Download ACA * What is it?

The Impact of the ACA
and
Its Effect on Negotiations
Angie Peterman, Executive Director, OASBO
Colette 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 fulltime 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, OASBO
503-480-7218
Colette Blakely, Labor & PACE Services
Consultant, OSBA
1-800-578-6722