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All in a Day's Work® - Insights on Labor & Employment Law

WERC: plan design means plan design

Legislative changes to collective bargaining laws for public sector employees in Wisconsin have been significant over the past year. Health insurance, a common subject in nearly all bargains, is no longer a subject of bargaining for general municipal employees. Public safety unions can still bargain over some aspects of health insurance, but the scope of collective bargaining was significantly curtailed with the adoption of Section 111.70(4)(mc)6 of the Wisconsin statutes as part of the 2011 budget repair bill. The law provides:

(mc) Prohibited subjects of bargaining, public safety employees.

*   *   *

6. The design and selection of health care coverage plans by the municipal employer for public safety employees, and the impact of the design and selection of health coverage plans on the wages, hours and conditions of employment of public safety employees.

In a recent Declaratory Ruling case, the Wisconsin Employment Relations Commission (WERC) opined that a union proposal to limit employee contribution levels to deductibles established by an employer is prohibited under Wisconsin law. Wisconsin Professional Police Association/Law Enforcement Employee Relations Division and Eau Claire County (WERC Case 240; No. 70886; DR(M)-713; Dec. No. 33662).

During bargaining, the Wisconsin Professional Police Association (WPPA) made the following proposal:

The Association fully acknowledges the right of the Employer to choose the carrier and to establish the plan design. Should the employer design or choose a plan design which includes a deductible, the employees shall be responsible for paying the first two hundred fifty ($250)/five hundred ($500) of the deductible.

The employer, Eau Claire County, argued that this proposal was a prohibited subject of bargaining, as it undercut the authority of the county to establish plan design and really called for impact bargaining. The union conceded that the existence of a deductible is part of the plan design but argued that the question of who pays the deductible falls within the scope of “employee contribution requirements” that remain subject to collective bargaining in public safety units. The union relied on a note found in the legislative history that stated, in part, that the “employee contribution requirements for represented law enforcement and fire personnel would still be collectively bargained.”

The WERC helped define the scope of plan design in this decision. The WERC noted that “the existence of ‘deductibles’ or co-pays is not simply a matter of sharing the insurance cost, as is the case of the employer and the employee sharing the premium cost. The premium share does not modify behavior the way deductibles and co-pays do.” According to the WERC, the very essence of plan design is “making decisions which steer insureds in a particular direction and encourage various behaviors. It is illogical to assume that decisions regarding co-pays and deductibles are not integral parts of plan design.”

The WERC did not accept the union argument that “employee contribution requirements” held open the possibility of bargaining over who pays the deductible. Rather, the WERC held that the plain meaning of the statute should prevail and, in doing so, held that the union’s proposal was prohibited. The decision stated (emphasis in original):

Employees contribute towards the health insurance premium cost each month. The employer pays the premiums. Employees who utilize health care pay the full cost of the deductible or co-payments. They do not contribute to the cost of deductibles or co-pays.  Simply put, insured parties do not “contribute” to deductibles, they pay them.

The net effect of this decision for public safety bargaining units in Wisconsin, is that, while bargaining over premium share remains a mandatory subject, bargaining over the deductible amount or amount of a co-pay and, most importantly, who pays such amounts is prohibited. The plain meaning of the statute prevails.

March 13, 2012

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