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:

DO:

• 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.

DON’T:

• 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.