What is a Multiemployer Benefit Trust Fund?

Unlike benefit programs that are sponsored and controlled by one employer for their own employees, a multiemployer benefit trust fund is a health fund that is created solely for the benefit of collectively bargained employees working for many employers. The fund is maintained pursuant to a trust agreement and one or more collective bargaining agreements. Employers negotiate the fund into the applicable collective bargaining agreement and agree to contribute to the fund at certain specified rates for the benefit plans that are negotiated (medical, dental, vision, etc.).

Multiemployer benefit trust funds are typically sponsored and administered by joint boards of both labor and management trustees representing participants from many organizations, usually within the same or related industries, and a labor union. These funds are often referred to as "Taft-Hartley funds."

The Taft-Hartley name refers to the Taft-Hartley Act of 1947, also known as the Labor-Management Relations Act. The Act was passed by Congress to regulate organized labor practices and define standards for union pension and benefit funds. Taft-Hartley funds are often the only way a small employer can provide comprehensive health coverage to their employees in a cost effective manner, since such funds create cost-savings due to centralized administration and pooling of resources.

Because multiple employers contribute to the fund for their employees, the costs are shared and the risks are pooled. As a result, multiemployer plans can provide a competitive benefit for the same or better rate when compared to a single employer health plan. And since multiple employers participate in the same fund, employees can move among participating employers without losing coverage, although their benefit plans may differ based on each employer's collective bargaining agreement.

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A benefit trust fund is a health fund that is created solely for collectively bargained employees working for many employers.