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 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 3 rd 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 Colette Blakely, Labor & PACE Services Consultant, OSBA