The Associated Press
The telecommunications giant AT&T said on Friday that it would take a $1 billion noncash accounting charge in the first quarter because of the health care overhaul and might cut benefits it offers.
The charge is the largest disclosed so far. Earlier this week, the AK Steel Corporation, Caterpillar, Deere & Company and Valero Energy announced similar accounting charges, saying the health care law that President Obama signed Tuesday would raise their expenses. On Friday, the 3M Company said it would take a charge of $85 million to $90 million.
All five are smaller than AT&T, and their combined charges are less than half of the $1 billion that AT&T is planning. The $1 billion is a third of AT&Tâ€™s most recent quarterly profit. In the fourth quarter of 2009, the company earned $3 billion on revenue of $30.9 billion.
AT&T said Friday that the charge reflected changes to how Medicare subsidies are taxed. Companies say the health care overhaul will require them to start paying taxes next year on a subsidy they receive for retiree drug coverage.
A White House spokesman, Robert Gibbs, said Thursday that the tax law closed a loophole.
Under the 2003 Medicare prescription drug program, companies that provide prescription drug benefits for retirees have been able to receive subsidies covering 28 percent of eligible costs. But they could deduct the entire amount they spent on these drug benefits â€” including the subsidies â€” from their taxable income.
To read more, visit: http://www.nytimes.com/2010/03/27/technology/companies/27phone.html?th&emc=th
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