Impact of Health Care Law on Employers

obeygiant

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Jan 14, 2002
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Chairman Henry A. Waxman and Subcommittee Chairman Bart Stupak today announced that the Subcommittee on Oversight and Investigations will hold a hearing on April 21, 2010, regarding claims by Caterpillar, Verizon, and Deere that provisions in the new health care reform law could adversely affect their company's ability to provide health insurance to their employees. These assertions appear to conflict with independent analyses, which show that the new law will expand coverage and bring down costs.

Chairman Waxman and Subcommittee Chairman Stupak sent a letter to the Chief Executive Officers of Caterpillar, Verizon, Deere and others requesting their testimony at the hearing as well as information and documentation from each company on the law's projected impact.
Commitee On Energy And Commerce

The Steamboat Pilot on Wednesday quoted worried officials from the Steamboat Ski and Resort Corp. to the effect that the health-care measure approved three days earlier could cost them $2 million a year starting in 2014. The story said the ski industry has a huge number of uninsured seasonal employees who work enough to qualify for full-time benefits.
There is some concern in the industry, said Jennifer Rudolph of Colorado Ski Country USA, which has 22 members statewide.
“But (the legislation) was no surprise, and we’ve been in constant conversation with our members,” Rudolph said. “It will stay on our radar while we figure out what it all means.”
Dave Byrd, director of education and risk at the National Ski Areas Association, was more emphatic.
“This is a serious, serious issue,” Byrd said. “We’re all scrambling to make heads and tails of it.”
The legislation, which calls for a $2,000 per employee fine for failure to insure full-time workers (30 hours or more a week), offers half-hearted exemption for seasonal workers, but it’s not enough, Byrd said. There are too many unresolved issues, he said. Ski resorts are a lifeline, providing employment in job-poor rural areas and at a time when work is scarce, Byrd said.
I'd be interested in how this plays out.


Also here is the 2074 page heathcare bill and the changes.
 

Ugg

macrumors 68000
Apr 7, 2003
1,985
15
Penryn
It is truly an enormous change to the status quo and I think until 2014 rolls around, nobody's going to really know how it plays out. But for every CFO who's making wild claims, there are also hundreds of thousands of Americans relieved that they no longer have to make life plans based on insurance availability.

How much more productive will those people be? Do you not think that some of them have been held back by lack of insurance portability? Our 401ks follow us from job to job, why has it taken so long for insurance to do that? I think it's very possible that we'll see a mini renaissance now that people are freed of the shackles of health insurance tyranny.
 

Sun Baked

macrumors G5
May 19, 2002
14,874
57
Likely fewer full time jobs, already quite a few companies that require insurance for full time people due to unions tend to rotate people in as part timers for extended periods.

Can see the small McJobs immediately doing their best to make sure they fall well bellow the 50 FTE threshold.

Should be interesting to how the multi-store operations fare, to see if they are counted as one employer or multiple employers depending on how they rig the books.
 

IntheNet

macrumors regular
Oct 6, 2009
190
0
"Chairman Henry A. Waxman and Subcommittee Chairman Bart Stupak today announced that the Subcommittee on Oversight and Investigations will hold a hearing on April 21, 2010, regarding claims by Caterpillar, Verizon, and Deere that provisions in the new health care reform law could adversely affect their company's ability to provide health insurance to their employees. These assertions appear to conflict with independent analyses, which show that the new law will expand coverage and bring down costs."
Waxman is trying to shame these corporations and force their silence; it is really unprecedented how brazen this action is from Washington! Imagine... a private firm announcing that it will accrue significant costs in government compliance and a couple of government bureaucrats summon you to Washington to demand your silence! Amazing! Insofar as Stupak, no words can convey the level of utter contempt the nation has with this legislator who clearly took earmark bribes for his yes vote on health care legislation, then has the temerity to demand companies stand in his presence to explain their actions! Such CEOs of these firms should show Waxman/Stupak only their middle finger in response to unprecedented contempt from Washington.
 

