Business Insurance reports that the final authorization was published in the April 2 Federal Register.
Under the plan, Coca-Cola will use assets in a voluntary employees’ beneficiary association (VEBA) to purchase medical stop-loss policies from Prudential Insurance Co. of America to pay claims over the expected lifetimes of roughly 4,000 retirees and dependents. Prudential in turn will use the premium it receives from Coca-Cola to reinsure the risk with Red Re, a South Carolina-domiciled captive insurer and one of three captives owned by Coca-Cola (see Coke Proposes Captive Insurer Deal for Benefits).
According to Business Insurance, Coca-Cola established the VEBA in 2006 and contributed $216 million to the trust.
The medical stop-loss coverage will pay claims that fall between an attachment point and an upper limit. In its application with the DoL, Coca-Cola said the attachment point for all retirees would be $100. For those younger than 65, the upper limit would be $5,800; for retirees 65 and older, the upper limit would be $3,500. Those figures may change slightly when the stop-loss program is put in place.Coca-Cola is still waiting for a private letter ruling from the Internal Revenue involving tax issues related to the transaction, according to the news report.