Employee Benefits:

Status of UMWA Combined Benefit Fund

HEHS-99-7R: Published: Oct 2, 1998. Publicly Released: Oct 2, 1998.

Additional Materials:


Cynthia Maher Fagnoni
(202) 512-7202


Office of Public Affairs
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Pursuant to a congressional request, GAO provided information on the current state of the United Mine Workers of America (UMWA) Combined Fund, focusing on: (1) the current population of beneficiaries; (2) the medical benefits provided to all classes of beneficiaries; (3) the extent to which the benefits provided by the fund represent the beneficiaries' primary medical coverage; (4) the major components of expenditures by the Combined Fund; and (5) how long the fund will remain solvent and able to cover beneficiaries.

GAO noted that: (1) the Combined Fund provides benefits to 71,337 individuals; (2) because Combined Fund benefits are only available to individuals who were eligible to receive and receiving benefits on July 20, 1992, the number of beneficiaries declines over time; (3) other beneficiaries include parents of mine workers, unmarried children of mine workers under the age of 22, unmarried dependent grandchildren under the age of 22, dependent children of any age who are mentally impaired or disabled before the age of 22, and surviving dependent children of deceased miners; (4) the Combined Fund provides beneficiaries with an array of medical benefits; (5) of the 71,337 individuals receiving benefits through the Combined Fund, 65,146 are also covered by Medicare; (6) Combined Fund officials could not provide GAO with the exact number of beneficiaries covered by private insurance; (7) however, they estimate that the number of beneficiaries is negligible; (8) according to the June 1998 actuarial projections, the major expenses of the Combined Fund are medical benefits, death benefits, and administrative costs; (9) in 1997 medical expenses constituted approximately 90 percent of expenditures, with death benefits and administrative costs amounting to about 3 percent and 7 percent, respectively; (10) these expenses vary with both the size of the beneficiary pool and trends in the costs of medical treatment; (11) since a finite number of beneficiaries is covered by the Combined Fund, the beneficiary pool will likely decline as recipients die, driving down the number of individuals claiming benefits; (12) conversely, medical costs are expected to rise, thereby increasing per-capita medical expenses; (13) thus, as the beneficiary pool decreases over time, medical expenses may become a larger component of Combined Fund expenses in the future; (14) if the Combined Fund becomes insolvent, the cost of borrowing to pay benefits may add to expenses; (15) it is difficult to accurately project the future solvency of the Combined Fund, primarily because of uncertainties created by the recent Supreme Court decision; (16) the June 1998 Court ruling will likely reduce the number of firms that are required to pay into the fund; and (17) regardless of the ultimate effect of the ruling on fund revenues, actuarial estimates made just before the decision show that the fund will be insolvent by 2000 and that its deficit will grow to between $107 million and $619 million by 2007, depending on the variation in Medicare-related expenses.

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