miloblithe

macrumors 68020
Nov 14, 2003
2,076
28
Washington, DC
Waxman is trying to shame these corporations and force their silence; it is really unprecedented how brazen this action is from Washington! Imagine... a private firm announcing that it will accrue significant costs in government compliance and a couple of government bureaucrats summon you to Washington to demand your silence! Amazing! Insofar as Stupak, no words can convey the level of utter contempt the nation has with this legislator who clearly took earmark bribes for his yes vote on health care legislation, then has the temerity to demand companies stand in his presence to explain their actions! Such CEOs of these firms should show Waxman/Stupak only their middle finger in response to unprecedented contempt from Washington.
Verizon spent over $17 million in 2009 on lobbying . I don't think speaking to Congress is really out of the ordinary for them. Caterpillar over $2.6 million. As a matter of principle, I think any company that spends that much on lobbying should be forced to say publicly what it is they are lobbying for any why.

http://www.opensecrets.org/lobby/clientsum.php?lname=Caterpillar+Inc&year=2009

http://www.opensecrets.org/lobby/clientsum.php?lname=Verizon+Communications&year=2009
 

mcrain

macrumors 68000
Feb 8, 2002
1,768
11
Illinois
??

Anyone other than me think this smells a little fishy? These corporations are using accounting processes to post an uncertain loss in a year in which business is down?

Estimates are that health care reform will save money, but there are some who think it will cost the companies money. So far, there has been no additional cost, yet they are booking huge losses now...

It will be interesting to see how this plays out.
 

IntheNet

macrumors regular
Oct 6, 2009
190
0
Anyone have Prudential life insurance? Expect a huge premium hike courtesy of the idiots that brought you Obamacare... btw... note that this $100M charge is only in first quarter! That's actually a $4M annual charge to be passed on to policy holders...

Prudential to take $100M health care charge in 1Q
(AP) – 18 hours ago
http://www.google.com/hostednews/ap/article/ALeqM5jq4y4VraHNPT_G-NnV80IEiW-FkwD9EOJ5E80
NEW YORK — Insurer Prudential Financial Inc. said Monday that it will take a $100 million charge in the first quarter in relation to the recent health care overhaul legislation. The life insurance and annuities provider said in a regulatory filing that it will take the charge against earnings in the first quarter. Prudential joins a growing list of companies that have said they will take accounting charges because of the health care bills. AT&T said last week it would take a $1 billion charge in the first quarter. AK Steel Corp., 3M Co., Caterpillar Inc., Deere & Co. and Valero Energy have also said they would take smaller charges.
 

leekohler

macrumors G5
Dec 22, 2004
14,162
19
Chicago, Illinois
It is truly an enormous change to the status quo and I think until 2014 rolls around, nobody's going to really know how it plays out. But for every CFO who's making wild claims, there are also hundreds of thousands of Americans relieved that they no longer have to make life plans based on insurance availability.

How much more productive will those people be? Do you not think that some of them have been held back by lack of insurance portability? Our 401ks follow us from job to job, why has it taken so long for insurance to do that? I think it's very possible that we'll see a mini renaissance now that people are freed of the shackles of health insurance tyranny.
I'm right there with you.

Anyone other than me think this smells a little fishy? These corporations are using accounting processes to post an uncertain loss in a year in which business is down?
Of course it's suspect.
 

obeygiant

macrumors 601
Original poster
Jan 14, 2002
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Letter from Congress to the CEO of Caterpillar Inc.

Dear Mr. Owens:
On March23,2010, President Obama signed health care reform into law. One of the top priorities of the House Energy and Commerce Committee will be to ensure that the law is implemented effectively and does not have unintended consequences.

After the President signed the health care reform bill into law, your company announced that provisions in the law could adversely affect your ability to provide health insurance. Caterpillar stated in an SEC filing that its after-tax earnings for fiscal year 2010 will decrease by $100 million as a result of the law. A Caterpillar spokesman also warned of a reduction to employee benefits, claiming "there's greater cost pressures on us that could drive changes to plans."

