Presented by:

Vimal pandey

Shailendra pratap Aditya Prakash

. sick leave pay. Among the types of benefits with a VEBA may provide are accident insurance insurance benefits.What does mean VEBA? A voluntary employees' beneficiary association (VEBA) is a form of trust fund permitted under Federal law whose sole purpose must be to provide employee benefits. childcare costs. and vacation pay. . training benefits. severance pay. employee continuing education.

any medical expense that is permitted to be taken under the terms of section 213 of the Internal Revenue Code. or reimburse employees for. including: Medical Insurance Dental Insurance Vision Insurance Health Insurance • Health Maintenance Organizations (HMOs) • Preferred Provider Organizations (PPOs) Long Term Care (Tax Qualified Medicare Supplement Insurance Plan Deductibles and Co-Pays .WHAT BENEFITS MAY BE PAID FROM THE VEBA? A. This encompasses a very wide range of expenses. The VEBA may either pay directly.

127.B . Amounts received under accident and health plans Sec. Educational assistance programs . Improvements by lessee on lessor's property Sec. Compensation for injuries or sickness Sec. mass transportation assistance and mass purchasing power. Certain death benefits Sec. 104. Contributions by employer to accident and health plans Sec. 109. Qualified scholarships Sec. legal services. Income from discharge of indebtedness Sec. 106. 101. Many other benefits may be provided by a VEBA. investment advisory services. Many of these programs may be provided on a tax exempt or partially tax exempt basis through the VEBA. ranging from child care. 105. housing allowance plans. 117. The following list from the IRS is typically available to VEBA’s:  PART III – ITEMS SPECIFICALLY EXCLUDED FROM GROSS INCOME         􀂉 􀂉 􀂉 􀂉 􀂉 􀂉 􀂉 􀂉 Sec. 108. auto lease assistance.

• Secondary objective is the provision for “crossover” benefit funding within the VEBA. tax effective vehicle to accumulate assets to pay the health and many other eligible expenses of its members and their dependents. such as child care. wherein VEBA assets may be used to fund different benefits.Objective of VEBA • The VEBA may provide a particularly flexible. subsidized housing etc. . Many of the other expenses may be provided. transportation assistance. tuition assistance.

with responsibility for overall coordination of the implementation and administration of the VEBA and will oversee the operations of the VEBA in order to maintain Federal and State Compliance II. The VEBA must meet strict requirements of the Internal Revenue Code and be a separate legal entity. Service Providers – In addition to a trustee. Public Agency Retirement Planning. will act as Trust Administrator. A 501(a) trust. will be established with a bank as trustee. Inc. . several outside providers are needed to provide services to the VEBA. Separate Legal Entity – The law requires that a VEBA must establish a plan and trust set up by one or more employers for the purpose of providing health and welfare benefits to their employees. which is a separate legal entity..HOW WILL THE VEBA BE STRUCTURED? I.

This is a crucial responsibility of the Plan Administrator. Plan Flexibility – Because health care is such a dynamic area the VEBA will be modified to meet changing needs of the Agency.e. the requirements of labor negotiations and the other factors that impact health and other benefits..III. IV. . and depositing money into the trust. Agency Participation – An agency will participate in the VEBA by adopting a plan document specifying the provisions of its program i. governmental regulation. specifying reimbursable benefits.

$10.565 ($10.565 in taxes.65%) Net Cash-Out $ 6.435 Gross Cash-Out $10. 1.000 (50 days at $200 / day) Less Taxes 3.000 X 35.0 – VEBA Contrib. a retiree with accumulated leave or vacation time at retirement of $10.000 The VEBA saved $3.WHAT ARE THE TAX ADVANTAGES OF A VEBA WHEN USED TO PAY POST RETIREMENT HEALTH EXPENSES?  There is a three-fold tax advantage. Pre-Tax Contributions For example.000 Less Taxes . .000 could enjoy the following savings: If the leave were paid currently: Gross Cash-Out $10.

.000 will then earn tax free interest during the time it is invested in the VEBA prior to payment.2. and is then used at retirement to increase the fund available for retiree payments.5% of adjusted income before they become deductible. Tax Free Payment – Consider the situation when the VEBA account is used to pay benefits. Tax Free Growth – This $10. Health expenses are generally not deductible since they must exceed a threshold of 7. To retirees this means they must first receive their pension payments and pay tax on the entire amount before they pay medical premiums and expenses. 3.

Thank You .

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