In an effort to mitigate the negative financial effect of otherwise unfunded retiree medical obligations, many employers are turning to an old, somewhat familiar, tax-advantaged funding mechanism to pre-fund retiree medical obligations – the voluntary employee beneficiary association (or VEBA) trust. Although some of the tax...
Background on Retiree Medical Benefit Funding
The Employee Income Retirement Security Act (“ERISA”), the federal law that governs employer funding for qualified retirement plans such as 401(k)s, does not require employers to pre-fund retiree medical plans; moreover, certain tax advantages that were previously available for pre-funding such plans are no longer as beneficial for most employers. Consequently, many employers fund retiree medical plans on a pay-as-you-go (“PAYGO”) basis. Where benefits are provided on an unfunded, PAYGO basis, the balance sheet recognition of retiree medical costs, as is now required by FASB and GASB, can have a potentially severe negative impact on financial statements.
The National Association of Health Underwriters (NAHU) is hosting their 2013 Annual Convention and Exhibition June 23-26 at the Hyatt Regency in Atlanta, Ga. and will feature speakers such as Congressman Tom Price and former White House press secretary Dana Perino.
Small and mid-size employers, in particular, often use the services of a broker to get them the lowest rates on group health care.
As the implications of health care reform become more and more apparent, large employers are increasingly grappling with coverage options in order to avoid the penalties.
The majority of recent conversation related to the legislation (i.e. PPACA, aka health care reform) that was confirmed as law last summer has related to the concept of “Play or Pay” with employers.
Requests for permissions to reuse content contact Copyright Clearance Center at firstname.lastname@example.org