From the Hotline: Union Health Care Reform Requirements Under Mutliemployer Plans

Question: When employers participate in a multiemployer plan subject to a collective bargaining union agreement, and the union does not comply with health care reform requirements (minimum value insurance, annual notices, etc) what is the employer’s available recourse?

Answer: In general, collectively bargained healthcare plans have to comply with the requirements of the PPACA at the same time other plans are required to comply in 2014.  This is an issue for employers with unions regardless of whether they provide benefits through a union-sponsored plan (a Taft-Hartley multiemployer plan) or collectively bargained employer-sponsored benefits.

For multiemployer plans like the one you referenced, we are cautioning our clients to begin now to work with the unions to determine whether or not the plans will meet the PPACA requirements.  Some experts are telling us that even with the Taft-Hartley plans, if the plans are not compliant with the PPACA, the employer pays the penalty.  We are encouraging clients who are participants of such plans to ask the union benefit plan trustees whether they are in full compliance, so that the employer won’t be hit with penalties.  You asked what an employer can do.  They can ask the right questions and monitor the results and/or possibly open and renegotiate contracts and/or move away from multiemployer plans to single employer-sponsored plans that are compliant.

Another item for unionized small employers participating in Taft Hartley plans to consider – they miss out on tax benefits the PPACA provides when the PPACA-mandated state insurance exchanges start in 2014.  At that time, small employers are eligible for tax credits for paying their employees’ health insurance premiums.  However,  to be eligible, the insurance must have been purchased on a state exchange.  To be sold on a state exchange, health insurance must be available to all employees.  Taft Hartley plans therefore cannot be included in the state exchange system because they are open only to union members, and a small employer misses out on the tax benefits of purchasing health benefits from an exchange.

We are encouraging our clients with union benefits plans to consult with benefits and labor counsel who can help determine the best way to approach the potential compliance issues and get them resolved before the laws take effect.