Labor Negotiations Issues Under the Patient Protection and Affordable Care Act

Susan K. Hansen Attorney at Law MADDEN GALANTER HANSEN, LLP 505 North Highway 169, Suite 295 Plymouth, MN 55441 (763) 545-2525 [email protected] These materials are intended to be educational only and do not constitute legal advice.

Health Care Coverage Must Be Offered to “Substantially All” Full-Time Employees Full-time employees means 30 or more hours/week or 130 or more hours/month

Does language of CBA restrict health care coverage to “full-time employees” defined as 40 hours per week?

  Health

insurance article   Definitions article   Negotiated changes to CBA language may be necessary   Duration of contract?   Request union to reopen CBA

Health Care Coverage Must Be Offered to “Substantially All” Full-Time Employees Sample Language for Labor Agreement and Personnel Policy

Example: “The Employer shall offer health insurance benefits to eligible employees and their dependents that work on average or are expected to work 30 or more hours per week or the equivalent of 130 hours or more per month.”

Health Care Coverage Must Be Offered to “Substantially All” Full-Time Employees

Full-time employees means 30 or more hours/week or 130 or more hours/month  

For employees employed to work less than 30 hours/week, monitor work hours   Notice

to employees that working more hours is prohibited and results in disciplinary action   Ongoing supervisory monitoring and enforcement   Train and hold supervisors accountable

Example of Notice to Employees and Policy Language: Working More Hours Prohibited

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“In order to comply with law while avoiding penalties, part-time employees will be scheduled with business needs and in manner which ensures positions retain part-time status under which intended. Employees in part-time and temporary positions will not be permitted to work more than 28 hours/week. All shifts, including schedule trades or picked-up shifts, must be pre-approved by supervisor. Unpaid furloughs may be imposed on employee who exceeds 28 hours/ week. Working shift without prior approval may result in discipline, up to and including termination of employment.”

Health Care Coverage Must Be Offered to “Substantially All” Full-Time Employees Full-time employees means 30 or more hours/week or 130 or more hours/month Is reducing employees’ work hours to less than 30 hours/week an option to avoid obligation to offer health care coverage?  

Health Care Coverage Must Be Offered to “Substantially All” Full-Time Employees Meaning 30 or more hours/week or 130 or more hours/month

Reducing Employees Work Hours   Language of CBA?   Grievance potential: Unions claim employer required to apply seniority/ layoff articles   Split of arbitration decisions on whether a reduction in hours violates CBA   Arbitrator considerations •  • 

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Contract language, bargaining history, past practices and other circumstances. If CBA defines “normal work week,” •  Employer must have sound business reasons for making unilateral change in work week. •  Employer cannot make unilateral changes in it for indefinite periods.  If language in CBA is construed as guarantee of certain number of hours of work per day or per week, employer cannot make unilateral change in work hours.

Health Care Coverage Must Pay For at least 60% of Covered Health Care Expenses

Does language of CBA or addendum detail health insurance plan and/ or benefits? If less than 60% …

  Negotiated

changes to CBA language may be necessary   Duration of contract?   Request union to reopen CBA

Health Care Coverage Must Be “Affordable” “Affordability” is based on cost of lowest cost option   What is cost of single coverage, lowest cost option?   Does CBA require employees to contribute toward single premium cost?   How does employee contribution to lowest cost single compare to ACA affordability calculations?

single coverage,

  Run

the numbers   Negotiated changes to CBA language may be necessary   Duration of contract?   Request union to reopen CBA

Cadillac Plan Determination of Cadillac Plan  

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Designation of Cadillac Plan status based on cost of coverage provided

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40% tax on high cost plan excess amounts beginning in 2018

Cost of plan: Single coverage exceeds $10,200 annually, or   Family coverage exceeds $27,500 annually  

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Tax imposed on insurers for insured plans

What is Included In Cadillac Plan

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Medical and prescription drug coverage

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Contributions to: • 

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Dental and vision coverage unless separate

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Health Flexible Spending Arrangements (FSAs) Health Reimbursement Arrangements (HRAs) Health Savings Accounts (HSAs)

Are you on track to be a Cadillac Plan?  

Trend analysis based on annual 10% increase 2014

2018

“High Cost” - Family $1,566/month $18,789/year

High Cost – Family $2,292/month $27,500/year

“High Cost” - Individual $581/month $6,970/year

High Cost – Individual $850/month $10,200/year

Strategies for Cadillac Plans

Introduce plan design changes now in effort to move toward lower cost plans   Wellness Initiatives   CBA Language  

Education   Labor Management Insurance Committees   Incent employees to gravitate toward lower cost plans through focus of financial contributions  

Language of CBA Reopener Language in Insurance Article (Initial Proposal)

Example: “The Employer reserves the right to modify health insurance provisions of this Agreement in the event the Employer is subject to a penalty, tax, fine or increased costs as a result of requirements of ACA."

  Rely

on provision to reopen Insurance Article to negotiate changes to CBA   Some Unions have objected contending language constitutes waiver of rights under public sector bargaining laws

Language of CBA Reopener Language in Insurance Article (Fallback Proposal)

Example: “In event health

insurance provisions fail to meet requirements of ACA and its related regulations or cause Employer to be subject to penalty, tax or fine, Union and Employer will meet immediately to bargain over alternative provisions so as comply with ACA and avoid and/or minimize any penalties, taxes or fines for Employer."

  Rely

on provision to reopen Insurance Article to negotiate changes to CBA   Some Unions have objected contending language arguably constitutes waiver of rights under public sector bargaining laws

Plan Design Changes … Aggregate Value of Benefits

Minn. Stat. § 471.6161, subd. 5. Collective Bargaining The aggregate value of benefits provided by a group insurance contract for employees covered by a collective agreement shall not be reduced, unless the public employer and exclusive representative of the employees of an appropriate bargaining unit, certified under section 179A.12, agree to a reduction in benefits.

“Benefits” includes:   Co-pays   Deductibles   Out-of-pocket maximums   Co-insurance   Network of providers

Plan Design Changes … Aggregate Value of Benefits Seek Waiver of Bargaining Obligation Related to Reduction in Aggregate Value Example: “In the event Employer modifies group   Clear and health insurance benefits in unmistakable waiver order to avoid and/or minimize penalties, taxes, required fines or increased costs to meet requirements of ACA, Union waives right to bargain over any resulting reduction in aggregate value of benefits.”

Language of CBA Savings Clause Example: “To the extent a provision of the contract is declared to be contrary to law by a court of final jurisdiction or administrative ruling or is in violation of legislation or administrative regulations, said provision shall be void and of no effect. The parties agree to immediately meet and negotiate a substitute for the invalidated provision.”

  Analyze

existing Savings Clause to determine if changes are necessary.

  Rely

on Savings Clause as basis to negotiate changes to CBA

Pro-rata Contributions Pro-rata Contributions to 30 Or More Hour Per Week Employee   ACA does not currently   Does CBA include pro-rata contain specific language contribution? requiring employer to make same contribution to   Example: “The Employer shall provide each eligible part-time 30 hour employees as 40 employee regularly scheduled to hour employees. work at least 20 but less than 32 hours per week with a pro-rata   Potential concern that contribution toward the cost of could be viewed as single health insurance.” “discriminatory” or potential violation of   Monitor legal developments and request Union to reopen CBA “anti-abuse” regulations. relying on Savings Clause