Elk Grove firefighters' union contract aims to avoid 'Cadillac tax' on health care

A two-year extension of Elk Grove Village firefighters union contract approved this week awards raises of 2 percent and allows the village to make changes to medical plans to avoid a so-called Cadillac tax in the federal health care reform law.

The language on health insurance mirrors that in the village police union contract approved in October 2014, and it's the same wording village officials are trying to put into a new contract for the village's third employee union, representing public works employees.

Mayor Craig Johnson said the public works union has indicated it is amenable to it. The current agreement expires April 30.

Under the Affordable Care Act, benefit plans that spend more than $10,200 per person or $27,500 for a family will be subject to a 40 percent excise tax starting in 2020. That deadline was recently extended two years by Congress.

Johnson said the new fire union contract allows for individual health plans above those limits to be reduced to avoid the penalty.

The village estimates it would have paid close to "seven figures" in taxes for employee health insurance plans deemed too generous, Johnson said.

"They're very fair to the taxpayers of the community," Johnson said of the membership of Elk Grove Village Professional Firefighters Association Local 2340.

The deal, ratified last month by the union and approved Tuesday by the village board, covers 81 rank-and-file firefighter/paramedics and lieutenants. Johnson, union President John Lodewyck and Vice President Brian McVeigh participated in a signing ceremony at this week's village board meeting.

"We appreciate the village involving us in the Cadillac tax discussions," Lodewyck said.

The agreement calls for raises of 2 percent on May 1, 2017, and 2 percent on May 1, 2018. The contract runs through April 30, 2019.