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AT&T Inc.will take a $1 billion non-cash accounting charge in the first quarterbecause of the health care overhaul and may cut benefits it offers tocurrent and retired workers.
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In this March 23, 2010 photo, AT&T President and CEO Randall Stephenson delivers a keynote speech...
Inthis March 23, 2010 photo, AT&T President and CEO RandallStephenson delivers a keynote speech during the CTIA wireless show, in Las Vegas.AT&T said Friday, March 26, it will take a $1 billion non-cashcharge in the first quarter related to the health care overhaul.(APPhoto/Isaac Brekken)
(AP)
The charge is the largest disclosed so far. Earlier this week, AK Steel Corp., Caterpillar Inc., Deere & Co. and Valero Energy announced similar accounting charges, saying the health care law that President Barack Obama signed Tuesday will raise their expenses. On Friday, 3M Co. said it will also take a charge of $85 million to $90 million.
All five are smaller than AT&T, and their combined charges are lessthan half of the $1 billion that AT&T is planning. The $1 billionis a third of AT&T's most recent quarterly earnings. In the fourthquarter of 2009, the company earned $3 billion on revenue of $30.9billion.
AT&T said Friday that the charge reflects changes to how Medicaresubsidies are taxed. Companies say the health care overhaul willrequire them to start paying taxes next year on a subsidy they receivefor retiree drug coverage.
White House spokesman Robert Gibbs said Thursday that the tax law closed a loophole.
Under the 2003 Medicare prescription drug program, companies thatprovide prescription drug benefits for retirees have been able toreceive subsidies covering 28 percent of eligible costs. But they coulddeduct the entire amount they spent on these drug benefits — includingthe subsidies — from their taxable income.
The new law allows companies to only deduct the 72 percent they spent.
AT&T also said Friday that it is looking into changing the healthcare benefits it offers because of the new law. Analysts say retireescould lose the prescription drug coverage provided by their formeremployers as a result of the overhaul.
Changes to benefits are unlikely to take effect immediately. Rather,the issue would most likely come up as part of contract negotiationsbetween the company and unions representing its employees and retirees.AT&T is the largest private employer of union workers in the U.S.
Also on Friday, Reps. Henry Waxman, D-Calif.,and Bart Stupak, D-Mich., said they are asking the CEOs of Caterpillar,Verizon, Deere and others to testify at an April 21 House subcommitteehearing on claims that the health care law could hurt their ability toprovide health insurance to workers.
As simple as it is I didnt see this happening, granted I wasnt paying close attention to all this. I guess you gotta take to give?
In this March 23, 2010 photo, AT&T President and CEO Randall Stephenson delivers a keynote speech...
Inthis March 23, 2010 photo, AT&T President and CEO RandallStephenson delivers a keynote speech during the CTIA wireless show, in Las Vegas.AT&T said Friday, March 26, it will take a $1 billion non-cashcharge in the first quarter related to the health care overhaul.(APPhoto/Isaac Brekken)
(AP)
The charge is the largest disclosed so far. Earlier this week, AK Steel Corp., Caterpillar Inc., Deere & Co. and Valero Energy announced similar accounting charges, saying the health care law that President Barack Obama signed Tuesday will raise their expenses. On Friday, 3M Co. said it will also take a charge of $85 million to $90 million.
All five are smaller than AT&T, and their combined charges are lessthan half of the $1 billion that AT&T is planning. The $1 billionis a third of AT&T's most recent quarterly earnings. In the fourthquarter of 2009, the company earned $3 billion on revenue of $30.9billion.
AT&T said Friday that the charge reflects changes to how Medicaresubsidies are taxed. Companies say the health care overhaul willrequire them to start paying taxes next year on a subsidy they receivefor retiree drug coverage.
White House spokesman Robert Gibbs said Thursday that the tax law closed a loophole.
Under the 2003 Medicare prescription drug program, companies thatprovide prescription drug benefits for retirees have been able toreceive subsidies covering 28 percent of eligible costs. But they coulddeduct the entire amount they spent on these drug benefits — includingthe subsidies — from their taxable income.
The new law allows companies to only deduct the 72 percent they spent.
AT&T also said Friday that it is looking into changing the healthcare benefits it offers because of the new law. Analysts say retireescould lose the prescription drug coverage provided by their formeremployers as a result of the overhaul.
Changes to benefits are unlikely to take effect immediately. Rather,the issue would most likely come up as part of contract negotiationsbetween the company and unions representing its employees and retirees.AT&T is the largest private employer of union workers in the U.S.
Also on Friday, Reps. Henry Waxman, D-Calif.,and Bart Stupak, D-Mich., said they are asking the CEOs of Caterpillar,Verizon, Deere and others to testify at an April 21 House subcommitteehearing on claims that the health care law could hurt their ability toprovide health insurance to workers.
As simple as it is I didnt see this happening, granted I wasnt paying close attention to all this. I guess you gotta take to give?