Guest ebyers Posted August 21, 2001 Report Share Posted August 21, 2001 I am looking at using a VEBA to base health benefits out of for an association. The people I am working with indicate that there is no tail end exposure for claims run off since there is an insurance carrier that is insuring the back end. I am simply concerned that there may be some liability for us since this is effectively a self funded plan. However, as I understand it, I shouldn't be concerned due to the insurance company on the back end. Any thoughts on this? Thanks Link to comment Share on other sites More sharing options...
Guest John Koresko Posted August 26, 2001 Report Share Posted August 26, 2001 One of the reasons people use VEBA trusts is that the liability is shifted from the employer to the plan. Of course, the plan has to be drafted in this way, so it is important to confirm that all rights attach against the VEBA and not the employer. This is a common issue in FASB 106 situations. A single employer plan is not remarkable in this regard. In fact, that characteristic gives the employer some interesting options. For example, the prevailing view in the U.S. is that there is no vesting in welfare benefits. Thus, they may be removed so long as the event triggering payment has not occured. The Unisys line of cases, Diebler in the Third Circuit, and others highlight this interesting feature. I wouldn't be worried about back side liability so long as the plan has been drafted and operated correctly. Link to comment Share on other sites More sharing options...
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