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.
© 2011 Fox Rothschild
The Union Contract (CBA)

Two Basic Types of Obligations to
Provide Health Care Coverage for
Employees in the Bargaining Unit
1. Employer Obligated to Participate in a
Taft Hartley Plan
2. Employer Obligated to Cover
Bargaining Unit With Employer Plan
© 2011 Fox Rothschild
Taft Hartley Plans
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Called “Multi Employer Plans”
Equal Amount of Trustees
Administrator
Self Insured, Insured or Combo
Funded by Employer Contributions
Agreed Employee Contributions
© 2011 Fox Rothschild
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
© 2011 Fox Rothschild
Health Care Reform
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The Costs
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© 2011 Fox Rothschild
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.
© 2011 Fox Rothschild
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
© 2011 Fox Rothschild
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
© 2011 Fox Rothschild
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
© 2011 Fox Rothschild
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.
© 2011 Fox Rothschild
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?
© 2011 Fox Rothschild
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
© 2011 Fox Rothschild
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
© 2011 Fox Rothschild
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
© 2011 Fox Rothschild
Contact Information
Jerold E. Glassman
973 994 7550/561 804 4422
jglassman@foxrothschild.com
© 2011 Fox Rothschild