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Grantor Trust Treated Like a VEBA Trust for Tax Purposes

401 Chaos

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That is a relatively short list and there are some who seemed to have filed "just in case", "not sure but better safe than sorry" or some other similar purpose, thereby greatly inflating the number. Also a large number seem inactive or never used.

You still did not say which states have or are filing for waivers as you claimed.

Why does a VEBA provide "pooling", facilitate " creative funding" and "creative plan design" any more than a taxable welfare benefit trust or anything else?

George D. Burns

Cost Reduction Strategies

Burns and Associates, Inc

www.costreductionstrategies.com(under construction)

www.employeebenefitsstrategies.com(under construction)

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Correct about the relative small numbers.

As I mentioned, to my knowledge, the vast majority of failed MEWAs were non licensed, non registered entities.

I believe there is an even larger number which would arise, as registered, licensed, entities, if the requirements were not as stringent as a full-blown commercial insurer, such as a United Health Group.

The ERISA exemption I am referring to is the exemption provided in 1983, when states were given fairly exclusive rights to regulate MEWAs.

They are now asking for a similar exclusion in order to offer more creative, innovative plans.

States had that opportunity back in 1983.

How did they fare?

Well, take, for instance, California.

Back in 1995, they banned all future self-funded MEWAs from forming.

A VEBA has the opportunity to be be creative and innovative, for it is a non commercial insurer.

There are distinct differences between non commercial and commercial insurers.

One of those differences is for a non commercial insurer to offer innovative plans.

If the non commercial insurer fails to do so, and, if it starts to resemble commercial insurers, its tax exempt status could be in jeopardy (Blue Cross Blue Shield, for example).

Don Levit

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