Health insurance is one of the most contentious issues raised during bargaining. A health insurance provider terminated its contract with a unionized hospital. The hospital sought the consent of its union, the Michigan Association of Police, to change its members’ coverage at the end of the year. The Company and the Union could not reach an agreement, so the hospital unilaterally changed the employees’ contribution rate. The Union filed an unfair labor practice charge over the unilateral change.

The Board found that the collective bargaining agreement contained two relevant provisions. One gave the Company the right to select and change insurance carriers, as long as similar health coverage was maintained. The other gave the Company the right to amend the plan design of the health insurance benefits with notice to the Union, but required that employee premiums stay the same. The hospital relied on its right to change insurance carriers to argue that the language in the other provision regarding employee premiums was irrelevant, but the Board disagreed. Instead, the Board found that the language prohibiting changes to the premium payment schedule was unambiguous. The Board ordered the hospital to reimburse employees for any expenses they incurred resulting from the premium increases.

A consistent rise in health insurance premiums is a concern for union and non-union employers. Companies must be sure that their union contracts give them adequate flexibility to increase employee premiums based on market conditions and the ability to change the Company’s insurance carrier.