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Retirement Health Savings Plan


Guest hnbc
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Does anyone know of a plan design whereby a governmental employee can take the value of unused vacation and sick pay to pay for their health insurance premiums? Can this be done on a pre-tax basis. Thanks -

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A plan design is possible in which, pursuant to a uniform policy or collective bargaining agreement, an employer cashes out unused vacation and sick pay into a VEBA trust to pay for their health insurance premiums. This approach saves FICA and Medicare taxes for both employer and employee, and permits the employee to save income taxes. Under such an arrangement, medical reimbursements are limited to 213(d) medical expenses.

We have been involved in setting up several of these arrangements, and I am familiar with several competitors doing the same or very similar things. Contact me off board if you would like details.

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