Cargo Business Newswire

Tuesday, August 5, 2014

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ILWU and PMA try to hash out who will pay health care taxes

As West Coast port labor talks continue between the International Longshore and Warehouse Union and the Pacific Maritime Association this week, negotiations have been complicated by provisions in the Affordable Care Act that tax premium health care plans such as the ones provided to dockworkers at West Coast ports.

The ILWU and the PMA are discussing how the $150 million tax on health insurance for the 20,000 port workers should be paid—whether workers, shippers or both should foot the bill for the ACA's 40 percent tax on high-end health care plans that will go into effect in 2018.

The health-care tax is a frustrating issue for both the union and employers because it could set a precedent, according to Nelson Lichtenstein, director of the Center for the Study of Work, Labor, and Democracy at the University of California at Santa Barbara.

"The ILWU is really one of the first unions to negotiate this," Lichtenstein said in a telephone interview. "It could set a precedent for other workers in other industries if the ILWU has to eat this."

Employers will have to decide whether to lower health benefits below the threshold to avoid the tax or try to shift the cost to workers, said J.D. Piro, a senior vice president at consulting firm Aon Hewitt who leads the company's health-benefits practice legal group.

"This will come up in just about every contract negotiation out there," Piro said by telephone. "Every employer is going to be calculating when and if they hit the threshold and how they're going to pay for this."

Union spokesman Craig Merrilees and PMA spokesman Wade Gates both called health care a major issue in contract negotiations, but declined to provide their bargaining strategies.

The ACA imposes a 40 percent excise tax on health insurance plans that cost more than $10,200 in annual benefits for individuals and $27,500 for families, indexed for inflation.

Merrilees said the two parties have been making progress toward a new contract since talks began in San Francisco in May. He didn't say whether the agreement would be for six years or less.

Longshore workers have continued working at West Coast ports since their contract expired July 1, first under an extension of the terms and currently without a contract.

For more of the Bloomberg story: businessweek.com

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