You’ll wonder where the money went when you lose your Medical Benefit!
The MEBA Medical and Benefits Plan has been experiencing a roller coaster ride of changes centered around the continued depletion of Plan reserves and it’s need for a better balance between contributions and expenses.
Spin the numbers from the 5500 Forms filed with ERISA, for the Medical Plan, from the years 2000 through 2004 around in a hat and you can come up with some interesting statistics, and comparisons.
2000 contributions from employers and retirees: $22.29 million.
2000 direct payments to participants and dependents: $23.18 million.
2001 contributions from employers and retirees: $22.74 million.
2001 direct payments to participants and dependents: $22.95 million.
2002 contributions from employers and retirees: $25.33 million.
2002 direct payments to participants and dependents: $24.36 million.
2003 contributions from employers and retirees: $34.03 million.
2003 direct payments to participants and dependents: $27.45 million.
2004 contributions from employers and retirees: $31.49 million.
2004 direct payments to participants and dependents: $27.43 million.
So the ascertaitions by the Davis Group those contributions from current contracts and retirees will keep up with expenses, and keep the Plan was on sound financial footing, was on the surface not totally misleading. However, these figures do not reflect payments to other insurance providers which seems to average $2.5 million per year, administrative costs which average $3.5 million per year, and losses and gains in the stock, bond, and cash funds which have been averaging a $3.35 million loss per year. So over and above the contributions/benefit equation is the loss of $9.35 million a year in the other components of the Medical Plan.
Nor does it reflect or fully explain the transfer of $7.5 million from the Re-allocatable Fund to cover expenses generated by the November 2003 Medical Plan Modification to cover surviving spouses. There is, however, $6.68 million amount that first appears for an end of the year asset value for 2003 under Schedule H, Financial Information, Line c9, “Value in interest in common/collective trusts.” Was this money, or assets of $14.18 million transferred to inflate the value of the Medical Plan prior to an election year (2004)at a time when it was actually experiencing large losses due to financial investment ineptitude and high Administrative Costs. The value of this asset at the end of 2004 was $5.60 million.
In reference to Administrative Cost let us look at Schedule C on the 5500 form which is “Service Provider Information”. This is payments to individuals who have provided services to the Medical and Benefits Plan and come under the heading of Administrative Costs in Expenses Line j5. The Plan is only required to list the top 40 individuals that provided services and the payments made to them. This top 40 list includes every one from the Plans Legal Counsel, to Port Representatives all the way down to the guy who sweeps up at night.
For the year 2003 some of these payments were:
Vacation Plan Manager: $55,123
Pension Manager: $63,828
Human Resources Manager: $60,474
Lawyers and Legal Aid: $652,899
Plan Administrator: $158,181
Aon Consulting: $92,643
Outport Rep-Jacksonville $42,883
These figures begs the question of why are these salaries (Vacation Plan Manager, Pension Manager etc.) being charged to the Medical Plan. While calculating out the Top 40 list for the year 2003 I was able to account for $450 thousand in payments that actually went to someone who dealt primarily with the Medical Plan.
As I mentioned earlier you’ll wonder where the money went when you lose your medical benefit!
posted by wff @ 1:32 PM
3 comments
3 Comments:
FACT OR FICTION OR IT'S TIME FOR RE-ELECTION
During the election period in 2004 MEBA Union Officials were characterizing the Union operated Medical Plan as being in good condition.
From an A Team2 flyer:
“Every good MEBA marine officer knows numbers matter.
When running a maritime union these are the numbers that mean something.
New Ships 2002-2004 plus 27.
More ships, more work, more jobs on the open board that in years.
Under the MEBATEAM II leadership we’ve successfully secured more ships and more jobs than any administration in the last 20 years.
On top of that, these gains also mean that we can ensure retiree medical benefits well into the future.”
From another Team2 flyer:
“Benefit Plans & Funds
The MEBA Medical Plan is in sound financial shape. It is the healthiest medical plan in the maritime industry. It has more that $40 Million in reserves to pay for medical claims. Contribution into the Medical Plan for 2003 were in excess of $34 Million. Bottom line is that the Medical Plan is bringing in more money than it pays out, and this will only continue because we have negotiated excellent contribution rates into every contract over the past three years”
From yet another Team2 Flyer:
“Keeping 70 years of MEBA experience working for You - Fighting for jobs. Keeping your health plan sound ………..
We’ve put that experience to work for you and your family over the last three years with results that mean concrete gains for you and your family:
Medical Benefits ensured well into the future”
From the July 23, 2004 MEBATeam2 letter signed by Davis:
“You said keep our benefits stabilized. At a time when many other families are concerned over the status of their health care plans and loss of benefits, we worked hard at ensuring the financial health of our MEBA Medical Plan, not only making it more secure but even improving our medical benefits.”
And:
“The MEBA Medical Plan is the healthiest plan in the maritime industry. It has more than $40 Million dollars in reserves to pay for medical claims. Contributions into the medical plan for 2003 were in excess of 34 million dollars. The benefit payments and administrative expenses were $32.7 million dollars. Thus, the medical plan brought in more money than it paid out.”
The Union’s Legal Representative William Doyle posted this last statement on the Official MEBA Members Internet Bulletin Board, on August 8 2004. In his position, he is privy to information ordinary Members do not get to see. Doyle makes this obvious by continuing:
“The retiree medical liabilities are reported by MEBA on its financial statements as required by SOP 92-6. These figures incorporate future benefit payments for current retirees and current actives (when they retire). The timeframe for the payments extend from the current day and look forward for up to 70 years.”
From yesterday's St. Petersburg Times.
http://www.sptimes.com/2006/03/28/Opinion/Bad_reform.shtml
Looking at the 2004 5500 report for the MEBA Pension Plan please note that according to the figures on the report the Plan is funded at 140%, or 40% over funded.
Seems to me that this plan should be paying the retirees medical benefits. Simply make the change that, once retired, medical coverage is a component of the pension benefit. It might also have the additional advantage of protecting some of that over funding from exposure to law suits.
Rgds,
Bill Vaughan
Bill
This idea has been proposed to the Trustees when they went from 3% to 6% retirees contribution back in 2003 and was brought up again during this last change in retiree contributions. They did not deem it reasonable. To maintain a certain status with Pension Plans a certain % overfunding is required by Federal Law. (ERISA)
If that is not maintained then the Trustees are required to make changes to insure the overfunding status. Many Pension Plans are now underfunded and benefits frozen
or just plain cancelled in order to bring their funding status up to where it should be.
The reason the Pension Fund is enjoying an overfunding status is the value of the Real Estate and non liquid assets owned by the Plan. The Headquarters Office in Washington D.C. is owned by the Pension Plan (re-appraised within the last couple years).
Post a Comment
<< Home