Hot Topics in Collective Bargaining
Welcome to a series of columns on emerging topics at the collective bargaining table. This series will provide specific information concerning the demands that school board negotiators are seeing at the bargaining table.
||About the author: Philip Gerner, from the Robbins Schwartz law firm, represents school districts in a variety of legal negotiations. He is a frequent presenter for IASB on a full range of labor and employment issues.
Posted November 24, 2014
BARGAINING HEALTH INSURANCE BENEFITS: DO'S AND DON'TS
By Philip H. Gerner, III
Health insurance is a difficult but critically important issue during contract negotiations. School boards now confront Affordable Care Act (ACA) penalties if their insurance plan lacks minimum essential or affordable coverage, or includes a high premium “Cadillac” plan.
Tips for Negotiating Health Insurance
Board negotiation teams should plan for bargaining by:
- Preparing an analysis of insurance benefits costs over the previous contract term;
- Compiling an analysis of the district’s plan benefits and premium contributions versus other comparable districts’ health plans; and
- Determining if continuation of current plan options could result in ACA penalties.
During negotiations, school boards should consider the following:
- Share Health Insurance Cost Data with Union – Inform the union of the insurance costs over the previous contract period and the significant increased costs absent negotiated changes to current plan benefits.
- Add Lower Cost, High Deductible Plan Option – Bargain higher employer contributions towards lower cost plan options, incentivizing employees to select cheaper plan options (e.g., HDHP/single – 95%, HMO/single – 90%, PPO/single – 85%).
- Add Premium Increases Cost Sharing Component – Ensure that employees have an economic incentive to support benefits changes to reduce annual premium increases (e.g., higher deductibles and co-pays). A cost sharing formula requiring employees to pay 50% of any annual premium increase after the first contract year significantly reduces district costs.
- Eliminate High Premium PPO Plans – Enable the district to avoid potential ACA “Cadillac” tax penalties for high cost health plans.
- Add Contingent Contract Reopener – Include a contingent reopener, enabling the district to negotiate plan benefits to comply with ACA requirements and avoid penalties.
- Include Maintenance of Benefits Provisions – Deny union proposals obligating the district to maintain the same or current level of health plan benefits throughout the contract.
- Restrict Health Plan Design Changes – Reject union proposals limiting insurance committee consideration of plan benefits changes (e.g., if annual premium increases exceed 15%, the insurance committee will meet to review health plan changes to reduce premium costs).
- Incorporate Employee Premium Contribution “Caps” – Avoid union proposals limiting employee health insurance premium contributions. These provisions create a disincentive for unions negotiating employee contribution changes.
- Specify Health Plan Benefits in CBA – References to specific health plan benefits (e.g., PPO plan includes single deductible of $___ and co-pays of $___) subject districts to grievances if plan benefits are changed.
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