Guest Jay Walters Posted October 8, 1999 Report Share Posted October 8, 1999 Employer sponsors self-funded health plan with employer and employee contributions to a VEBA. Employer wants to use VEBA funds to purchase stop loss insurance. I am familiar with the DOL's position that stop loss insurance is not a plan asset if the employer is the beneficiary of the policy and the policy doesn't guarantee payment of plan benefits. Would purchasing a policy with VEBA funds create a prohibited transaction or an anti-inurement problem? Link to comment Share on other sites More sharing options...
IRC401 Posted October 9, 1999 Report Share Posted October 9, 1999 If VEBA funds are used to purchase a policy, the VEBA should own the policy. Why not get stop loss insurance to limit the VEBA's liability? Link to comment Share on other sites More sharing options...
Guest John Koresko Posted October 16, 1999 Report Share Posted October 16, 1999 The reason one usually employs a VEBA is to shift the ultimate liability for the benefits off the employer and onto the trust. It is a prohibited transaction issue if the stop loss insurance is paid from VEBA assets for the benefit of the employer. However, as reflected in IRC401's comment, it is perfectly reasonable and normal for the VEBA to buy stop-loss to insure its own liability for employee claims. Link to comment Share on other sites More sharing options...
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