Biotechnology Healthcare - November/December 2008 - (Page 17) fessor of Public, Private, and NonProfit Partnerships at the University of Baltimore. Internal Revenue Code section 501(c)(9) enables an employer or union to make contributions into a VEBA — a tax-exempt trust account on behalf of covered workers or retirees. Dollars in a VEBA grow tax-free and the earnings are not taxed when used to pay for eligible out-of-pocket healthcare expenditures and insurance premiums.1 A 1 See «www.irs.gov/charities/nonprofits/ article/0,,id=154610,00.html». VEBA is an individual trust that replaces the employer as a guarantor of healthcare coverage. As such, it is not a health benefit plan, but rather a funding vehicle to pay for one’s healthcare costs. VEBAs were first codified by the IRS in 1928. In 1976, 6,000 VEBAs were in existence. That number increased steadily until 1993, when it reached 15,000. After 1993, the number decreased because of changes in the tax code, bottoming out at 12,000 two years ago. Now, their number is on the rise again, SEE IF YOU CAN DO BETTER Because biologics are “less intuitive” than traditional pharmaceutical products, union managers will be less familiar than employers about how to make coverage decisions about them, says Alan Lyles, ScD, MPH, PhD, at the University of Baltimore. thanks to more favorable tax laws, union interest in gaining control of healthcare benefits, and corporate understanding that relieving themselves of large liabilities makes a stock more attractive to investors. Currently, VEBAs are in existence in a number of industries, primarily steel, telecommunications, utilities, and automobile manufacturers and their suppliers. These VEBAs are administered by companies in those industries, or in some cases, by the unions that represent workers. VEBAs have attracted a significant amount of attention of late, thanks to the labor negotiations between the United Auto Workers (UAW) and the big three American automakers. ROB CRANDALL NOVEMBER/DECEMBER 2008 · BIOTECHNOLOGY HEALTHCARE 17 http://www.irs.gov/charities/nonprofits/article/0,,id=154610,00.html http://www.irs.gov/charities/nonprofits/article/0,,id=154610,00.html
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