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