Examining Form 5500 data submitted by 1,436 multiemployer health plans, the median benefit costs for the plans increased over 2% from 2021 to 2022, reaching $13,121 per participant per year (PPPY), according to The Multiemployer Health Plan Landscape: A 15-Year Look (2008-2022), recently released by the International Foundation of Employee Benefit Plans. Benefit cost levels are influenced by various factors, including the types of benefits offered (medical, prescription drug, dental, vision, etc.) and the design of those benefits, as well as the demographics of the population utilizing the benefits (average family size, morbidity, age, gender, etc.).
Health Plan Benefits
For the plan year 2022, 80% of multiemployer health plans offered dental and vision benefits in addition to health benefits; 62% of plans also included life insurance benefits. Only 3% of plans offered only medical/prescription drug (only health) benefits. The highest prevalence of dental coverage (94%) was found in the service industry, and the highest prevalence of vision coverage (89%) was found in the transportation industry.
Retiree Coverage
The percentage of plans covering retirees varies by industry and region. In general, the larger the number of active participants in a health plan, the more likely the plan is to also cover retirees. The percentage of multiemployer health plans covering retirees in the 2022 plan year was 74%. Most construction industry plans (81%) covered retirees, while just over half of service industry plans (55%) covered retirees. When comparing regions, plans covering retirees are most common in the Midwest (80%) and least common in the South (64%).
Plan Funding
The funding, or income, of multiemployer health plans can be broken into four primary components: employer contributions, worker/retiree contributions, investment income, and other income (which may include rental property income and reimbursements from subrogation). Employer contributions have accounted for at least 80% of the total income during every calendar year for the 15-year period covered in the report (101% in 2022). Participant contributions have been anywhere from 4.6% to 6.5% in any given year (5.1% in 2022), with the remaining total income coming from investment/other income (-6.6% in 2022).
- The average employer contribution PPPY was $13,735 for the 2022 plan year, up from $12,211 reported for 2020. That’s over a 12% increase.
- The average plan’s PPPY worker/retiree contribution was $869 for the 2022 plan year. Compared to $813 in the 2020 plan year, that’s an increase of almost 7%.
Assets as Months of Expenses
Despite shifting demographics and impacts due to the COVID-19 pandemic, which varied dramatically by industry, the total number of participants covered by multiemployer health plans remained relatively unchanged over the 15-year period, and the financial condition of many multiemployer health plans improved.
In the 2020 plan year, 65% of the multiemployer health plans in the study had assets in excess of 12 months of expenses, compared to 64% in the 2020 plan year. Over the 15-year period, the percentage of plans with assets worth less than six months of expenses decreased from over 26% to 17%, while the percentage of plans with assets worth more than 24 months of expenses increased notably from 16% to 32%.
Learn More About Multiemployer Health Plans
The Multiemployer Health Plan Landscape: A 15-Year Look (2008-2022) is the seventh multiemployer health plan benchmarking report produced in partnership with Horizon Actuarial Services, LLC, and the International Foundation of Employee Benefit Plans. The comprehensive report examines data from Form 5500 annual reports filed by multiemployer health plans with the U.S. Department of Labor. As required by the Employee Retirement Income Security Act (ERISA) to satisfy annual reporting requirements, Form 5500 collects data on the plan demographics, benefit costs, income and plan cash flows of employee benefit plans filed by group health plans.
