HOW DOES C.H.I.P.S. WORK?

1. The Traditional Employer - Controlled Group Plan: A Basic Overview
2. Current State of the Traditional Employer - Controlled Group Plan
3. Why C.H.I.P.S. As An Alternative to the Traditional Employer - Controlled Group Plan?
4. The Role and Responsibilities of the Trustees

• Union negotiates (with the Employer) health & welfare benefits for its members
• Most Canadian Employers hire Agents/Brokers/Consultants who advise said Employers on benefits-related matters
  • But many Local Unions don't have Agents/Brokers/Consultants to advise them (or you) about benefits
• Union may negotiate benefits but, the Employer owns and controls the group policy and provides the benefits to you via an insurance company (in most cases)
• Employer and Employer's Agent/Broker/Consultant negotiate terms of group policy contract with insurance company
• If Employer establishes a retention accounting agreement with an insurance company, and your claims experience is favourable, Employer may get rate credits (the Employer owns the claims fluctuation reserve), and you may not know that monies may be returned to the Employer.
• You may have to get your claim forms directly from the Employer and/or insurance company
• Employer completes portion of your disability claim forms (and, in some cases, claim forms for other benefit lines)
• You get general information about the Plan by contacting the Employer and/or insurance company
• Most plans are fully insured through for-profit institutions (insurance companies), and the majority of these institutions are now demutulaized, meaning that there are shareholders to appease

• Because it is for-profit, health care costs are increasing at greater rates than C.H.I.P.S. (especially when Employers try to match our benefit levels and service)
• Because Employer plans are mostly for-profit, acts of government hit these types of plans harder than they hit C.H.I.P.S.
• "The big fish are swallowing up the little fish": Fewer insurance companies in the marketplace means that it's harder for Employers to "shop around"
• Increasing premiums, decreasing coverage, and lots of "managed care" (reduced plan maximums, reduced benefit levels, increased deductibles, per-prescription deductibles, increased exclusions, dispensing fee caps on drug plans, not allowing coordination of benefits with spouse's plan, dental patients wait longer for checkups, diminished units of cleaning & scaling, etc.)
• Lots of "window dressing" and less emphasis on core (most-needed & most-utilized) benefits
• More out-of-pocket health care expenses paid for by you with your after-tax dollars

• Since you, the Union members, are negotiating benefits in lieu of extra take-home wages, the Employer isn't really "paying for" your group insurance...YOU ARE!
• Why should you negotiate benefits with Employers if you have no ownership or control over what is supposed to be your plan?
• If the group plan is supposed to be for you (the members), why not take official ownership of it by joining us...a Trust made up of fellow Union members who oversee the funds?
• Therefore, switch the bargaining approach from negotiating benefits with an Employer (since the Employer no longer provides the benefits) to negotiating dollars - we then use these monies to build/provide best plan possible
• Increased/improved member confidentiality (claim forms and all questions about operation of Plan available from our Plan Administrator who is hired by us, not the Employer)
• Operate on a not-for-profit basis (We do not get paid for being Trustees, and our job is to make sure income equals total expenses plus reserves while eliminating profit and risk charges)
• The savings over the insurance company's charges are used to provide better benefits or higher benefit levels. The underwriting that we use relies on us not being negotiated out of your Collective Agreement. Once we are in a certification, we should not be allowed to be bargained away.
• "Safety in numbers" - Getting and keeping as many bargaining units as possible helps keep benefits and costs more accessible and affordable for everyone
• We try to tailor plans to fit your needs more closely
• We try to minimize "window dressing" in plans and emphasize benefits which you and your families need and use most
• We are not immune to government-legislated changes but, our not-for-profit framework results in less negative impact to you than traditional Employer-controlled plans.
• We're not an insurance company so, we cannot be "bought out" by another insurer
• We continue to be your best option for group Health & Welfare Benefits (a superior alternative to the traditional Employer- controlled group plan)

• We establish rules and procedures for carrying out the intent of the Plan.
• We hold exclusive title to any and all monies payable to and received by the Trust Fund (neither the participating Locals, nor any individual member or Employer, has any right, title, or interest in such monies or the Trust Fund).
• We are designated as the persons to receive contributions.
• We receive, hold, and deal with any and all monies received by us for the sole purpose of operating the Plan and making payments pursuant to its provisions.
• We have the power to enter into contracts/arrangements and/or procure insurance policies (and we can terminate, modify, or renew said contracts, arrangements, or policies).
• We may open a bank/credit union account in the name of C.H.I.P.S., and may hold the fund in such form as we believe to be most beneficial to you, the beneficiaries (provided the investments are authorized by law).
• We may retain, employ, and compensate (out of the Trust Fund) actuaries, administrators, bookkeepers, auditors, legal counsel, consultants, and other such persons as we believe necessary and proper for the sound and efficient operation of the Plan.
• We shall not receive compensation for the performance of our duties as Trustees but, we may be reimbursed by the Trust Fund for all reasonable and necessary expenses which we may incur in the performance of such duties (i.e. lost wages).
• We may enter into agreements with insurance companies or other such entities to provide you with certain health & welfare benefits that we believe cannot currently be self-insured.
• We may also create a self-insuring fund (which we have done for WI, EHB, and Dental).