Voluntary Employees Beneficiary Association (VEBA)

Last updated: May 24, 2018

What Does Voluntary Employees Beneficiary Association (VEBA) Mean?

A voluntary employees' beneficiary association (VEBA) is a trust fund formed by an employer or by a group of employees that provides various benefits, such as health, accident, life, and more to employees, their dependents, their beneficiaries, or former employees who are disabled, laid-off, or retired. In this way, it resembles various insurance products. For a VEBA to be legitimate, it must only consist of members of the same labor union or company.


Insuranceopedia Explains Voluntary Employees Beneficiary Association (VEBA)

Contributions made by employers to a VEBA are usually tax-deductible, which provides them with an incentive to contribute. Moreover, the Internal Revenue Service code authorizes it as a tax-exempt account as long as it is only used to pay out benefits.

VEBAs often form because employees at a company are seeking ways to expand the benefits they can receive through their jobs. These beneficiary associations provide a structure for such benefits to be created. However, an individual can only receive the benefits while they are part of the company or the labor union.


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