The Turbulent History of the Nation’s Largest Voluntary Employees’ Beneficiary Association

Abstract

The Detroit automakers’ Retiree Medical Benefits Trust is the nation’s largest Voluntary Employees’ Beneficiary Association (VEBA). It is an independent trust with assets of $60 billion that is responsible for providing medical, prescription drug, dental and vision benefits to 720,000 hourly retirees, surviving spouses and dependents of General Motors, Ford and Fiat Chrysler. It was established in 2007 through the joint efforts of the Big Three Detroit automakers and the United Automobile Workers Union primarily to protect the health care benefits of hourly retirees and to provide the companies with financial relief from the burdens of legacy costs that eventually contributed to their bankruptcies. Although it is now viewed as a success, there were times in its history when its inception and future were seriously in doubt. A review of its history will inform HR professionals of the problems and solutions they may encounter in establishing a VEBA.