Health Care Reform Issues for the Unionized Employer

1. Health Care Reform Issues for the Unionized Employer Patient Protection and Affordable Care Act: Issues for Employers Who Are Parties to Collective Bargaining Agreements Presented by Jerold E. Glassman, Esq.

2. The Union Contract (CBA) • Two Basic Types of Obligations to Provide Health Care Coverage for Employees in the Bargaining Unit • Employer Obligated to Participate in a Taft Hartley Plan • Employer Obligated to Cover Bargaining Unit With Employer Plan

3. Taft Hartley Plans • Called “Multi Employer Plans” • Equal Amount of Trustees • Administrator • Self Insured, Insured or Combo • Funded by Employer Contributions • Agreed Employee Contributions

4. Employer Health Coverage for Bargaining Unit Employees • Named Insurance Carrier/Policy • Described Minimum Coverage • Same or Similar Plan to Non Bargaining Unit Employees Premiums are paid by the Employer; in some cases with Employee Contributions

5. Health Care Reform $$$ $$$ The Costs $$$

6. Health Care Reform • Excise tax on high-cost employer-sponsored health coverage. For tax years beginning after Dec. 31, 2017, a 40% nondeductible excise tax will be levied on insurance companies and plan administrators for any health coverage plan to the extent that the annual premium exceeds $10,200 for single coverage and $27,500 for family coverage. An additional threshold amount of $1,650 for single coverage and $3,450 for family coverage will apply to retired individuals age 55 and older and for plans that cover employees in high risk professions.

7. SPECIAL RULES FOR COLLECTIVELY BARGAINED PLANS • Fully insured collectively bargained multi-employer plans and single employer plans in effect on 3/23/10 are “grand fathered” not subject to the Act’s rules until THE DATE ON WHICH THE LAST OF THE CBAs RELATING TO THE COVERAGE TERMINATES • Act specifically provides that a collectively bargained plan is permitted to be amended early for some or all of the Act’s rules. This voluntary amendment will not be treated as a termination of the CBA which could otherwise cause the plan to be subject to an earlier compliance deadline

8. SPECIAL RULES FOR COLLECTIVELY BARGAINED PLANS • However, some key provisions of Act still applicable to collectively bargained plans effective plan year commencing on or after 9/23/10 • Include: children up to age 26, even if married, eligible for coverage (not required to cover if eligible to participate in another employer’s plan) • Prohibition on life time benefits of essential benefits

9. SPECIAL RULES FOR COLLECTIVELY BARGAINED PLANS • Prohibition on exclusions of pre-existing conditions for children • No recission of coverage except for fraud • All will increase your costs; costs you hadn’t planned for when you negotiated your CBAs

10. NATIONAL LABOR RELATIONS ACTS AND OTHER CONSIDERATIONS PERTAINING TO UNION EMPLOYERS • Section 8(a)(5) of NLRA prohibits unilateral changes to terms and conditions of employment • Exception if changes required by law, so foregoing changes not a violation of NLRA • Any attempt to shift costs to employees mid CBA will usually be met with a grievance or unfair labor practice charge unless union consents.

11. NATIONAL LABOR RELATIONS ACTS AND OTHER CONSIDERATIONS PERTAINING TO UNION EMPLOYERS • Review your CBA-it might be your friend! • Some CBAs allow for cost-sharing and the Employer to pass the increased cost of health insurance to employees usually with caps on premium contribution by the employee • On the other hand, some do not and unions may or may not resist changes • Is there a re-opener? Risks?

12. NATIONAL LABOR RELATIONS ACTS AND OTHER CONSIDERATIONS PERTAINING TO UNION EMPLOYERS • Mandatory vs. permissive subjects to bargaining • Mandatory includes wages hours and other terms/conditions of employment; if one party refuses to bargain, its an unfair labor practice to refuse to bargain • Permissive includes subjects like advertising and have minimal effect on the employment relationship; unfair labor practice to demand bargaining over permissive subjects • If CBA silent and no zipper clause, Employer could argue increased cost not contemplated by CBA and seek changes as mandatory subject of bargaining

13. POSSIBLE IMPACT OF 2014 CHANGES • Excise tax could cost less for Employers than premium contributions • Typical strategy of seeking larger premium contributions may throw you into penalty situation-lots of moving parts • Employers who contemplate terminating health insurance coverage need to be careful • Decision to terminate is mandatory subject of bargaining • Considerations before deciding whether to terminate include: union opposition (institutional and for benefit of employees), litigation and employee morale

14. STRATEGIES AND RECOMMENDATIONS • Start your planning now for 2014 changes particularly if your CBA is set to expire in 2014 • If CBA expires before 2014 and are bargaining successor CBA, may want to turn to re-opener clause to see where its all headed • Should consider broad language in CBA allowing you to unilaterally amend or terminate health insurance coverage

15. Contact Information Jerold E. Glassman 973 994 7550/561 804 4422 jglassman@foxrothschild.com