WASHINGTON—A tentative accord on a plan to tax costly health insurance plans that was hammered out last week between the White House and organized labor brings a final agreement on health care reform legislation within sight, experts say.

The agreement on a health care tax ends union opposition to what was one of the most controversial provisions in the legislation, which had threatened to block a final agreement.

“It takes off the table one of the showstoppers. This was one of the big stumbling blocks that had to be resolved to improve the odds” of passage, said Frank McArdle, a consultant with Hewitt Associates Inc. in Washington. “With labor unions now promising to endorse the legislation, a lot of underbrush has been cleared away.”

With the accord on the health care tax, “an agreement in principle on other major issues may not take much longer,” said Paul Dennett, senior-vp health care reform with the American Benefits Council in Washington.

“We've seen tremendous progress over the last couple of days,” said AFL-CIO President Richard Trumka in a briefing with reporters.

But some uncertainties lie ahead, Mr. Dennett noted. Still unknown, for example, is whether the health care tax agreement will be embraced by rank-and-file Democrats, especially in the House, which did not include a health care plan tax in the reform package it passed last year.

With the House and Senate passing health care reform measures by razor-thin margins, opposition from even a handful of members could derail a final agreement, Mr. Dennett said.

For example, a proposal floated last year by Senate Majority Leader Harry Reid, D-Nev., to allow retirees age 55 through 64 to enroll in and buy coverage from the federal Medicare program died within a few days amid opposition from a group of Senate Democrats.

“How will rank-and-file House and Senate Democrats respond to this? That is the key,” Mr. Dennett said.

The new proposal—of which not all details are yet known or decided on—modifies a health care tax plan embedded in the Senate-passed health care reform package.

Under the Senate plan, a 40% excise tax would be imposed on health insurance premiums exceeding $8,500 for individual coverage and $23,000 for family coverage. The tax would be paid by insurers and plan administrators but almost certainly passed back to employers in the form of higher charges.

The cost threshold triggering the tax would be somewhat higher for plans covering employees in certain high-risk industries, such as mining and construction, and for plans covering early retirees.

The tax would begin in 2013, and the cost threshold would be increased in succeeding years to reflect the annual increase in the Consumer Price Index, plus one percentage point.

Under the latest agreement, though, the cost thresholds would be raised to $8,900 for single coverage and $24,000 for family coverage.

More significantly, the cost thresholds triggering the tax would be higher for plans that have a significant number of women and older workers, though the details of that change still are being worked out, sources said.

The cost threshold also would be modified, at least for a few years, to reflect geographic differences in health care costs.

In addition, the cost of dental and vision plans would not be included until 2015 in calculating the cost of a health care plan for tax cap purposes.

And in a step to end union opposition to the tax cap, health care plans set up through collective bargaining agreements and plans covering state and local public employees would be exempt from the tax until 2018, or five years later than all other group plans.

Observers said the seeds of an agreement were sown when President Barack Obama, in meetings with House Democrats, said he would continue to support a tax on costly health insurance plans.

That continued presidential support forced unions to the bargaining table. “Unions recognized the inevitability of the health care tax,” which led them to negotiate, Mr. McArdle said.

Still, plenty of unknowns remain, with one of the biggest being what legislators will decide on how to replace the revenue that would be lost through the modifications to the health care tax cap, Mr. Dennett said. Under the Senate plan, its health care tax cap would raise about $150 billion over a 10-year period. Revenue figures for the new plan are not available, but informal estimates suggest it would cut that revenue figure by between $60 billion and $90 billion.

Yet another unknown is the actions employers and employees would take if a tax is imposed on the most costly plans.

It is possible, says Helen Darling, president of the National Business Group on Health in Washington, that employers would step up their offerings of lower-cost plans and more employees would enroll in those plans.

“The imposition of an excise tax would be a powerful reason for some employers to change the design of their plans,” Mr. Dennett said.

While higher cost thresholds and other changes would significantly decrease the number of plans affected by the tax, eventually more and more plans would be hit by the tax, unless the indexing method is changed, Mr. Dennett said. That is because the cost of group plans historically has increased much more than the annual rise in the Consumer Price Index.