@BobKamman said:

How can you say "this has anything to do with the employer" but still think it is subject to Medicare (employment) taxes?

Just to be clear, I said "I don't think this has anything to do with the employer" in the context of the employer not causing/creating/being responsible for an error by the VEBA.  So the reason I believe Medicare tax is part of this discussion is:

a.  Did the foul up have anything to do with the employer? NO.

b.  If the VEBA never existed in the first place, would the wages have been subjected to the employee share of Medicare? YES.

The employer is not my client so I don't care about their share.