The new law is designed to expand coverage and bring down costs, so your assertions are a matter of concern. They also appear to conflict with independent analyses. The Congressional Budget Office has reported that companies that insure more than 50 employees would see a decrease of up to 3% in average premium costs per person by 2016.2 The Business Roundtable, an association of chief executive officers from leading U.S. companies, asserted in November 2009 that health care reform could reduce predicted health insurance cost trends for businesses by more than $3,000 per employee over the next ten years.

The Subcommittee on Oversight and Investigations will hold a hearing on April 21, 2010 at 10:00 a.m. in Room 2123 of the Rayburn House Office Building to examine the impact of the new law on Caterpillar and other large employers. We request your personal testimony at this hearing.

To assist the Committee with its preparation for the hearing, we request that you provide the following documents from January 1,2009, through the present: (1) any analyses related to the projected impact of health care reform on Caterpillar; and (2) any documents, including e- mail messages, sent to or prepared or reviewed by senior company officials related to the projected impact of health care reform on Caterpillar. We also request an explanation ofthe accounting methods used by Caterpillar since 2003 to estimate the financial impact on your company ofthe 28% subsidy for retiree drug coverage and its deductibility or nondeductibility, including the accounting methods used in preparing the cost impact released by Caterpillar this week.
Wow. The government is all "Hey, what you're saying about healthcare costs is different from what we say. Come here and tell us everything about how you came to that conclusion." It may have precedent but I've never read anything like that.

If these companies are telling the truth and it ends up that they've got to cut jobs or raise prices to the consumer because of new government mandated incurred health care costs- the proverbial siht is going to hit the fan.
 

Zombie Acorn

macrumors 65816
Feb 2, 2009
1,301
9,062
Toronto, Ontario
It is truly an enormous change to the status quo and I think until 2014 rolls around, nobody's going to really know how it plays out. But for every CFO who's making wild claims, there are also hundreds of thousands of Americans relieved that they no longer have to make life plans based on insurance availability.

How much more productive will those people be? Do you not think that some of them have been held back by lack of insurance portability? Our 401ks follow us from job to job, why has it taken so long for insurance to do that? I think it's very possible that we'll see a mini renaissance now that people are freed of the shackles of health insurance tyranny.
mini renaissance? lol. How are they freed from the shackles of health insurance tyranny? They are now force to please the insurance companies as they have no choice but to be insured. You guys must have taken some hallucinogens before looking at what this bill is really about.

I don't plan my life around health insurance. Then again I am one of those who would be screwed hardest by these new changes.
 

Zombie Acorn

macrumors 65816
Feb 2, 2009
1,301
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Toronto, Ontario
Anyone other than me think this smells a little fishy? These corporations are using accounting processes to post an uncertain loss in a year in which business is down?

Estimates are that health care reform will save money, but there are some who think it will cost the companies money. So far, there has been no additional cost, yet they are booking huge losses now...

It will be interesting to see how this plays out.
They can easily calculate their new liabilities based on the new rules going into place. Its not rocket science, if you are going to pay penalties or have to ensure a wide group of people you didn't have to before you can determine a cost. This bill has nothing in it that will save money for the people buying insurance or the government. If the government was worried about saving money they'd pass some simple reforms such as re importation of drugs.
 

mcrain

macrumors 68000
Feb 8, 2002
1,768
11
Illinois
They can easily calculate their new liabilities based on the new rules going into place. Its not rocket science, if you are going to pay penalties or have to ensure a wide group of people you didn't have to before you can determine a cost. This bill has nothing in it that will save money for the people buying insurance or the government. If the government was worried about saving money they'd pass some simple reforms such as re importation of drugs.
No, it is not rocket science, but it might be tax fraud.

(edit) Nothing in it to reduce costs? What? Really. So the CBO and every other analysis is just wrong? (edit2) not every other analysis, that's an overstatement. How about most other independent analysis?

