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Latest News - October 2013

October 26, 2013
What's The Deal? The Affordable Care Act In Labor Contract Negotiations
Source: Jones Day
Doreen Davis

The Affordable Care Act ("ACA") infuses new complexities into collective bargaining negotiations over health insurance benefits. In past years, the challenge for many employers at the bargaining table has been to control escalating health insurance costs and to shift an increasing share of those costs onto employees. Those challenges were hard enough. But now, with the advent of the ACA, employers face entirely new challenges as they develop their bargaining positions on health benefits. The ACA forces unionized employers to reassess the health benefits that they provide employees and determine which employees should be eligible to receive them. In addition, employers must develop new strategies for negotiating health benefits, with the goal of minimizing their exposure to ACA penalties, satisfying the ACA's coverage and benefit requirements, and preserving flexibility to make changes to comply with the ACA's complex and evolving requirements.

These challenges begin with fundamental decisions about the ACA's employer "play or pay" provision. See Jones Day Commentary, " Deciding Whether to Play or Pay Under the Affordable Care Act." These "play or pay" decisions implicate any number of mandatory bargaining issues, including whether to provide health insurance, what types and levels of health insurance to provide, how to address coverage of part-time employees, and how to deal with employee costs. Given the significance of all of these issues to unionized employers, this Commentary will provide an overview of the bargaining issues and will be followed with a supplemental Commentary addressing the ACA's "Cadillac tax." In addition, on November 21, Jones Day will be presenting a webinar entitled "What's the Deal? The Impact of the Affordable Care Act on Labor Contract Negotiations," with registration information available here.

In short, regardless of what employers have negotiated into past labor contracts, the landscape has dramatically changed. Employers need to take a fresh look at their health insurance provisions and prepare new strategies for negotiating future contracts in light of the ACA.



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