A sought-after executive/employees benefit in today's costly healthcare market is VEBA, which stands for Voluntary Employees Beneficiary Association. Through a VEBA Plan, uninsured medical expenses are covered. Assets are accumulated to cover the health related expenses of executives, employees, even retirees and their dependents.

Working through a trust, the plan forwards funds to the trust, determines how those funds are to be applied, and stipulates the operating procedures of the VEBA. As a separate legal entity the trust protects VEBA funds from the claims of employer creditors.

The Trust is authorized to pay only those expenses set out in the plan. Once funds are in the VEBA, they cannot return to the employer. The real advantage for plan sponsors and participants is VEBA's tax-free status. Contributions grow tax-free and remain tax-free when qualified expenses are paid out.