I'm also a rocket scientist, so hey, this topic is made for me.
 

rhsgolfer33

macrumors 6502a
Jan 6, 2006
882
1
I think it's very possible that we'll see a mini renaissance now that people are freed of the shackles of health insurance tyranny.
A government mandate to purchase health insurance from health insurance companies has freed us from the shackles of health insurance tyranny? A penalty up to $695 or 1% of income freed us from tyranny? Sounds like its just starting to me, I was plenty happy before.

Anyone other than me think this smells a little fishy? These corporations are using accounting processes to post an uncertain loss in a year in which business is down?

Estimates are that health care reform will save money, but there are some who think it will cost the companies money. So far, there has been no additional cost, yet they are booking huge losses now...
Its an accounting rule that requires companies must state the present value of their future health liabilities, its not fishy at all. The companies can figure out approximately what they have to pay for retiree drug benefits and then they are required to report those in accordance with FASB 106 (for you non-accountants the Financial Accounting Standards Board (FASB) essentially decides what accountants can and cannot do when creating financial statements).

No, it is not rocket science, but it might be tax fraud.
I take it that you don't know that there is a difference between financial accounting and tax accounting? Just because I get to take an expense on my financial statements does not mean that expense appears or can be taken on my tax return. The rules from the FASB and the tax law are vastly different. For instance, though I can report fines and penalties as an expense on my financial statements, I cannot take them as an expense on my tax return.
 

mcrain

macrumors 68000
Feb 8, 2002
1,768
11
Illinois
A government mandate to purchase health insurance from health insurance companies has freed us from the shackles of health insurance tyranny? A penalty up to $695 or 1% of income freed us from tyranny? Sounds like its just starting to me, I was plenty happy before.
The shackles they were talking about, I think, are the insurance companies unfettered ability to deny claims, deny coverage and refuse to insure people. The insurance companies have made changing jobs or going on your own very difficult, and very expensive. Believe me, I know. (edit) Before anyone says anything, I know the power isnt' unfettered. Just liked the sound of it.

Its an accounting rule that requires companies must state the present value of their future health liabilities, its not fishy at all. The companies can figure out approximately what they have to pay for retiree drug benefits and then they are required to report those in accordance with FASB 106 (for you non-accountants the Financial Accounting Standards Board (FASB) essentially decides what accountants can and cannot do when creating financial statements).
So, maybe not tax fraud, merely SEC fraud. I say that because, the CBO and many of the estimates indicate that there will be savings for businesses. I am not an accountant, I ask them questions and defer to their expertise on issues like this. If there are supposed to be savings, and the businesses are booking huge losses, thus deflating their value, that would be covered by the SEC.

I take it that you don't know that there is a difference between financial accounting and tax accounting? Just because I get to take an expense on my financial statements does not mean that expense appears or can be taken on my tax return. The rules from the FASB and the tax law are vastly different. For instance, though I can report fines and penalties as an expense on my financial statements, I cannot take them as an expense on my tax return.
Yeah, you're right. Again, I'm not an accountant. I would be willing to bet however that if they adjust their books in this way it will have an affect on their taxes. Just a guess, because, as I may have mentioned, I'm not an accountant.
 

Desertrat

macrumors newbie
Jul 4, 2003
2
706
Terlingua, Texas
The quotes are from an email newsletter from the Heritage Foundation, so no link. The laws they're referring to are way outside my area of knowedge.

"The tax charges stem from changes Obamacare makes to the tax treatment of prescription-drug benefits for retirees. Companies used to be able to deduct part of their costs for providing drug benefits to their retirees, but Obamacare cancels that deduction. Roland McDevitt, director of health care research at Towers Watson, tells the Wall Street Journal, they "have a stream of tax benefits they are losing way out in the future." Since companies had counted on these deductions for current and future retirees as an existing asset under the old law, accounting rules require firms to take the full loss for the change in the same quarter in which the tax law is changed. Hence Friday's announcement to inform shareholders that AT&T's bottom line was about to take a $1 billion hit."

