Premium Holidays are No Vacation!

Shane Clune, Chief Steward and 2822 Labor-Management Health Care Committee Representative

On July 30, 2019, as part of the conclusion of the LMHCC Consensus decision making process, the County Board authorized the County Administrator David Hough to stop collecting insurance premiums for three pay periods this fall. This is also known as a premium holiday. The County certainly seems very excited about this, but I think a lot of us don’t know what it means.

A premium holiday is a pay period in which neither the employer or enrolled employee pay their contribution of the health insurance premium. Claims will continue to be paid out of the health plan reserves, but the health fund will receive no premium revenue for six weeks. You will not have your premium deducted from your check during a premium holiday. The employer will not pay their own, much larger share either (the employer contributes an average of 81% of the premium). This contribution split (around a 1:4 ratio) is negotiated and defined in our contract. Hennepin County has planned three premium holidays this fall, meaning that insurance coverage will continue as normal for enrolled employees, but three paychecks will not have premiums deducted from them.

While keeping a little bit more of your money (or a lot, if you can afford an expensive plan) is a good thing, this is a much better deal for the employer than it is for us. We negotiate our benefits, including health insurance. Employees, as a whole, will save $913,461 from a single premium holiday. The employer will save $3,894,000 in compensation for that same holiday. In total, employees will save a total of $2.7 million, while the employer will save $11.7 million. While we’re getting a little bit of a break, the employer is getting more than four times more of a break.

This is a problem. Not only did the Board reject the majority recommendation, supported by all labor representatives during the LMHCC, to reduce the reserves by making our healthcare less expensive to use, but they chose to stop providing a negotiated benefit. This is money that was costed in during negotiations, and could have been used for other negotiated benefits (e.g. uniform allowance, parking reimbursement, etc.). In fact, unilaterally deciding to stop all contributions to a negotiated benefit may even violate the contract.

In the Board’s own words, this $11.7 million (that the county would otherwise have spent on their negotiated contribution to our healthcare fund) will instead be spent elsewhere in the county. Instead of holding up their end of the bargain on our compensation, they’re going to
put a band-aid on their budgetary problems. Instead of balancing the budget by cutting back on superfluous management or raising taxes on the rich, Administration and the Board have agreed to balance the budget on the backs of working people.