This is why. Reform Inches Ahead with 'Cadillac Plan' Tax Deal By Emily P. Walker, Washington Correspondent, MedPage Today Published: January 14, 2010 Click here to provide feedback WASHINGTON -- Union leaders endorsed the healthcare reform legislation Thursday after they struck a deal with the White House on a tax on high-cost insurance plans, representing a breakthrough in negotiations as the House and Senate work to meld their respective bills into a final package.
Union leaders had said they couldn't support the Senate bill because it taxes high-cost, so-called Cadillac insurance plans, which are common among union members. In many cases, unions negotiated high-benefits plans with employers in lieu of pay raises, so taxing the Cadillac plans would be unfair, labor leaders said. Even though insurance companies would pay the tax, the unions believe the cost would be passed on to workers.
But officials from major unions, including the AFL-CIO, National Education Association, and Service Employees International Union, announced Thursday they reached a deal with the president under which they could accept a tax. The unions and the White House agreed on a higher threshold for what defines a Cadillac plan: $8,900 instead of $8,500 for an individual and $24,000 rather than $23,000 for a family of four. The tax rate remains 40% but it would hit fewer people.
The average health insurance policy in 2009 cost $13,375, according to the Kaiser Family Foundation. Dental and vision care would also be excluded in determining the total cost of the plan. In addition, plans that contain a high proportion of women and elderly will receive special treatment so they are not automatically taxed more just because they include larger numbers of people expected to have higher healthcare costs.
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