That seems pretty clear: The companies are following existing law and standard accounting procedures.

"AT&T's billion-dollar Obamacare headache is so large due to the size (281,000 employees) of the company. Piper Jaffray & Co. analyst Chris Larsen tells Bloomberg: "Companies like AT&T, that have large employee bases, are going to have higher health-care costs and, therefore, lower earnings unless they can negotiate something or offer less to their employees." And changes to current and future retirees' health care seem to be exactly what will AT&T will do as a side effect of Obamacare. AT&T wrote in their Friday filing: "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."

And AT&T is not alone. Towers Watson estimates that just this tax change alone will eliminate $14 billion in U.S. corporate profits. That's $14 billion less American employers have to spend creating new jobs when our unemployment rate is still 9.7%. And AT&T is not the only company informing employees that Obamacare is going to mean worse care for them. Verizon Communications, the second biggest U.S. phone company, told employees last week that Obamacare "may have significant implications for both retirees and employers."

Note that by reducing profits, the feds lose the taxes from those foregone profits.

Waxman appears to be doing the usual "Me no Alamo! Me no Goliad" grandstanding because of an unanticipated side effect. The facts are contrary to all the hoopla about the benefits of the so-called "reform"--as was predicted.
 

mcrain

macrumors 68000
Feb 8, 2002
1,768
11
Illinois
The deduction you are talking about is described:

What happened was this: When George W. Bush and the Republican Congress passed Medicare Part D in 2003, they were presented with a problem: The fact that the government was now offering prescription drug coverage might encourage these companies to dump the prescription drug coverage they were already offering employees. So Congress gave them a kickback: Companies that provide retiree drug benefits get a subsidy of about $1,300 per retiree per year in order to keep companies from ending their retiree drug plans at once and dumping everyone into Medicare. This subsidy is not just tax free but also tax deductible. Let me make sure that's clear: Not only did companies get a subsidy, but they could also deduct that subsidy from their taxes. Sweet deal.

This looked a bit nuts in retrospect, so Democrats ended the subsidy's deductibility. Again, let's be clear: They didn't end the subsidy. And they didn't make it taxable. They just said that it couldn't be used as a tax deduction.
So, Deere, ATT, Verizon are all freaking out over the loss of a deduction, not the subsidy. (edit) Oh, they aren't even getting taxed anything additional, they are merely losing a questionable deduction! FYI
 

rdowns

macrumors Penryn
Jul 11, 2003
27,345
12,409
So they're complaining because they're losing a bit of corporate welfare?
 

IntheNet

macrumors regular
Oct 6, 2009
190
0
So, Deere, ATT, Verizon are all freaking out over the loss of a deduction, not the subsidy.
AT&T was quite specific about tax burden and additional compliance legislation:

"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."

Caterpillar Inc. and Deere & Co. will see also their costs increase this year. The point is that these companies are talking real increases which will be passed on to customers and/or job cuts to our already fragile economy. Even worse retirees will be significantly affected courtesy of Obamacare. Perhaps Democrats should have thought of this impact before they so adversely impacted the nation.
 

Zombie Acorn

macrumors 65816
Feb 2, 2009
1,301
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Toronto, Ontario
No, it is not rocket science, but it might be tax fraud.

(edit) Nothing in it to reduce costs? What? Really. So the CBO and every other analysis is just wrong? (edit2) not every other analysis, that's an overstatement. How about most other independent analysis?

I'm also a rocket scientist, so hey, this topic is made for me.
tax fraud? Since when is accounting for future liabilities tax fraud? Companies do it all the time with pension plans and everything else that is a future cost of business which won't be realized within the year.

As for the CBO, they are only allowed to work with the numbers they are given, they can't account for changes in the game after these new laws are implemented. I don't need to prove that this won't lower costs, the proof is in the pudding, and you are about to get a nice heaping scoop.

If I were blind folded for the past 4 years I would have thought this legislation came from the right. In bed with corporations, check. Reduces freedom, check. Increase government, check.

