‘Cadillac Tax’ Key in Allegheny Technologies’ Lockout
20th August 2015
A provision of the Affordable Care Act, which is one reason Allegheny Technologies locked out more than 2,000 union workers last week at 12 plants in six states, also could be a stumbling block in negotiations involving two other major steel producers whose contracts covering about 30,000 union workers expire in less than two weeks.
The federal legislation subjects employers to a 40 percent tax if premiums for health care coverage exceed prescribed limits starting in 2018.
The tax was imposed to pay for the premium and cost-sharing subsidies, Medicaid expansion, and other provisions designed to make health care coverage more affordable for more people. It was dubbed the “Cadillac tax” because many believed it would apply only to gold-plated coverage provided to high-paid workers.
However, 48 percent of companies are likely to be subject to the tax in 2018 and 82 percent could be liable by 2023, according to benefits consultant Towers Watson.
“We’ve been calling it the ‘Chevy tax,’” said Anna Fendley, a legislative representative with the United Steelworkers union. “This is a tax that’s really falling on the backs of working people.”
Every government employee ought to be required to recite the definition of ‘unintended consequences’ before receiving a paycheck.