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Is New Jersey State Healthcare Moving Toward the Implementation of a CDHP?

By Frank M. Crivelli on June 18, 2015
Posted in Contract Negotiations, Public Employment Labor Law

Yesterday, NJ.COM reported that Governor Christie was prepared to roll out sweeping pension legislation that would overhaul the way in which teacher pensions would be funded in the State of New Jersey.  Presently, teachers pensions in the State of New Jersey are funded by the State and not the School District or Municipality that employs the teachers.  The New Jersey League of Municipalities stated that the overhaul has the potential to cost New Jersey Municipalities hundreds of millions of dollars each year if implemented.  However, those who crafted the governor’s plan have said those costs would be offset by reducing public employee health benefits in the future.

I bring this point to our reader’s attention as it harkens back to collective negotiations I just engaged in with a large Industrial Manufacturing Union (IUE/CWA Local 81455) and a Fortune 500 Company (Ingersoll Rand).  This was the first time that I had negotiated for this Union and the negotiating committee explained to me that their healthcare coverage has been whittled away one contract after another while the cost of coverage was passed on to the employees.  This round of negotiations was no exception as the company proposed what is often referred to as a “Consumer Driven or Directed Health Plan (CDHP).

A CDHP is a health plan that has incredibly high deductibles and maximum out of pocket costs that legislatively allows the employer to offer its employees the ability to participate in a health savings account in an effort to assist defraying the cost of healthcare.  In this instance, the annual deductibles were set at $1,500 for single coverage; and employee/child and family coverage was set at $3,000.  Additionally, the annual maximum out of pocket costs were $3,000 and $6,000 respectively.  In essence, other than a single well visit per year, all other heath expenses would be the employees responsibility to pay until the deductible is reached and then co-insurance (80%/20%) would take over until the maximum out of pocket is reached.  Thereafter, all other health care expenses would be covered at 100%.  While the employee’s cost of premium was decreased, the large deductible and maximum out of pocket was incredibly unpopular and foreign to the Union’s membership.  To help in assisting to defray the large looming deductibles and annual maximums, the employees have the ability to set-aside pretax dollars in a Health Savings Account, as well as participate in a “wellness” program that could garned them additional money from the company for participation.  Despite the fact that the Union offered an actuarial sound “traditional” healthcare plan that would cost the company the same amount of money as the CDHP, Ingersoll Rand wanted nothing to do with the same as the CDHP was being rolled out around the country.

This is not my first experience in collective negotiations with such a health plan as I encountered the introduction of a CDHP several years ago while representing another Manufacturing Union.  While I have only seen this plan offered in the private sector, I am fearful that the State of New Jersey is preparing to roll out such a plan in an effort to save costs with healthcare.  This is especially true when I read articles such as the one mention in the opening paragraph of this article.  Based on this fact, Public Employee Union Leaders and Negotiating Teams should familiarize themselves with these plans.  It is important to note that the costs of these plans are substantially lower for the employer as it drives the cost burdens of healthcare onto the shoulders of the employees.  Therefore, in preparing to negotiate, keep your eyes and ears open for this four letter word (CDHP).

 

Tags: benefit reform, CDHP, Christie, collective bargaining, Consumer Directed Health Plan, Consumer Driven Health plan, Contract Negotiations, CWA, Governor Christie, health benefits, health care, health care reform, Health Savings Account, healthcare reform, Ingersoll Rand, IUE/CWA, IUE/CWA Local 81455, NJ Public Employees, NJ Public Safety Employees, pension reform, PFRS, Public Employment Labor Law, Retiree Benefits, Trane Corporation
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Photo of Frank M. Crivelli Frank M. Crivelli

Frank M. Crivelli’s practice revolves around the representation of over eighty-five (85) labor unions in various capacities, the majority of which bargain for law enforcement entities. He is proud to be called on a daily basis to provide counsel to over 12,000 state…

Frank M. Crivelli’s practice revolves around the representation of over eighty-five (85) labor unions in various capacities, the majority of which bargain for law enforcement entities. He is proud to be called on a daily basis to provide counsel to over 12,000 state, county and local law enforcement officers, firefighters and EMS workers.

Mr. Crivelli specializes his individual practice in collective negotiations.  Over the past twenty (20) years, Mr. Crivelli has negotiated well over one hundred (100) collective bargaining agreements for various state, county, municipal and private organizations and has resolved over thirty-five (35) labor agreements that have reached impasse through compulsory interest arbitration.  Mr. Crivelli routinely litigates matters in front of the New Jersey State Public Employment Relations Commission, the New Jersey Office of Administrative Law, third party neutrals for mediation, grievance and interest arbitration, the Superior Court of New Jersey and the United States District Court for the District of New Jersey.

Mr. Crivelli founded and created the New Jersey Public Safety Officers Law Blog (www.njpublicsafetyofficers.com) approximately fifteen (15) years ago where he and members of his firm routinely publish blog posts regarding legal issues related to the employment of New Jersey Public Safety Officers.  The blog now contains over six hundred (600) articles and is reviewed and relied upon by thousands of public employees.  Mr. Crivelli has also published books and manuals pertaining to New Jersey Public Employee Disability Pension Appeals and the New Jersey Worker’s Compensation System. Currently, he is drafting a publication on how to Prepare and Negotiate a Collective Bargaining Agreement.  He lectures annually at the New Jersey State PBA Collective Bargaining Seminar, the National Association of Police Organization’s Legal Seminar, the New Jersey Public Employment Relations Commission Seminar on Public Employment Labor Law, the United States Marine Corps’ Commander’s Media Training Symposium and to Union Executive Boards and General Membership bodies on various labor related topics.

Prior to entering private practice, Mr. Crivelli joined the United States Marine Corps where he served as a Judge Advocate with the Legal Services Support Section of the First Force Services Support Group in Camp Pendleton, California.  While serving in the Marine Corps, Mr. Crivelli defended and prosecuted hundreds of Special and General Court Martial cases and administrative separation matters.  In addition to his trial duties, Mr. Crivelli was also charged with the responsibility of training various Marine and Naval combat command elements on the interpretation and implementation of the rules of engagement for various military conflicts that were ongoing throughout the world at that time. After leaving active duty, Mr. Crivelli remained in the Marine Corps Reserves where he was promoted to the rank of Major before leaving the service.

For the past fifteen (15) years, Mr. Crivelli has been certified as a Civil Trial Attorney by the Supreme Court for the State of New Jersey, a certification which less than two percent (2%) of the attorneys in New Jersey have achieved.  He is a graduate of Washington College (B.A.), the City University of New York School of Law (J.D.), the United States Naval Justice School, and the Harvard Law School Program on Negotiation.

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Frank M. Crivelli is a shareholder in the law firm of Crivelli, Barbati & DeRose, L.L.C. His primary practice revolves around the representation of public employee labor unions in various capacities to include contract negotiation, unfair labor practice litigation, contract grievance arbitration, and other diverse issues that are litigated before state and federal trial courts, appellate courts, and administrative tribunals throughout the State of New Jersey

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