Brothers and Sisters,

With a health care reform deal announced loudly in the media between "labor," the administration and Congress on changes to the excise tax provision, I want to provide you a new update today that outlines some of the key elements of that deal and what we know about the potential impact they will have on each and every one of you.

From Day One, we forcefully argued that the excise tax was bad policy and bad politics and that it had no place in any health care reform bill. Not once did we waver from that argument.

Our message was heard and we believe had a significant impact on what ultimately came out of the negotiations between representatives of the labor movement, the administration and Congress.

We believe we can say with confidence that our constant and consistent message resulted in significant changes to the excise tax provision of the reform bill that the House and Senate now must finish debate on and send to the president.

I don't want to overstate this, but suffice it to say that our hard opposition to the excise tax convinced negotiators to agree to new provisions that, while they fall short of our goal of eliminating the excise tax, these changes do effectively eliminate the burden of additional taxes that would have fallen on our members had the tax remained unaltered.

Based on the initial information we have received from the AFL-CIO on the changes to the excise tax provision, we know that:

• Every health plan covering our members is exempt from the tax until 2018, based on new provisions that collectively bargained health benefits will be exempt from the tax until 2018, as would the benefits of all state and local municipal worker plans even if not collectively bargained;
• The threshold for the tax to kick in on family plans has been raised from $23,000 to $24,000 for all workers, and from $26,000 to $27,000 for our members;
• The cost of dental and vision coverage will be excluded from the cost of the plans when determining if they rise above the threshold beginning in 2015;
• Each year after 2013, the $27,000 threshold for our members will increase by the CPI + 1 percent and will rise even more in high cost states;
• Further, if health care costs rise faster than expected prior to 2013, the initial thresholds will also be increased, as well.

While there's significantly more to the deal than just these initial bullets, and we are going to do a full and complete analysis over the coming days, we have not been able to identify a single IAFF member's health care plan that would or will be subject to the excise tax based on these new provisions scheduled to take effect in 2018.

We know there's a lot more to go in the political process before this bill is finally approved by both houses of Congress and signed by the President, but we are pleased that our efforts to protect our members from a severe economic penalty appear to have made a significant impact on what we are told will be in the final legislation.

We will update all of you as more details of the bill emerge.

Fraternally,

Harold A. Schaitberger
General President