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City eyes Cadillac tax rule

New Hampshire Union Leader

July 01. 2014 10:46PM

MANCHESTER — U.S. Sen. Kelly Ayotte has written a letter to President Barack Obama expressing concerns about the impact the “Cadillac tax” provision of the Affordable Care Act could have on municipalities like Manchester.

Ayotte wrote the letter in response to concerns raised by Mayor Ted Gatsas over the possibility that the city and school district could be hit with a combined $5.8 million tax bill in 2018 if its current health plans remain in place. The Cadillac tax is to be levied on employers who offer unusually expensive health plans to their employees.

“This significant new tax burden will put additional pressure on municipalities like Manchester that are working diligently to balance their budgets and operate in a fiscally responsible manner,” Ayotte wrote in the letter to Obama, which was presented to the Board of Mayor and Aldermen at its meeting Tuesday.

Ayotte has joined her Republican colleagues in opposing Obamacare.

“In meetings with business owners and employees across my state, I have heard similar concerns that mandates and taxes under the health care law are making it harder for businesses to grow and hire,” she continued in the letter.

Gatsas sent a letter to the state’s entire congressional delegation in which he proposed a waiver for municipalities from the Cadillac tax.

U.S. Democratic Rep. Annie Kuster also replied to his letter, stating that she shared concerns about the impact of the tax, while also pointing out the positive aspects of the health law.

Starting in 2018, the Affordable Care Act will levy excise taxes on employers whose health plans cost more than $10,200 for individuals and more than $27,500 for families. The plans will be taxed at 40 percent of the cost above those limits.

The issue is a pressing concern for the city because most of its union contracts expire in a year, while the city’s largest union, representing teachers, has yet to come to terms on a new contract.

Contracts typically run for three to four years, and health care costs are a key component.

“We’re going to start talking about contract negotiations, and this needs to be kept in mind,” Gatsas said at the meeting.

Alderman-At-Large Joe Kelly Levasseur has been critical of seeking a waiver from the Cadillac tax, arguing it would deprive the city of leverage in negotiations. But he said on Tuesday that he was glad the mayor raised the issue.

“It’s good we’re looking at this early,” he said.

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