Obama, unions agree to modify high-cost health-benefit tax

Under the agreement, reached after an intense round of negotiations this week, union leaders dropped their opposition to the so-called Cadillac tax in exchange for concessions to limit its scope. Organized labor had opposed the tax, saying that union members had negotiated generous benefits in lieu of pay increases.

In a significant victory for unions, the 40 percent excise tax would not apply to policies covering workers in collective-bargaining agreements, state and local workers and members of voluntary employee-benefit associations through Dec. 31, 2017.

A union official familiar with the details said the tentative agreement would raise the threshold on insurance policies subject to tax from $8,500 in the Senate-passed bill to $8,900 for singles and from $23,000 to $24,000 for family coverage, and exempt the cost of dental and vision plans. Even the new thresholds would be subject to adjustment if unexpected rises in health care occur by the time the plan is effective, this official said.

Additionally, AFL-CIO President Richard Trumka said that beginning in 2017, all health plans — union and nonunion — would be permitted to seek coverage in insurance exchanges that would be set up under the bill to allow consumers to shop for coverage issued under federal regulations. White House officials disputed that, saying the issue was not settled.