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The third party benefits administration industry as a whole is extremely large and diverse and includes
a wide assortment of outsourcing arrangements. Such arrangements range from large and small firms which
provide comprehensive ongoing benefits administration and management services (our current business) to
client employer plans, to smaller entities which provide some specialty services.
Third party administrators typically are grouped and characterized by the primary types of clients that
they service. For instance, some third party administrators focus on single employer plans, corporate
plans or governmental plans and some (like us) focus on Taft-Hartley (with multi-employer collectively
bargained plans).
The Taft-Hartley Act of 1947 (also known as the Labor Management Relations Act of 1947) is a Federal law
that, generally speaking, prohibits certain practices. Among other things, the Taft-Hartley Act
prohibits employers from paying money to unions (or other representatives of such employer’s employees),
but allows employers to contribute money to trust funds jointly created by representatives of the employer
and unions (or other employee representatives) that otherwise satisfy statutory requirements under the
Taft-Hartley Act.
Taft-Hartley multi-employer plans are benefit plans that comply with the Taft-Hartley Act and allow a
union member to gain credits toward pension benefits from work with multiple employers so long as each
employer is a party to a collective bargaining agreement requiring contributions to a particular plan.
Often, several employers in the same industry and geographical region will contribute to the same
multi-employer plan allowing individual workers to change employers while continuing to earn credits
toward future benefits.
The Taft-Hartley sector of employee benefit plan administration is one of the most complex areas of benefits
administration. Significant and changing government legislation, regulation and ongoing compliance present
formidable challenges to plan sponsors, Trustees and professionals. The Taft-Hartley sector of employee
benefit plan administration is a more specialized market comprised, for the most part, of numerous small
regional third party administration companies servicing benefit plans for memberships in local and regional
union offices throughout the U.S.
Union offices typically outsource the administration of the benefit plans to third party administrators.
It is generally not cost effective for a union office to provide constantly changing service
levels to members and regulatory changes like HIPAA implementation make it too expensive for the typical
office to administer benefits. Third party administrators can also lift the burdens of enrollment and
vendor management from the union office’s demanding schedule. Many
of the underlying companies involved in providing benefits under the plans prefer that an independent third
party administer their sponsored plan. Many third party administrators in this market have a local office
where union members can walk in if they feel they need to talk to a customer service representative in-person.
Trends in Union Membership.
According to the BLS, in 2007, 12.1% of employed wage and salary workers in the
U.S. were union members, up from 12.0% in 2006 and the number of persons in the U.S. belonging to a union
rose by 311,000 in 2007 to 15.7 million compared to 2006. Union membership levels vary by state and, as reported by the BLS, in 2007, 30 states
and the District of Columbia had union membership rates below the U.S. average, while 20 states had higher
rates. In addition, in 2007, all states in the Middle Atlantic and Pacific regions of the U.S. reported
union membership rates above the national average, and all states in the East South Central and West South
Central regions of the U.S. had union membership rates below the national average. We
believe that industry trends in union membership may create more opportunity for industry consolidation
among smaller regional third party administrators specializing in Taft-Hartley multi-employer plans and
possibly lead to more acquisition opportunities for us. Smaller regional administrators may be unable
to operate as cost-efficiently as a larger company. We also offer more services
at more competitive rates than such smaller firms.
Union Members Typically have more Benefits
Union members typically have more benefits than non-union employees.
We believe this provides us with the opportunity to offer and provide new and additional services to our clients and their members.
Also we believe that, as evidenced by the typically long relationship and
retention period by clients in the Taft-Hartley third party administration business, a client is less likely to change third party
administrators due to the complexity, cost and delays associated with any such change.
According to information published by the AFLCIO on its website (www.aflcio.org), 81% of union workers are covered
by pension plans, compared with 47% of non-union workers, and 67% of union workers have defined-benefit retirement
coverage, compared with 15% of non-union workers.
Business of ATPA
ATPA was formed nearly fifteen years ago through the consolidation of two long established third party administrators that were founded
about the same time having over forty years of experience in employee benefits administration. In addition, both entities had a long history and
experience in the use of computer application technology for the administration of Taft-Hartley multi-employer
trust funds and both specialized in collective bargaining agreement administration.
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