January 14, 2010

Brothers and Sisters,

We are fully aware of the media reports this afternoon that there has been a deal reached between "labor," the White House and Congressional leaders on the excise tax in the health care reform legislation being debated.

On a conference call with the AFL-CIO Executive Council just minutes ago, AFL-CIO President Richard Trumka provided a report that outlined that purported "deal."

Let me state right here that this IAFF was not afforded an opportunity to be a part of the labor committee that participated in negotiations with the White House and Congressional leaders over the changes that are being reportedly made to the excise tax provision in the bill.

On Monday, January 11, in a conference call with the Executive Committee of the AFL-CIO, conducted prior to the first meetings between the labor committee and the White House, I made it very clear to the union leaders who were selected by Trumka to go into those private discussions that our union was fully and completely opposed to any excise tax because it would either force a tax on the premiums of our members or force their health benefits to be cut. I was the only member of the AFL-CIO Executive Committee to take that position and our position was widely covered in the media over the past week.

In addition, as late as 1:30 p.m. this afternoon (January 14), I was one of four labor presidents invited to speak before the House Leadership and Democratic Caucus. At that event, I was the only speaker who, in very clear and emphatic terms, strongly reiterated that this IAFF remains completely opposed to an excise tax. I reaffirmed that this is bad policy and bad politics.

While the reports of the "deal" appear to show that the thresholds have increased and that state and local governments may have received a multi-year exemption, which should serve to ease the burden on our members, I still find it unacceptable that a form of the excise tax remains in the bill.

Internally, we will be analyzing the affects of any changes to the excise tax provision once they are formally released. Rest assured that this union will continue to fight the excise tax so that it doesn't affect any of our members and we will continue to update you as this process moves forward.

Fraternally,

Harold A. Schaitberger
General President

January 15, 2010

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