VEBA - a federal tax-free Trust to provide health, dental and vision insurance premium relief for retirees.
LAW VEBA Health Trust
The Law Inc. Board of Directors has established a federal tax-free Trust to provide health, dental and vision insurance premium relief for retirees.
Who can participate?
Since January 1, 2004, any member of LAW, Inc. (or spouse of a member with an affiliate membership) is able to participate in the Trust fund by contributing $10 per month to the Trust. The money put into the Trust will be invested and the earnings will be tax-free. The assets of the Trust will be analyzed every fall and the Trustees will determine the amount to be paid out to anyone who retires in the forthcoming calendar year. The money paid out will also be tax-free.
How is the trust paid out?
The Trust account will have a 10-year vesting period. For the first 24 months of participation, there will be no disbursement to the participant. After 24 months of participation, the participant will be entitled to 20% of the benefit of a fully vested member. This will grow by 10% each year until 10 years of participation in which the participant would be entitled to 100% of the amount designated by the Trustees. Persons who participate will be eligible to receive a benefit for 10 years, provided that they reach the age of eligibility, which is age 55. Any employee who retires at age 55 or after would be entitled to 120 months of benefits (10 years). The amount paid to the retiree as determined by the Trustees would be used to offset health insurance premiums, dental insurance premiums, vision insurance premiums or any combination the retiree designates.
For every 3 months an employee contributes after their initial 10 years, they would be entitled to an additional one month of a benefit. Currently, after 10 years, you are entitled to 120 months of benefits. Under this plan, you would be entitled to accumulate additional months at the ratio of 1 month of benefit equals 3 months of contributions. Under this formula, someone who paid into the plan for 20 years would be entitled to an additional 40 months (3 yrs 4 months) of benefits. Carrying this out further, someone who participated in the plan for 25 years would be entitled to an additional 60 months (5yrs) and 30 years would be entitled to an additional 80 months (6 yrs 8 months).
The additional months earned to be used at the back or front of the base 120 months that is triggered at age 55 or later. In other words, if someone had contributed for 20 years and was entitled to an additional 40 months of benefits, the member could elect to take it at the end of the base allotment of 120 months or take it in the beginning. By taking it in the beginning, a participant can draw from the fund while the employee is still working. For example, if someone contributed for 20 years and was entitled to an additional 40 months, they could start drawing this benefit before their 52nd birthday.
Board of Trustees
The Board of Trustees will have seven persons; three permanent seats and four seats elected by the participating LAW, Inc. full service members. The Trustees shall initially be a 5-member board with three permanent seats from LAW, Inc. The President, Vice-President and Secretary will hold three permanent seats with four additional seats being elected by the Trust participants. The next election will take place this fall for the seventh seat. One Trustee will be elected by the participating members each year for a 4-year term or a partial term if a Trustee resigns. The Trustees will determine the investment, principles and disbursements of the Trust. To be eligible to run for one of the four Trustee positions, the candidate must be a participating member of a full service local represented by LAW, Inc. at the time of the election and while serving as a Trustee.
Who pays to get the trust started?
LAW, Inc. will pay the initial attorney’s fees to set up the VEBA account and will bear the full cost. Thereafter, once the account is set up and running, any expenses will be deducted from the Trust. Additionally, the LAW, Inc. staff will assume the paperwork, which will be a big cost savings to the Trust in the initial years.
Now is the time to join!
We have received a great deal of interest from the membership and we hope that many of you who showed an interest will come forward to participate so we can collectively put together our money for the betterment of our membership and help provide relief for health, dental and vision insurance for those members who will be retiring in the future. LAW, Inc. is continually accepting members in the trust account. By contributing $10.00 per month for 10 years, you will receive a return of approximately 650% of your investment at today’s projection for your investment of $1,200. As the fund grows, so does your payout. Participants draw from the fund tax-free to help pay for premiums when they are eligible. Members of LAW can take advantage of this wonderful benefit by filling out a simple application. Sign up your spouse as an affiliate member for $2/month and get the same benefits X2.
What if I am no longer represented by LAW?
Once a member is a participant of the Trust, they will be allowed to stay in the Trust even if they are no longer represented by LAW, Inc. in a participating full service local, provided they maintain an affiliate membership and make their $10.00 monthly payment (total of $12.00). An affiliate membership currently is $2 per person per month and is not considered an association membership.
What if the participant dies before the participant retires?
If the participant has participated in the Trust for 24 months or more, the participant’s spouse may continue to make payments as an affiliate member and will be entitled to the benefit on the date that the deceased participant would have been eligible to receive the benefit from the Trust, (i.e., the deceased participant’s 55th birthday). The remaining benefit to fulfill the 120 months will be available to be used by the surviving spouse. You may designate a beneficiary on the VEBA application.