, providing ERISA mandated HIPAA training to VEBA directors, and handling the related fiduciary and ERISA issues.
Stahl Cowen's experience includes:
- Creating VEBAs and new welfare benefit plans to replace employer provided benefits.
- Designing VEBAs whereby welfare benefit plans providing health insurance and life insurance were terminated, but retired employees were still provided health reimbursement arrangements.
- Negotiating VEBA settlement agreements in Chapter 11 bankruptcies.
- Constructing VEBA plans, negotiating with vendors, creating and drafting VEBA trusts, financial investment guidelines, and board of director bylaws, HIPAA training, and long-term assistance in administration of VEBA plans.
- Devising mechanisms tying employee productivity to the employer's obligation to fund the VEBA at various levels.
- Assisting non-for-profits in maximizing State contract benefits.
All employers have been impacted by the increase costs of retiree benefits, but many employers fail to consider alternatives until they are facing bankruptcy. Stahl Cowen's philosophy is to explore options for employers on a proactive basis—creating a win-win scenario for employers, their employees, and their retirees.
For further information about our services in this area, please contact: