Feds Defer “Cadillac” Health Plan Penalty to 2020

BRIEF RECAP:

 

Negotiations between the BR-BOE (Bridgewater-Raritan Board of Education) and the BREA (Bridgewater-Raritan Education Association) are at an impasse, pending a mediation session scheduled to take place this Wednesday, January 13. 

 

Late last year, the school board posted on its web site the terms and conditions of what was then its most current wage and benefits offer.  This information is no longer on the BR-BOE’s home page.

However, on November 11, 2015, I posted a summary of both the BR-BOE and the BREA’s negotiation positions at that time based upon the data then released by the school board:  You can review it on this previous blog post.  

As pointed out in November, the biggest sticking point between the two parties was the near-confiscatory, so-called “Cadillac” health care plan penalty, and the impact it might present as a budget-buster.

The BR-BOE then wrote that “beginning in 2015, the third year of this contract, the District will incur a tax penalty in excess of $1 million for these “Cadillac” health insurance plans currently being offered to District employees." 

According to the school board, 94% of BREA members are enrolled in Aetna 10, the most expensive health plan which, under Obamacare regulations is clearly classified as a “Cadillac” plan.

The stated purpose of this near-confiscatory penalty by the writers of Obamacare was presumably to reduce health care costs by discouraging plans which provide top-of-the-line medical benefits.

CURRENT STATUS:

Public sector unions, including the National Education Association (NEA) were unwaveringly opposed to that penalty and lobbied heavily not to have it included in the Affordable Care Act.  They lost that fight.  

 But they now seem to have won the battle.

When Congress passed the national budget compromise proposal that President Obama recently signed into law, there was an attachment to that bill – now encoded into law – which defers implementation of the “Cadillac” tax penalty by two years, from its initial date of 2018 to 2020. 

 

That was a major win for public sector unions and other companies which offer those plans.

Bringing the issue closer to home, this deferment may have taken off the table what was perhaps the BR-BOE’s biggest bargaining chip with respect to both salaries and benefits, as well as to who would bear the cost for Aetna 10, still a legally classified “Cadillac” plan, even though its implementation has been deferred to 2020.

In an effort to get clarification of this topic, I e-mailed Ann Marie Mead, President of the BR-BOE.  She wrote back that, “given the pending mediation/impasse, I am not in a position to comment at this time,” but that “If anything changes . . .” she would let me know.

I also spoke with Steve Beatty, President of the BREA, asking what he could clarify, while still keeping in the spirit of the upcoming Wednesday mediation session where teams representing both the school board, as well as the teachers will sit down with a mediator.

Mr. Beatty said that deferment of the “Cadillac” tax penalty to 2020 “changes everything, [and that the impending penalty was] a singular issue for [the school board] not settling.”

He added that “the writing was on the wall [that the penalty would be deferred or eliminated], and that [through the BREA’s ongoing internal research and advisers], “we knew it was coming down.”

Thanks for checking in and, don't forget, take care of yourselves.