AT&T says new healthcare norms will cost it $1 billion
27 March 2010
Telecom major AT&T said on Friday it would record a $1billion non-cash charge for the current quarter related to the new US healthcare reform law, as lawmakers called on the company and three other large employers to testify about expected cost hikes.
AT&T's charge was reported to be the largest in a series of charges announced by US companies this week.
A House energy and commerce subcommittee said on Friday it would call on the chief executives of AT&T, Caterpillar, Verizon, and Deere to testify on 21 April about how the reform might adversely affect their ability to provide health insurance.
"The new law is designed to expand coverage and bring down costs, so your assertions are a matter of concern," the subcommittee said in the letters.
AT&T, whose annual revenue is expected to be $124.1 billion this year, said the charge is the result of a provision in the law related to the tax treatment of Medicare subsidies. As a result of the legislation, the company, which ended 2009 with 282,000 employees, said it will be evaluating prospective changes to the health care benefits it offers to employees at retirees.
Under the health care overhaul large ranks of retirees can no longer deduct from their taxes the subsidies paid by the federal government for retiree drug benefits.