Maximum VEBA funding.

• Author: Bulmer, Mark D.
• Position: Voluntary employees' beneficiary association - Brief Article

Many employers with self-insured medical plans formed voluntary employees' beneficiary associations (VEBAs) to accelerate their income tax deductions for medical expenses incurred but not reported (and thus not paid) at year-end. This approach saved substantial taxes for many of these employers in the initial years of funding the plans. Unfortunately, some of them overlook the ongoing benefits of maximum year-end VEBA funding by simply making "standard" monthly accruals for the next month's expected medical expenses. This standard accrual may work well for the first 11 months of the tax year, but the final month should be examined closely, since it may be possible to "prefund" more than just the next'...