Plan Design Analysis
An Example of the Rael & Letson Approach
The Board of Trustees knew that their plan was in relatively good condition but have become aware of the spiraling cost of health and welfare benefits. In order to maintain the long term health of the fund, the Trustees wanted to know what changes should be made to the benefit design and the costs of any benefit changes.
Rael & Letson prepared a detailed analysis of the current benefits, reviewed the eligibility rules and collective bargaining agreement provisions, developed a census of the membership and their enrollment patterns, and examined the insurance vehicles and provisions. Next it was determined how the current benefits compared to benefits available in similar industries.
The final results showed that although the plan provided good coverage, there were better alternatives for delivery of benefits and the plan was unlikely to be able to maintain the levels of coverage over the long-term. The Board was able to have a focused discussion to establish priorities; for example, the retention of skilled employees, desire for new members, etc. Based upon the analysis of the benefits and costs as they compared to similar industries, along with the likelihood of future contributions resulting from collective bargaining and future work, the Board acted to proceed with submission of some of the benefits to competitive bid and consideration of changes in the rules for eligibility. In preparing the requests for proposals, vendor requirements were added that would be beneficial to the plan.