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View Profile · 01-17-2010 1:39 PM

Unions will dodge O's health tax

Big Labor got some big love from President Obama and congressional Democrats yesterday after they agreed to exempt union workers from the whopping â€œCadillac taxâ€ on high-cost health-care plans until 2018.

The sweetheart deal, hammered out behind closed doors, will save union employees at least $60 billion over the years involved, while others won't be as lucky -- they'll have to cough up almost $90 billion.

The 40 percent excise tax on what have come to be called "Cadillac" health-care plans would exempt collective-bargaining contracts covering government employees and other union members until Jan. 1, 2018.

In another major concession to labor, the value of dental and vision plans would be exempt from the tax even after the deal expires in eight years, negotiators said.

Under the plan to help fund health-care reform, the tax would kick in for plans valued at $8,900 or more for individuals and $24,000 or more for families.

That's slightly higher than the $8,500 and $23,000 thresholds in the bill passed by the Senate last month.

The threshold will be even higher for certain plans with many older workers and women -- a move to benefit unions with a high proportion of female membership, sources said.

New York labor leaders -- who had initially campaigned against the Cadillac tax, favoring instead a surcharge on the wealthy -- said they are thrilled.

"We can live with it. We have an agreement that nothing will be taxed until 2018," crowed George Boncoraglio, regional president of the Civil Service Employees Association.

Officials said the deal was thrashed out over more than 15 hours of negotiating at the White House that ended after midnight Wednesday.

Powerful unions were well-represented around the bargaining table.

Participants included AFL-CIO President Richard Trumka and Andy Stern, head of Service Employees International Union; Anna Burger, head of Change to Win; and the leaders of unions representing teachers, government workers, food and commercial workers, and electricians.

Stern has been among the most frequent visitors to the White House over the last year, showing up more than 20 times, according to logs.

Originally, the Cadillac tax included in the Senate bill was estimated to raise $149 billion through 2019.

But Trumka said the exemption would reduce that amount by $60 billion -- money that negotiators will now have to find elsewhere, or reduce the coverage in the legislation.

Boncoraglio said CSEA leaders were meeting in Albany -- preparing to wage a major offensive against the tax -- when their Washington lobbyist called and briefed them on the changes.

Obama backs the Cadillac excise tax, citing economists who say it would drive down costs by encouraging insurance companies to offer employers and workers a chance to buy lower-cost health plans to avoid the levy

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