Why a Benefit Fund Should be Established

The benefits of a Fund are many. Below are the reasons the union, the trustees, the Fund and the employer will find it beneficial to have a union set up and operate a Benefit Fund.

THE UNION:

• Determines the benefits best for its members
• Has access to more benefits information for its members
• Knows the real costs involved in the benefits
• Can share office space and expenses with the Fund
• Receives credit and visibility for bringing benefits to its members
  

THE TRUSTEES:

• Are appointed by union leadership
• Choose the fringe benefits and control the fringe benefit moneys
• Have the power to alter benefits at any time
• Provide a program of benefits tailored to the needs of members
• Serve as advocates for the members in disputes with insurance providers
  

THE BENEFIT FUND:

• Negotiates plan benefits and premiums with insurance providers
• Invests money received to earn interest
• May include employees other than unit members
• “Personalizes” the benefits to become union benefits, rather than employer benefits
• Has the ability to self-fund benefits, which eliminates the middleman resulting in lower expenses and expanded benefits to members
• May obtain discounts from providers and form its own “Preferred Provider Organization”
• May be used to offset employee contributions to health insurance premiums or replace diminished health insurance benefits
• Receives all contingency arrangements from the insurance company

THE EMPLOYER:

• Involvement in administering benefits is alleviated
• Fund relieves employer’s clerical personnel from claims processing and/or customer service
• Fund works cooperatively with the employer’s business office in COBRA tracking
• Can monitor the Fund by requesting a copy of the Fund’s annual audit.
• The employer has no administrative costs
• Administrators and other small groups of employees can be included in Fund
• Employer is better able to budget for benefit costs, having a negotiated fixed expense
• Fund may provide greater benefits for the same benefit dollar spent by employer
• Moneys contributed to a Fund are cheaper dollars than moneys paid as salary
• Enhanced benefit packages improve employee morale and retain high quality staff
• Enhanced benefit packages attract better qualified employees
• Funds provide alternate means of providing moneys to participants rather than the more visible salary schedule