UE Local 222 is involved in a major legal fight by unions in Connecticut against efforts by employers to make workers pay the 40 percent health insurance excise tax. UE got into this fight when the Town of Monroe proposed in contract negotiations that the members of Sub-local 44, workers in the Department of Public Works, start paying the tax in 2014 or see big cuts in their healthcare coverage

The excise tax, one of the most anti-worker provisions of the Affordable Care Act (ACA or Obamacare), will be imposed starting in 2018 on so-called “Cadillac” health plans – plans whose annual costs exceed an arbitrary monetary limit ($10,200 for individual coverage and $27,500 for self and spouse or family coverage). The law says that the “coverage provider” – the insurance company or the employer (if self-insured), must pay the 40 percent on the portion of the healthcare plan cost that’s about the caps. Nowhere does the law say that the tax should be paid by workers.

In negotiations with the UE bargaining committee, Monroe town officials proposed if their health insurance premium goes above the ACA beginning in 2018, the workers will pay the 40 percent tax on the difference or that the town can unilaterally reduce benefits to bring the plan below the excise tax threshold. That’s outrageous enough, but even more absurd because the contract the parties are now bargaining would only run until 2016 – two years before the excise tax goes into effect.

The union responded by filing charges with the Connecticut State Board of Labor Relations alleging that the town’s proposal constitutes a municipal prohibited practice (MPP), the term for an unfair labor practice in Connecticut public sector labor law. UE says the proposals is illegal because it goes against the federal law by making workers pay the employer’s tax, and because it attempts to bargain something that can’t even happen until after the term of the new contract.

UE also intervened into an action brought by the Connecticut Education Association – the CEA – seeking a declaratory ruling from the state labor board that attempts to impose the excise tax on workers is an illegal subject of bargaining.

“We have a hearing coming up before the state labor board,” says Northeast Region President Peter Knowlton.  “As far as we can tell, this will be the first such hearing anywhere in the country. This case involved more than just us because there’s clearly a concerted attack by administrators in Connecticut municipalities and school districts. We think this attack will accelerate next year, as we get within three years of 2018.” Knowlton says most public employers in Connecticut will be represented at the hearing, and the hearing is to get a declaratory judgement on whether imposing the excise tax on workers is a mandatory subject of bargaining. 

The excise tax provision was included in the ACA to penalize employers, and by extension workers, for health insurance plans that are allegedly “too generous” – in other words, plans that provide decent coverage for people’s medical needs. It’s an incentive to provide worse healthcare plans, with higher deductibles and co-pays, and to “contain healthcare costs” by making healthcare more expensive for working people to use. It’s the same logic that’s behind employer’s efforts to impose higher out-of-pocket costs on workers so we’ll do without the medical care that we and our families need.

“The excise tax, even if paid by the employer or the insurer as the law says, is exactly the wrong approach,” says Knowlton. “Rather than trying to tax decent health benefits out of existence, the government could be providing good healthcare for everyone, and at a much lower cost, by getting the insurance companies and their profit greed out of healthcare. Canada provides good health insurance for all its citizens and spends about half what the U.S. spends on healthcare, and other countries do it too.”