RUMORS vs. REALITY: Tentative National Agreement Health and Welfare Benefits
Published: Sep 16 2022 2:56PM
September 10, 2022 Tentative National Agreement
Health and Welfare Benefits
RUMORS vs. REALITY
RUMOR: The rumor is that the new National Agreement requires the increase in Employee monthly health and welfare (H&W) cost-sharing contributions to be applied retroactively, so those amounts will get deducted out of my backpay and service recognition bonuses.
REALITY: The reality is that Employees’ monthly cost-sharing contribution does not increase until January 1, 2023, so there are no deductions for health and welfare benefits out of your backpay and service recognition bonuses.
RUMOR: Well, the rumor is that the new National Agreement is going to increase my monthly cost-sharing contribution 15% each month, so by January 2025, I will be paying over $1,000 per month just to have health insurance coverage.
REALITY: The reality is that the Employee monthly cost-sharing contribution will not increase by 15% each month, and most certainly will not be $1,000 per month by January 2025. The Employee monthly cost-sharing contribution is set at 15% of the Carriers’ (railroads’) Monthly Payment Rate, starting January 1, 2023 and the same will apply for January 1 2024. Starting on January 1, 2025 and on January 1 each year thereafter, the Employee monthly cost-sharing contribution will be the lesser of 15% of the Carrier’s Monthly Payment Rate or $398.97. It is currently estimated that the Employee monthly cost-sharing contribution will be $295 for 2023, $308 in 2024 and $326 in 2025.
RUMOR: Okay, but the rumor is that even if the Employee monthly cost-sharing contribution only goes up to $326 on January 1, 2025, that will wipe out all of my wage increases from the Agreement.
REALITY: The reality is that you will be money ahead, even with the higher Employee monthly cost-sharing contribution. The currently Employee monthly cost-sharing contribution is $228.89 per month, and the average straight time (ST) hourly rate of pay across the Class I railroads for Maintenance of Way (MOW) Workers is $31.06. So right now, the average MOW Worker is paid $5383.63 in ST in a month ($31.06 x 173.33 ST hrs.) and when you deduct the current Employee monthly cost-sharing contribution of $228.89, it comes out to $5,154.74 in ST pay per month.
Under the new National Agreement, that $31.06 hourly rate would be $38.51 by July 1, 2024. So, by January 1, 2025, the average MOW Workers would be paid $6,674.94 in ST in a month ($38.51 X 173.33 ST hrs.), and when you deduct the estimated Employee monthly cost-sharing contribution of $326, it comes out to $6,348.64 in ST pay per month. I am no mathematician, but that’s nearly $1,200 more ST pay per month than now, so you’re still money ahead.
RUMOR: Yeah, but the rumor is that the railroads and their managers will just charge a bunch of fake insurance claims to the health insurance plan so that the Employees’ monthly cost-sharing contribution will go way up and eat up more of the wage increases.
REALITY: The reality is that railroad executives and managers are not covered under your insurance plan. Only Union Members and their dependents are covered under the Railroad Employees National Health and Welfare Plan (“the Plan”), so the railroads cannot make fake insurance claims to the National Plan to drive up the costs of benefits. The railroads only want to cut benefits because they want to cut their costs to provide insurance benefits. The railroads have no incentive to drive up insurance costs because that would only increase the railroads’ costs for health insurance since they pay 85% of the cost of the benefits.
RUMOR: Yeah, but the rumor is that railroads and the health insurance companies decide what the Carrier’s Monthly Payment Rates are, so the Union’s really can’t do anything about keeping the Employee’s monthly cost-sharing contributions down.
REALITY: The reality is that the Carrier’s Monthly Payment Rates are established each year by the Joint Plan Committee (JPC). The JPC consists of representatives for the Unions and railroad management on the committee. The insurance vendors on the Railroad Employees National Health and Welfare Plan provide the JPC with information like: how much insurance costs were in the prior calendar year and how much they are so far in the current year; what medical inflation is anticipated to be in the following calendar year; how many Employees (and dependents) are expected to be covered under the Plan in the following year; what an appropriate margin of error would be in their projections, etc. In other words, the JPC reviews data and estimates what the costs will be to provide health insurance for the following year and that is what the Carrier’s monthly payment rate is based on.
RUMOR: Yeah, but the rumor is that there is no way that health insurance costs could ever go down without cutting benefits, so the Employee’s monthly cost-sharing contributions will just always go up.
REALITY: The reality is that there are ways to make insurance costs go down without cutting benefits. One of the ways is called “rebidding” the health insurance Plan vendors, and it is required by the new tentative National Agreement. When you rebid the Plan, vendors, insurance companies/vendors compete to provide services to the Plan. With a health insurance plan of this size, it usually results in tens of millions in dollars of savings. In fact, on Amtrak the health insurance plan (AMPLAN) is rebid every 3-5 years. AMPLAN’s rebidding has resulted in tens of millions of dollars in savings for providing the same health insurance benefits, and there have been minimal changes to copays, deductibles, out-of-pocket maximums and the Employee’s monthly cost for insurance.
Rebidding the National Health and Welfare Plan has great potential to result in real savings that will save the railroads money on their payment rate, and more importantly, save you money on your Employee monthly cost-share.