Its like Bush never left office :eek:

except for foreign policy and a few smaller things like the recent takeover of student loans (which was a huge waste) I am having trouble finding much of anything that should appease the dems who were so against Bush.
 

Desertrat

macrumors newbie
Jul 4, 2003
2
706
Terlingua, Texas
All these large corporations use this accrual method of accounting. It's standard accounting practice. The US government uses the cash method, so it does not openly admit to the unfunded liabilities of SS, Medicare, Medicaid, and other such programs where the numbers are somewhere north of sixty trillion dollars. These and other "off budget" items are still debts, obligations for future payments--and we don't have the money.

And to repeat, CBO input numbers come from Congress, not from objective, disinterested sources. That's why all federal programs' costs rise so much faster than the original amounts. They're dressed quite prettily in order to fool the public into believing that a Ponzi scheme will work forever.
 

rhsgolfer33

macrumors 6502a
Jan 6, 2006
882
1
So, maybe not tax fraud, merely SEC fraud. I say that because, the CBO and many of the estimates indicate that there will be savings for businesses. I am not an accountant, I ask them questions and defer to their expertise on issues like this. If there are supposed to be savings, and the businesses are booking huge losses, thus deflating their value, that would be covered by the SEC.
Its neither tax fraud nor securities fraud. Its perfectly legal and helps to state future liabilities more accurately. SFAS 106 makes it clear that this is what a company should do when liabilities for future retiree benefits increase. In fact, its actually more conservative and better accounting practice to restate these liabilities when they've increased. There's no securities fraud, accounting fraud, or tax fraud involved at all here; the companies are simply following SFAS 106 and the principle of conservatism in regards to stating what they expect their future liabilities to be.

Yeah, you're right. Again, I'm not an accountant. I would be willing to bet however that if they adjust their books in this way it will have an affect on their taxes. Just a guess, because, as I may have mentioned, I'm not an accountant.
It likely won't have an affect. These write downs generally occur after the computation of tax and usually are disallowed expense when figuring income taxable income and income tax liability. There is actually a section on a corporate tax return for reconciling book income (financial accounting income) with tax income which involves adding back things like this. Since we're essentially pre-recording expenses that we reasonably expect to owe and occur but that haven't actually yet occurred, its not very likely that the IRS allows a SFAS 106 write down as an expense in the year the write down occurs; its much more likely that these companies will have to deduct these expenses in the year in which they actually disburse cash to pay these drug benefits.

Regardless, removing this tax benefit was a very very poor choice. We're trying to encourage companies to continue to do things like provide drug benefits to retirees, yet we're removing a very significant incentive for them to do so. The fact that anyone was surprised that this would happen (when corporations had been saying it would) blows my mind. I wouldn't be too surprised if AT&T et al significantly reduce the drug benefits they provide to retirees when the next contract agreements come up.

Oh, they aren't even getting taxed anything additional, they are merely losing a questionable deduction! FYI
Which means they're going to pay significantly more taxes since they no longer get this write off, effectively meaning they're going to be paying significantly more to provide the same benefits.

Also, how was this deduction questionable? It was perfectly legal. I presume congress understands the deductions that they write into law and pass, right?
 

mcrain

macrumors 68000
Feb 8, 2002
1,768
11
Illinois
If I were blind folded for the past 4 years I would have thought this legislation came from the right. In bed with corporations, check. Reduces freedom, check. Increase government, check.

Its like Bush never left office :eek:
Well, you would be correct. The insurance mandate is a conservative idea, created by conservatives, proposed by conservatives, and initially supported by conservatives. It was created at a time when conservatives were opposed to liberal efforts to expand medicare or provide universal coverage. Under Clinton, in response to his health care reform proposals, the Republicans proposed insurance mandates. In the last election cycle, Hillary Clinton recognized those mandates might lead to bipartisan support, seeing as the Republicans were the ones who proposed it. Remember Hillary Clinton arguing for mandates and Obama wanting universal coverage.

