Segal Company

Retiree Health and VEBAs

Providing health benefits for retirees presents employers with many challenges. Sibson Consulting can help you find solutions that work for both your organization and retirees.

Sibson works with a variety of public sector employers that offer Medicare and non-Medicare retiree coverage, including prescription drug, dental, vision, and life insurance benefits. Services we provide include:

  • Evaluating alternatives such as retiree self-pay policies, pre-funding retiree health benefits, health reimbursement accounts (HRAs) and other cost-saving measures
  • Implementing a Medicare Advantage Fee-For-Service Arrangement or a Private Fee-For-Service alternative
  • Performing a Medicare Part "D" actuarial attestation and review for creditable coverage
  • Negotiating with carriers regarding the rates and contractual arrangements for all offerings
  • Creating a retiree health strategic plan
  • Designing a plan for retiree prescription drug coverage
  • Assessing your plan's Retiree Drug Subsidy (RDS) savings to see whether the subsidy income meets expectations
  • Evaluating replacing RDS and self-funded prescription drug coverage with a Medicare Part D Prescription Drug Plan (PDP)
  • Preparing applications and assisting with administration of Employer Group Direct-Contract prescription drug plans
  • Conducting FAS106 Valuations Results and Financial Experience and Budget Projections (FEPBs)

Retiree Health VEBAs

A voluntary employees' beneficiary association (VEBA) is one option for organizations that are looking for a new way to handle the rising costs and obligations of retiree health benefits, especially when these benefits are collectively bargained or the company is in bankruptcy.

What is a VEBA?

A VEBA is a trust that is established to provide tax-free retiree health benefits to current and/or future retirees. Characteristics of a VEBA include:

  • Assets are held in trust to provide qualifying health benefits (i.e., medical, dental, prescription drugs, health insurance premiums, Medicare supplemental premiums), and cannot be reverted to the employer or used for any other purpose
  • Run by a board of trustees, who determine the policies of the trust and manage the investment of funds
  • Can be defined-benefit and/or defined-contribution type plans
  • Contributions to the trust can come from an employer, a debtor or successor company, or after-tax retiree contributions
  • Allow tax-exempt investment earnings on plan assets
  • Funding limitations do not apply if the trust meets collective bargaining standards

How can Sibson help?

Sibson Consulting has experience with over 25 retiree health VEBA clients - some of which have been around for more than 25 years. This significant, in-depth experience in the creation, design, implementation, communication and administration of VEBAs is unparalleled. Our consultants are available to assist you and your attorneys in addressing the following aspects of a VEBA:

  • Establishing plan administration
  • Determining plan design
  • Determining funding options
  • Developing policies and procedures
  • Selecting, retaining and managing service providers
  • Investment consulting (provided by Segal Advisors, Inc., our SEC-registered investment consulting affiliate)
  • Preparing documentation and participant communications
  • Preparing filings and disclosures
  • Obtaining fiduciary liability insurance

Contact us today if you are considering a VEBA to maintain benefits for your participants.

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