Rehab plans

[Guest JM123]

If an employer adopts an increased contribution schedule consistent with a rehab plan that will apply for the remainder of the CBA, is the plan sponsor also committed to that schedule?

I see that 432(e)(3)(B)(iii) provides that rates provided by the sponsor and relied upon by the parties shall remain in effect for hte duration of the CBA. But (e)(3)(B)(ii) requries that the sponsor annually update the contribution schedules.

Does this mean that where, for example, a new CBA provides for increased contributions consistent with the rehab plan and then two years later the sponsor decides that it increased contributions are required and collect a surcharge from the employer until it adopts the higher contribution schedule?

[Bill Ecklund]

If an employer adopts an increased contribution schedule consistent with a rehab plan that will apply for the remainder of the CBA, is the plan sponsor also committed to that schedule?

I see that 432(e)(3)(B)(iii) provides that rates provided by the sponsor and relied upon by the parties shall remain in effect for hte duration of the CBA. But (e)(3)(B)(ii) requries that the sponsor annually update the contribution schedules.

Does this mean that where, for example, a new CBA provides for increased contributions consistent with the rehab plan and then two years later the sponsor decides that it increased contributions are required and collect a surcharge from the employer until it adopts the higher contribution schedule?

The rehab plan has to be udated annually, and the contribtuion schedules may have to be changed, but any such changes do not apply to CBA's currently in force until the CBA expires and is renegotiated.

[Guest JM123]

"The rehab plan has to be udated annually, and the contribtuion schedules may have to be changed, but any such changes do not apply to CBA's currently in force until the CBA expires and is renegotiated."

So the rules are different after a CBA is adopted that is consistent with the contribution schedule under the original rehabilitation plan. In that case, the rehabilitation plan can be updated but cannot be involuntarily imposed on an employer until after the CBA expires (6 mos), but (unlike the rules applicable to the original rehab plan) there is no surcharge during the period before the new schedule is adopted.

Is that right?

[Bill Ecklund]

"The rehab plan has to be udated annually, and the contribtuion schedules may have to be changed, but any such changes do not apply to CBA's currently in force until the CBA expires and is renegotiated."

So the rules are different after a CBA is adopted that is consistent with the contribution schedule under the original rehabilitation plan. In that case, the rehabilitation plan can be updated but cannot be involuntarily imposed on an employer until after the CBA expires (6 mos), but (unlike the rules applicable to the original rehab plan) there is no surcharge during the period before the new schedule is adopted.

Is that right?

Yes, that is correct.

[Guest Salvador A Mander]

"The rehab plan has to be udated annually, and the contribtuion schedules may have to be changed, but any such changes do not apply to CBA's currently in force until the CBA expires and is renegotiated."

So the rules are different after a CBA is adopted that is consistent with the contribution schedule under the original rehabilitation plan. In that case, the rehabilitation plan can be updated but cannot be involuntarily imposed on an employer until after the CBA expires (6 mos), but (unlike the rules applicable to the original rehab plan) there is no surcharge during the period before the new schedule is adopted.

Is that right?

Yes, that is correct.

I have a similar question. If our collective bargaining agreement does not expire until two years, but we want to "lock in" the contribution schedule for later years, can we adopt a contribution schedule that locks in those years even though the collective bargaining agreement will otherwise expire in two years? We are concerned that the plan sponsor will increase the contribution rates in later years.

[Bill Ecklund]

"The rehab plan has to be udated annually, and the contribtuion schedules may have to be changed, but any such changes do not apply to CBA's currently in force until the CBA expires and is renegotiated."

So the rules are different after a CBA is adopted that is consistent with the contribution schedule under the original rehabilitation plan. In that case, the rehabilitation plan can be updated but cannot be involuntarily imposed on an employer until after the CBA expires (6 mos), but (unlike the rules applicable to the original rehab plan) there is no surcharge during the period before the new schedule is adopted.

Is that right?

Yes, that is correct.

I have a similar question. If our collective bargaining agreement does not expire until two years, but we want to "lock in" the contribution schedule for later years, can we adopt a contribution schedule that locks in those years even though the collective bargaining agreement will otherwise expire in two years? We are concerned that the plan sponsor will increase the contribution rates in later years.

You can always open the contract (assuming the union is williing) and adopt the schedule provided in the Rehab plan. This will avoid the surcharge and you are in compliance with the rehab plan until the CBA expires.

[Guest JM123]

I have a similar question. If our collective bargaining agreement does not expire until two years, but we want to "lock in" the contribution schedule for later years, can we adopt a contribution schedule that locks in those years even though the collective bargaining agreement will otherwise expire in two years? We are concerned that the plan sponsor will increase the contribution rates in later years.

432(e)(3)(iii) says the contribution schedule provided by the sponsor and relied upon by the parties in negotiating a CBA "shall remain in effect for the duration of that collective bargaining agreement." This would seem to limit your ability to avoid future contribution increases after the rehab plan-compliant CBA expires. To lock in the present contribution schedule for later years, you would have to extend the entire collective bargaining agreement.

Another consideration to make is that if the rehab plan is updated to require LOWER contributions, 432(e)(3)(iii) would appear to require continued contributions at the higher rates. Does this provision preclude the bargaining parties from negotiating for lower contributions? If so, does the excess over the lower rehab payments count as regular contributions on which benefits can accrue?

[Guest Salvador A Mander]

432(e)(3)(iii) says the contribution schedule provided by the sponsor and relied upon by the parties in negotiating a CBA "shall remain in effect for the duration of that collective bargaining agreement." This would seem to limit your ability to avoid future contribution increases after the rehab plan-compliant CBA expires. To lock in the present contribution schedule for later years, you would have to extend the entire collective bargaining agreement.

Another consideration to make is that if the rehab plan is updated to require LOWER contributions, 432(e)(3)(iii) would appear to require continued contributions at the higher rates. Does this provision preclude the bargaining parties from negotiating for lower contributions? If so, does the excess over the lower rehab payments count as regular contributions on which benefits can accrue?

So if my CBA expires in 2011 and I am looking at a rehab contribution schedule that provides for additional contributions at increasing rates over the next 5 or 6 years, and I amend my contract to include that contribution schedule, will I be subject to a new rehab contribution schedule after my contract expires in 2011 if the plan updates the schedule next year?