Here is an article on this issue: http://www.msnbc.msn.com/id/36064264/ns/politics/ If you don't like the source, my guess is everything in it can be verified through whatever sources you like.

Its neither tax fraud nor securities fraud. Its perfectly legal and helps to state future liabilities more accurately. SFAS 106 makes it clear that this is what a company should do when liabilities for future retiree benefits increase. In fact, its actually more conservative and better accounting practice to restate these liabilities when they've increased. There's no securities fraud, accounting fraud, or tax fraud involved at all here; the companies are simply following SFAS 106 and the principle of conservatism in regards to stating what they expect their future liabilities to be.
If that is the case, they would have recorded expected winfalls when the subsidy was created. There is a deduction afforded to the companies that allows them to continue providing the drug benefit, so they get a deduction. The only thing that is changing is that the extra subsidy that they were receiving is being cut off. Yes, they will have less money coming in the door, but their expenses won't change a bit. Right? Any "extra" expenses that they are recording now should merely offset the "extra" profits they got when the subsidies were created. Net gain/loss of ZERO. Am I missing something?

its much more likely that these companies will have to deduct these expenses in the year in which they actually disburse cash to pay these drug benefits.
What expense? They won't be paying anything extra. The only "expense" is the loss of free money in the form of corporate welfare. Oh, wait, I see, we need to give ATT, Verizon, Deere and CAT free money or they will dump all of their employees drug coverage into government funded programs. So, if that is the case, wouldn't universal coverage be the better option?

Regardless, removing this tax benefit was a very very poor choice. We're trying to encourage companies to continue to do things like provide drug benefits to retirees, yet we're removing a very significant incentive for them to do so.
It's not encouragement, it is a corporate entitlement program! They are gettnig free money for nothing! They don't even have to provide job applications or show that they are attempting to better their situation. They get to deduct the expense as it is!
The fact that anyone was surprised that this would happen (when corporations had been saying it would) blows my mind. I wouldn't be too surprised if AT&T et al significantly reduce the drug benefits they provide to retirees when the next contract agreements come up.
If they do, then they are crooks. The whole point of GWB putting the subsidy in there was to avoid a sudden reduction in employer provided drug coverage. Turned into a free paycheck for the companies.

Which means they're going to pay significantly more taxes since they no longer get this write off, effectively meaning they're going to be paying significantly more to provide the same benefits.
Really? THEY GET A DEDUCTION FOR THE COVERAGE THEY PAY! The only change is they won't get a free check from the government! What are you missing!

Also, how was this deduction questionable? It was perfectly legal. I presume congress understands the deductions that they write into law and pass, right?
The deduction will stay, it is the subsidy that is being removed. Sigh...
 

Shivetya

macrumors 68000
Jan 16, 2008
1,543
223
No, it is not rocket science, but it might be tax fraud.

(edit) Nothing in it to reduce costs? What? Really. So the CBO and every other analysis is just wrong? (edit2) not every other analysis, that's an overstatement. How about most other independent analysis?

I'm also a rocket scientist, so hey, this topic is made for me.
Its not tax fraud. Its a change in tax law that suddenly puts a lot of benefits under a new tax structure. When the government originated the policy it was done to entice employers to keep retirees and the like.

Now they took that enticement away and made it chargeable this year. That requires, by law, a restatement of earnings.

The truth sucks. This bill was to the benefit of politicians their rich buddies. The companies are going to have to make up the money or do without it, they certainly won't do the later. Hence expect smaller raises, less benefits, and less jobs.
 

Zombie Acorn

macrumors 65816
Feb 2, 2009
1,301
9,062
Toronto, Ontario
Really? THEY GET A DEDUCTION FOR THE COVERAGE THEY PAY! The only change is they won't get a free check from the government! What are you missing!

The deduction will stay, it is the subsidy that is being removed. Sigh...
And this increases their future liabilities... you can't bitch them out for stating that factually... which is exactly whats going to happen when they get to this congressional hearing.

Investors need to know this information for the future.. its criminal to not provide it.