What Does ‘Cadillac Tax’ Mean? Unions Exempt for Eight Years

What is Cadillac Tax?
A tax on those insurance companies who offer more expensive medical coverage to those who can afford it.

Arguments against the Cadillac tax comes from powerful labor unions, who claim that in many cases middle-class union members gave up wage increases in return for better medical coverage and more extensive healthcare benefits.

The proposed excise tax amounts to a 40% levy on health care plans over a certain dollar amount. The tax is to be levied on insurance companies who are then free to pass it on to companies and workers.

Overnight Thursday to Friday (Jan. 14/Jan. 15) President Barack Obama and leaders of Congress decided and announced that unions will be exempt for eight years. State and local government employees, which constitute an increasing percentage of the U.S. workforce, will also be exempt from the new tax until 2018.


AFL-CIO President Richard Trumka
Labor leader who got concessions from
Democrats on taxes of high-end health plans.