Converting unused vacation days to retiree medical benefits: a proposed partial solution to an emerging national...

Costs for retiree medical benefits are spiraling upward. One way to help fund this area of compensation, with little or no additional financial burden to either employers or employees, could be using an employee benefit plan whereby each year's unused vacation days and sick days are transferred into an employee's tax-free account in a voluntary employee benefit association (VEBA) trust. On retirement, the account is used to purchase a (pre-Medicare) retiree medical plan, prescription drug benefit, a Medicare supplemental policy and/or simply make Medicare premium payments.