AT&T Will Record A $1 Billion Expense Related To Health Care Law

Posted by IQ HSA on March 29, 2010 · Leave a Comment

The AT&T write-down is the largest reported so far. Caterpillar this week recorded a $100 million charge in the first quarter and Deere & Co. said it will report a one-time $150 million expense.

Among its many changes, the new health-care law eliminated a tax deduction that companies used to cut the cost of drug-benefit programs for retired workers. President Obama signed the massive health-care overhaul into law earlier this week in a big victory for ruling Democrats.

The health reform bill eliminated a subsidy for companies that operated as a double deduction. Companies such as John Deere and Caterpillar will face new costs up to $150 million, Ellen Schultz reports.

Yet companies that still offer retiree drug benefits, mostly older industrial concerns or those with unionized employees, say the end of the deduction could force them to alter their benefit plans. In other words, they might curtail or even cancel them.

“As a result of this legislation, including the additional tax burden, AT&T will be evaluating prospective changes to the active and retiree health care benefits offered by the company,” AT&T said in a filing with the government on Friday.

An AT&T spokesman declined to comment further on the filing.

Earlier this week, Verizon Communications sent a letter to employees suggesting that changes to their health-care plans could be afoot. AT&T and Verizon are the two largest phone companies in the U.S. and include a substantial number of unionized workers.

Several million retirees are estimated to receive drug benefits from a few thousand companies. If those retirees were shifted to the federal Medicare program, the government would to pick up the expense. Whether savings from elimination of the subsidy would offset those higher Medicare costs is unclear.

Under the old law, companies received a federal subsidy worth up $1,330 per retiree if they provided former workers with drug-care benefits. At the same time, however, companies could deduct the value of the subsidy from their taxable income.

White House spokesman Robert Gibbs on Thursday said the government merely eliminated a tax loophole that effectively allowed a company to benefit twice from one law.

The AT&T announcement is sure to cause a ripple in Washington. Republicans have already assailed the administration for what they say are excessive costs saddled on business by the health-care law. The issue is sure to be part of their campaign against Democrats in the fall elections.

Democrats say the health-care law will become more popular over time and they point out that it also includes substantial new subsidies for business.

“There’s $10 billion in health-care reform for support for businesses with early retirees,” Gibbs said.

Jeffry Bartash is a reporter for MarketWatch in Washington.

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Business Owner on Health Care: “I’m Confused”

Posted by IQ HSA on March 25, 2010 · Leave a Comment

Published: Wednesday, 24 Mar 2010 | 5:00 PM ET

By: Jane Wells
CNBC Correspondent

Madelyn Alfano is no dummy. This native of Hoboken has spent the last 25 years building up a successful chain of restaurants in Los Angeles called Maria’s Italian Kitchen. She’s President of the LA chapter of the California Restaurant Association.

But ask her what she’s supposed to do next to expand healthcare coverage from 50 fulltime employees to all 400 of her workers, and she draws a blank. “I just read a 30-page summary of what the healthcare bill is supposed to do and mean,” she says. “And I read it again. I read it two times, I was so confused.” She knows that within four years she will need to provide coverage, but she has a lot of questions. For example, if she has a part-time waiter who works a second job at another restaurant, “Who pays for that?” She’s also concerned that she’ll be paying workers comp, sick days, general liability, AND healthcare. “Something’s gotta give.”

The situation has her pausing expansion plans.

Alfano is just one of many business owners now trying to figure out what’s next. Here’s more of what she had to say.

The new healthcare law also mandates that any restaurant chain with at least 20 outlets must supply calorie information to customers. Alfano says that’s already the law in California, and the restaurant association supports this. But she’s worried she might get sued. Here she explains why:

Finally, the restaurant industry has been one of the hardest hit businesses in this recession. Madelyn Alfano explains how she managed to turn a profit and not lay off a single employee.

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The President Signed Health Care Legislation Today

Posted by IQ HSA on March 23, 2010 · Leave a Comment

The President signed the Health Care Legislation into law today. Here is a summary of the changes the initial version of the law will enact:

Mandate everyone must get insurance
Result in about 30 million additional people becoming insured
Subsidize coverage for people who can’t afford insurance; increase the number of people eligible
for Medicaid
Raise money to pay for these things through new fees, taxes and cuts to Medicare Advantage
Change the payment formula for Medicare Advantage
Make many changes in the way insurance companies operate, from saying they have to sell insurance to everyone, regardless of pre-existing conditions and health status, to selling insurance to individuals and small businesses through an exchange

The reconciliation bill, if it passes the Senate, would adjust many of those provisions and dates of enactment, although the broad strokes of the bill would remain the same.

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Side By Side Comparison Of Current Health Care Proposals

Posted by IQ HSA on March 22, 2010 · Leave a Comment

Passing comprehensive health care reform has been a priority of the President and Congress. The U.S. House of Representatives passed the Affordable Health Care for America Act on November 7, 2009 and the U.S. Senate passed the Patient Protection and Affordable Care Act on December 24, 2009. On March 18, 2010, Congressional leaders introduced the Health Care and Education Reconciliation Act of 2010, which modifies certain provisions in the Senate bill. The following summaries of these three bills focus on provisions to expand health care coverage, control health care costs, and improve the health care delivery system.

[Note: The reconciliation bill makes changes to the Patient Protection and Affordable Care Act passed by the Senate. The summary below includes the Senate bill language and incorporates changes to particular provisions made by the new legislation. The changes are identified by italicized text. If a provision was not addressed by the reconciliation bill, the Senate bill language has remained unchanged.] CLICK HERE to view side by side comparison.

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