Employers Signatory to

Multi-employer Plans to

Face Excise Tax under

New Health Care Legislation

----------------------------------------------

Effective Year Uncertain 

            Although the procedural maneuvering and deliberations in Congress leave unclear the substance of the bill that the President probably will sign when all is said and done, observers assume that one provision bound to survive the debate will be the so-called “Cadillac Tax.”  Employers offering high cost health insurance coverage through collective bargaining will pay a 40% tax on the value of the benefit plan that exceeds certain thresholds laid out in the reform legislation. 

            It is expected that multi-employer plans in the construction industry will fall under this provision of the law.  In the Senate version of the bill, the excise tax would be effective 2013, but the House version provides that the tax kicks in five years later.  We see the compromise version of the bill that is signed into law implementing the tax in 2014. Hence when the area agreements that expire in 2013 and 2014 are up for re-negotiation, the employer side of the table will in all likelihood do everything – including a strike or lock-out – to get plan amendments that deflect the excise tax. 

 

3/22/10