Healthcare Reform: Big Employers and Prescription Drug Charges for Retirees

In the healthcare reform fallout from this week, some big employers are now announcing accounting write-downs related to the provisions in the bill. Some of these write-downs are staggering in size, AT&T’s $1 billion (yes, that’s with a “b”) write-down the largest announced so far. The Los Angeles Times reports:

AT&T Inc. said Friday that it would record a $1-billion noncash expense in the first quarter related to the newly passed healthcare law, joining a growing list of large U.S. companies.

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

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

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 change their benefit plans. In other words, they might curtail or even cancel them.

I wouldn’t hit the panic button just yet. Any billion dollar accounting charge is going to be scrutinized pretty closely by the feds, and there are going to be a lot of questions of how they got to that number. Moreover, there are going to be plenty of consequences of healthcare reform, both good and bad, and we’ll have to see where it all shakes out in the end. A major feature of the healthcare reform is the revision to retiree prescription drug coverage and the so-called “donut hole.”

Hold on tight! It’s going to be a bumpy road!

For a full report from The Los Angeles Times: Big Employers Rethink their Healthcare Plans.

Related posts:

1. Healthcare Reform Wrap-up: Weighting In on How to Cut Healthcare Costs
2. Healthcare Reform Changes: Health Insurance and Adult Children
3. Healthcare Reform: Immediate Changes in Medicaid
4. Link of the Day: Kaiser Family Foundation Healthcare Reform Comparison
5. Saving on Prescription Drugs: Is Pill-Splitting an Option?