UAW-type VEBAs must file new retiree drug subsidy applications

Faced with the prospect of employers transferring retiree medical liability to union-sponsored voluntary employees' beneficiary association (VEBA) trusts, the Centers for Medicare and Medicaid Services has issued guidance confirming that VEBAs can participate in the Part D retiree drug subsidy (RDS) program but must file their own RDS applications. Even if the transfer occurs in the middle of the employer's plan year, the VEBA will not get credit for any expenses incurred under that prior plan. Retirees must again meet the deductible amounts once the VEBA's RDS application is effective.   (Select News, 14 Nov 2008)

• Full text of CMS guidance on VEBAs and retiree drug subsidy (CMS, 30 Oct 2008)

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