VEBA deduction
12-16-2006, 03:21 PM
#1
Gets Weekends Off
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Joined APC: Aug 2006
Position: Michael Vick's favorite animal
Posts: 267
VEBA deduction
I noticed the VEBA deduction on our last paycheck. I read the contract, but quite frankly, I don't understand this deduction very well.
Anybody out there that can "dumb it down" please do.
Anybody out there that can "dumb it down" please do.
12-16-2006, 03:55 PM
#3
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Joined APC: Jul 2006
Position: 767 Cap
Posts: 1,306
Originally Posted by JB130
I too have a VEBA deduction and I have no idea what it is. I also noticed I had no Social Security deduction either. Something is foul in Denmark.
Anybody have any ideas?
Anybody have any ideas?
12-16-2006, 04:12 PM
#5
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Joined APC: Nov 2006
Position: Window Seat
Posts: 101
No, I did not sign up for the Healthcare Savings Account (HSA). A quick Google search of "VEBA" shows, among a myriad of other things, that it could be the HSA....but not having signed up for it, I don't know why money would be deducted for it.
fdx727pilot, thanks for the FICA info. Unfortunately I have never hit the ceiling before this year.
fdx727pilot, thanks for the FICA info. Unfortunately I have never hit the ceiling before this year.
12-16-2006, 04:45 PM
#6
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Joined APC: Aug 2006
Posts: 1,433
"What is a VEBA?
Voluntary Employees' Beneficiary Associations (or VEBAs for short) are used by employers to provide health, life, disability, education and other benefits for their employees. They are part of the general tax law called welfare benefit plans. They also provide IRS-approved tax-planning and major tax-saving opportunities, and they can give you some of the best asset protection and tax sheltering legally available."
It's all in Section 27 of the new TA. It has to be established prior to 1 Jan per the agreement.
"With respect to pilots who retire on or after January 1, 2008 and their eligible dependents, the Retiree Group Health Plan shall provide solely for coverage for the retiring pilot and/or his eligible dependents for the period prior to their attaining Medicare eligibility age. The Association shall establish, sponsor and maintain a Post-Medicare Retiree Health Plan ("Post-Medicare Plan") and Voluntary Employees' Beneficiary Association (“VEBA”), to be effective January 1, 2008. Pilots retiring prior to January 1, 2008 who have attained Medicare eligibility age may, if eligible, elect coverage under the Post-Medicare Plan described in this Section 27.I., below. The Post-Medicare Plan and VEBA are collectively bargained for purposes of Internal Revenue Code Sections 419 and 419A.
3. The Company will make a lump sum contribution to the VEBA of $3.2 million, payable no later than November 30, 2006, with an additional $40 million contribution to be made to the VEBA no later than June 1, 2007.
As soon as practicable after October 30, 2006, but not later than January 1, 2007, the Company will contribute to the VEBA 50 cents of each paid credit hour for each pilot having a seniority list number (which would otherwise be paid to the pilot in cash) as the pilot's ongoing monthly contribution to the Post-Medicare Plan/VEBA. The Company shall remit such contributions to the VEBA no later than the 15th day of the calendar month following the calendar month during which the credit hours were actually paid. On the effective date of the Company’s contribution of 50 cents per paid credit hour, the hourly pay rates agreed upon for pilots will be established as book rates. Actual pay rates will be 50 cents less per hour. All retirement and welfare benefits based on pay will be based on pay determined under the book rates. The purpose of this provision is to allow the ongoing monthly VEBA contributions of 50 cents per paid credit hour to be funded out of compensation that would otherwise be paid directly to pilots in cash. Lump sum and monthly contributions will be placed in an interest-bearing escrow account until the VEBA is established."
Voluntary Employees' Beneficiary Associations (or VEBAs for short) are used by employers to provide health, life, disability, education and other benefits for their employees. They are part of the general tax law called welfare benefit plans. They also provide IRS-approved tax-planning and major tax-saving opportunities, and they can give you some of the best asset protection and tax sheltering legally available."
It's all in Section 27 of the new TA. It has to be established prior to 1 Jan per the agreement.
"With respect to pilots who retire on or after January 1, 2008 and their eligible dependents, the Retiree Group Health Plan shall provide solely for coverage for the retiring pilot and/or his eligible dependents for the period prior to their attaining Medicare eligibility age. The Association shall establish, sponsor and maintain a Post-Medicare Retiree Health Plan ("Post-Medicare Plan") and Voluntary Employees' Beneficiary Association (“VEBA”), to be effective January 1, 2008. Pilots retiring prior to January 1, 2008 who have attained Medicare eligibility age may, if eligible, elect coverage under the Post-Medicare Plan described in this Section 27.I., below. The Post-Medicare Plan and VEBA are collectively bargained for purposes of Internal Revenue Code Sections 419 and 419A.
3. The Company will make a lump sum contribution to the VEBA of $3.2 million, payable no later than November 30, 2006, with an additional $40 million contribution to be made to the VEBA no later than June 1, 2007.
As soon as practicable after October 30, 2006, but not later than January 1, 2007, the Company will contribute to the VEBA 50 cents of each paid credit hour for each pilot having a seniority list number (which would otherwise be paid to the pilot in cash) as the pilot's ongoing monthly contribution to the Post-Medicare Plan/VEBA. The Company shall remit such contributions to the VEBA no later than the 15th day of the calendar month following the calendar month during which the credit hours were actually paid. On the effective date of the Company’s contribution of 50 cents per paid credit hour, the hourly pay rates agreed upon for pilots will be established as book rates. Actual pay rates will be 50 cents less per hour. All retirement and welfare benefits based on pay will be based on pay determined under the book rates. The purpose of this provision is to allow the ongoing monthly VEBA contributions of 50 cents per paid credit hour to be funded out of compensation that would otherwise be paid directly to pilots in cash. Lump sum and monthly contributions will be placed in an interest-bearing escrow account until the VEBA is established."
12-16-2006, 06:35 PM
#8
Organizational Learning
Joined APC: Nov 2005
Position: Directly behind the combiner
Posts: 4,948
Originally Posted by A300_Driver
Looks like Tony has some serious competition!!!
The Health Care Spending Account should start in January, if you signed up for it. I would think it would be the rare family that would not spend $250 in a year on deductibles, copays, contacts, contact solution, glasses, dentists, aspirin, bandaids, ... all that stuff qualifies.
.
12-17-2006, 07:32 AM
#10
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Joined APC: Jul 2006
Position: A300 Captain
Posts: 257
I looked at the VEBA and even signed up then cancelled it after flying with a pretty knowledgeable individual. The shortcomings I saw were that you could use what was int there, but that is a defined amount per month; so, what if your big expenses are in the beginning of the year and not much in the account yet? When the account does fill up you may not have a big medical expense and lose the amount at the end of the year. Weigh that against the tax savings which is in the 20 to 30 percent range of whatever you have in the VEBA and I wasn't willing to risk losing whatever was left versus the tax savings I may have saved.
I know everyones decision is personal, but for me it didn't make sense. If I had known monthly medical expenses it would have been a good decision for us.
I know everyones decision is personal, but for me it didn't make sense. If I had known monthly medical expenses it would have been a good decision for us.
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