A Message from Business Manager Chris Erikson
At the General Membership meeting last week, I informed the members of a number of actions necessary to address the needs of both the COBRA Account and the Welfare Fund. The recommendations were unanimously supported and approved by an action taken by the membership.
In 2012, the members took action to defer $0.50 per hour from their Annuity contributions to fund a COBRA Account in order to pay the COBRA cost for unemployed members when their medical coverage ended after 26 weeks of unemployment. Those contributions stopped in January of 2013, and the account was well funded. As time went on and the length of unemployment increased, the account began depleting. The account is currently paying out approximately $265,000 per month in COBRA payments, so there is a need for the account to be replenished.
Currently, the Target Fund, which has been funded by the membership's deferral of $2.00 per hour from their Annuity contributions, is well funded. The Target Fund has been successful in helping to win jobs and will continue going forward. However, in order to address the deficiencies in both the COBRA Account and the Welfare Fund, going forward the $2.00 contribution will be split as follows: $0.50 per hour to the COBRA Account and $1.50 per hour directly to the Welfare Fund.
As I have been reporting since the pandemic began in March 2020, our work opportunities have been seriously impacted. Less employment, less hours, and less contributions, on top of nearly $90 million in unanticipated COVID-related medical and hospitalization expenses above our usual medical spend of about $500 million a year. The drain on our reserves and the markdown of our investments in the last fiscal year require immediate attention in order to provide for the high cost of our medical benefits that we all need. We will also temporarily shift the contributions from the Dental Plan, which is adequately funded, directly into the Welfare Fund as well. The cost sharing will require adjustments in our co-pays as well, as the amounts will change for certain services. The JIB will send out notices, and we anticipate those changes to be effective around October 1, 2023.
We are in this together. The trustees have spent countless hours deciding the best courses of action going forward to protect what we have. Our medical coverage is critical. These actions are necessary until work hours and contributions increase and continue to the point where we have adequate reserves in the Welfare Fund. Thank you for your support and understanding.