California Dump Truck Owners Association (CDTOA) - California Construction Trucking Association (CCTA)

Several times each year, we receive phone calls from members who are confused as to how the CDTOA Return-of Dues program works. During the Annual Membership & Board Meetings, the CDTOA Board and membership have over the years voted on a variety of changes to the Return-of-Dues “Life Insurance” program. The details explaining the changes were published in many issues of the association publication and on the website. The first major change went into effect in 1999, another in 2003, another in 2005, and the last one in 2007.

CDTOA Modifies Return-of-Dues Program Numerous Times to Maintain Its Feasibility

The CDTOA Board has been forced to continually deal with fiscal problems associated with the Return-of-Dues (RoD) program for the Association.

While the program is a benefit to the membership, it is without a doubt expensive to maintain. The staff of the association was recently tasked with researching other trade associations, and we discovered that no other association, at least in the U.S., offers such a great deal for their members. The reason for this is that it’s very expensive and unsustainable. Instead of utilizing dues to generate services and representation for the membership, it has become an expensive entitlement program. Today, the cost of the RoD program ranks as the 7th highest expense for the association at about $40,000/year.

As all of you are aware, the average age of our members is increasing. Our average age is now somewhere between 55-60.

The problem with this program is that insurance premium payments are based on the member's age and the amount of dues the member has paid into CDTOA since 1980, to a maximum of $7,000. The program was capped in 1999. This means that the majority of insurance coverage, and, therefore, premium costs, was for the oldest CDTOA members, both active and retired. In order for the program to continue, we had to control the future insurance premium increases.

One of the possible ways to maintain the existing coverage would be to annually adjust all the members’ dues by the increase in premium of the program. However, this was unacceptable because it would force the newest younger members to subsidize the older members, most of whom are retired and paying reduced dues.

Another option was to exclude retired members paying reduced dues, so that only members paying full dues would be eligible for the RoD program. A number of our older members were very unhappy with this option. The Executive Committee and Board felt this was unacceptable and unfair to our senior members. However, we accept and acknowledge the rising cost of the program can be directly attributable to the senior membership.

The solution became more obvious as we continued to explore the various alternatives. We could not expect our members to stop aging. However, we needed to control the cost of the program, especially for members over age 70. All other group life insurance programs reduce the benefit amount at age 70. The most common benefit is $1,000 and a further reduction at age 80 to $500. This was the solution reached by the membership, and we felt it was a fair compromise.

There were a few other amendments made to the program over the last 10 years.

First, as of 2003, new members do not get the $2,500 benefit after the 2-year eligibility period, but will receive only their accrued dues each year until the maximum of $7,000 or 70 years of age.

This is a reduction in the younger members’ coverage, but more accurately reflects the purpose of the RoD program.

Secondly, members age 71 or older will take a 10% per year reduction in coverage or accrued RoD. As an example, the chart  here to the right shows the effect on a member over an 18-year period. The chart also illustrates an example of the effect on a member from age 70 through age 88. The chart here is based on the member having the maximum $7,000 benefit at age 70. (Note: this scenario is for example purposes only, members who were over 71 when the program was amended with lower RoD will be affected differently.)

At age 88 and older, the total amount is a $1,000 death RoD benefit. This will keep the cost of the program at a much more manageable level.

Those members who are age 71 or above had their coverage adjusted beginning January 1st, 2003. Their new reduced benefit will be their current RoD benefit amount reduced by the 10% each year following, based on birth dates.

As an example, a member at age 78 with $7,000 RoD would have his or benefits reduced to $6,300 at age 79, not $2,713 as in the chart. This procedure would make it fair to our existing senior members. The CDTOA office database software accounts for the changes in coverage for all members.

Below is an example of what it would cost (in 2005) to insure members 71 and over with maximum benefits. With the average one-truck member dues running at $341/year, it doesn’t even cover the cost of their Return-of-Dues benefit.

In 2007, after following the losses or pay-outs of the program and facing increased insurance premiums to underwrite and to fund it, the CDTOA Board and membership unanimously decided to basically self-insure the program. This was the only way to make the program sustainable. Therefore, the insurance element of the program was terminated beginning 2008, and the association is solely responsible for the RoD death payouts. As a result of this decision, the death payouts are now a taxable event for your beneficiaries.

We hope this helps to expain how and why the program has changed over the years. Regardless of these program changes, your membership dues in CDTOA still remain a GREAT DEAL, just for the RoD alone.

Also, members should note that if you are dropped as a member for any reason, your accumulated RoD is also dropped. If you rejoin, you will have to start over.