How MEPs Are Established And Administered
MEPs are typically established through collective agreements negotiated by one or more unions, and are funded through employer contributions based on hours worked. Employers are allowed to deduct their MEP contributions from their taxable income and employees are generally not subject to tax on either the amounts of these contributions or the benefits they receive.
MEPs are "Trust Funds" and are generally administered by a joint board of trustees, comprised of an equal number of trustees appointed by the union(s) and the employers. The trustees often rely on the help of professionals such as lawyers, actuaries, and benefit administrators to establish and maintain these plans. This eliminates the need for participating employers to maintain their own plan administration work force.
Trustees are responsible for receiving contributions from employers, collecting late contributions from delinquent employers, paying certain benefits directly to members and their dependants, and entering into insurance contracts for the provision of other benefits. MEPs can use the pool of collectively bargained contributions and the pool of covered workers and their families to negotiate better terms with insurers and others than the individual employer could.