The Impact of the ACA and Its Effect on Negotiations Angie Peterman, Executive Director, OASBO Colette Blakely, Labor & PACE Services Consultant, OSBA
The Impact of the ACA and
Its Effect on Negotiations
Angie Peterman, Executive Director, OASBOColette Blakely, Labor & PACE Services Consultant,
OSBA
ACA – What is it?
• Federal legislation requiring health care coverage– Individuals required to have coverage or• Have an exemption from the requirement; or• Make an individual shared responsibility tax payment
when filing their individual federal income tax return
– Employers required to offer coverage– Subjects those not in compliance with various
financial penalties
Employer Mandate
• Applies to employers with 100 or more full-time equivalent employees
• 2016 that number drops to 50 fte • Must offer coverage to employees working
30+ hours per week or 130+ hours per month• Employers must provide coverage that is
adequate and affordable
Failure to Comply
• Employers may be subject to “pay or play” penalties– If they don’t provide coverage to at least 95% of
eligible employees (70% in 2015)– Coverage is not deemed affordable
• Penalty Amounts– $2,000 per employee if not offered– $3,000 per employee if not affordable
Reporting
• IRS reporting requirements– To assist in enforcement of ACA mandates– Begins with 2015 calendar year reporting– OEBB plans:• OEBB providers will file 1095-B form• Districts must provide 1094-C and 1095-C forms
– Other plans:• Need to work with provider regarding filing of
necessary forms and documents
Upcoming Considerations
• Cadillac Tax Beginning 2018– A 40% nondeductible excise tax – Imposed on aggregate value of health plan costs in
excess of:• $10,200 for individual coverage• $27,500 for family coverage
– Value indexed for inflation using CPI(U)• CPI(U) increasing between 2%-4% per year• Health insurance increasing 7%-10% per year
Cadillac Tax Considerations
• What plans do you offer– Lower premium and higher deductible– Higher premium and lower deductible
• OEBB plans– Currently all OEBB plans except possibly Plan H
may be subject to excise tax by 2018– Using current projections even Plan H will be
subject to excise tax by 2024
Strategies
• Leads us to strategies for complying with ACA and keeping costs and risk of penalties down
Review Current contract language:
• Contribution caps and any automatic increases.
• Are insurance contributions based on fixed dollar amount or percentage of cost?
• Benefit for double covered employees.
Opt-Out provisions:
• What opt-out incentives are provided to employees?
• What would it cost the District if opt-out employees and their families migrated back into District insurance?
How is full time defined in the collective bargaining agreement?
• Under the PPACA full time employees are defined as employees working 30 hours or more.
• Efforts to change the definition to 40 hours are continuing, but have failed up to this point.
Insurance Committees
• Who is on the District insurance committee?
• What is the current practice and/or language regarding plan selection?
• Who has final decision making authority on plan selection?
Choices, Choices, Choices
• Flexible Spending Accounts (FSAs)
• Health Savings Accounts (HSAs)
• Health Reimbursement Accounts (HRAs)
• Provisions on insurance pools
Current District Trends Around Insurance
• Offering HSA contributions rather than insurance contribution increases.
• Selecting higher deductible plans for employees to choose from.
• Districts bringing in 3rd party administrators to discuss healthcare changes with employees.
Trends in Union Proposals
• Language guaranteeing employees cash equivalent of insurance cap if employee elects to purchase insurance from Cover Oregon in the future.
• Proposals on insurance pooling.
• Language guaranteeing current District contribution amounts if OEBB moves to tiered rates only.
Bargaining Strategies
• Begin educating Association leadership on financial impacts of the healthcare reform under PPACA now.
• Bargain for fixed dollar amount contribution rather than a percentage.
• Bargain to provide insurance only to employees who work 30 hours or more.
Bargaining Strategies
• Bargain to limit plan selection to not include Cadillac plans.
• Consider negotiating the move to tiered rates now rather than later.
• Negotiate a monetized benefit to replace any early retirement incentives based on insurance.
Bargaining Strategies
• If bargaining a multi-year agreement give careful consideration how insurance language will work under PPACA rules during the term of the agreement.
• When drafting language regarding the insurance cap, include the words, “Based on the composite rate, the District will contribute...”
We’re here to Help
Angie Peterman, Executive Director, OASBO503-480-7218
Colette Blakely, Labor & PACE Services Consultant, OSBA1-800-578-6722