Most union benefit plans are bought from an insurance carrier. IBOTU Local 713 runs self-insured plans instead — the Fund pays claims directly rather than paying premiums to an insurer. That single structural difference is where the savings come from.
Under a fully insured plan, a contributing employer pays a premium to a carrier. The carrier collects that premium, pays whatever claims come in, and keeps the difference. In a good year, the carrier keeps the surplus. In a bad year, it raises the premium.
Under a self-insured plan, the Fund assumes that risk itself. Employers pay the actual cost of claims plus administration rather than an insured premium. When a plan year runs well, the surplus stays in the Fund — and it goes back into member benefits and contribution stability instead of into a carrier's margin.
IBOTU's self-insured plans are Taft-Hartley plans governed by ERISA, which means trustees carry a legal fiduciary duty to act solely in the interest of plan participants and their beneficiaries — not shareholders, not insurers, and not employers.
A carrier sells standard products. A self-insured fund can add, adjust or expand coverage based on what its members actually use. When utilization data shows a gap, the Fund can close it — without waiting for a carrier to decide there's a market for it.
Employers pay real claims costs rather than inflated insured premiums. There is no carrier profit margin built into the rate, and self-insured plans are exempt from state premium taxes.
Full access to claims and utilization data makes cost management proactive rather than reactive. Trends get identified early, programs get adjusted, and vendor negotiations happen with real numbers behind them. Under a fully insured arrangement, that data usually belongs to the carrier.
The obvious objection to self-insurance is exposure to a single very large claim. Specific and aggregate stop-loss coverage caps that liability — the flexibility of self-insurance, with a floor under the downside.
IBOTU's self-insured Taft-Hartley plans operate under ERISA, which brings fiduciary oversight, ACA compliance and statutory member protections. Trustees are legally required to act solely in the interest of plan participants and beneficiaries. That is a materially different accountability structure from buying a product from a carrier whose duty runs to its shareholders.
| Feature | Fully Insured | IBOTU Self-Insured |
|---|---|---|
| Flexible benefit design | No | Yes |
| Claims surplus returned | No | Yes |
| Real-time claims data | No | Yes |
| Carrier profit margin | 10–15% | Eliminated |
| State premium taxes | Applies | Exempt |
| Vendor negotiation power | Carrier-driven | Union-driven |
| Benefit customization | Limited | Unlimited |
| Stop-loss protection | N/A | Included |
IBOTU is a multiemployer fund. Pooling members across many contributing employers produces purchasing power no single employer could reach on its own, and it spreads risk across a far larger population — which is what makes self-insurance workable for employers who could never self-insure alone.
It also means coverage follows the member. As members move between participating employers, they keep continuous coverage rather than falling into the gaps that are common in single-employer plans.
The structure is only worth explaining because of what it pays for. Medical, prescription drug, dental and vision, life and AD&D, disability and mental health coverage are all delivered through these plans — designed around what members use rather than around what a carrier sells.
See the full range of member benefits →
Whether you are a union local weighing benefit options or an employer trying to understand your obligations, we can walk you through what a self-insured arrangement would look like for your group.
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