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Benefits April 2, 2010
Verizon Reports $970M Health Care Charge
April 2, 2010 (PLANSPONSOR.com) - Verizon Communications Inc. said it expects to record a charge of $970 million related to the new U.S. health care reform law.
Reported by Rebecca Moore
According to Reuters, the telephone company said the one-time noncash charge stems from the elimination of an income tax deduction related to providing retirees with prescription drug coverage.
Under the 2003 Medicare prescription drug program, companies that provide prescription drug benefits for retirees receive subsidies covering 28% of eligible costs, but are allowed to deduct the entire amount they spent on these drug benefits — including the subsidies — from their taxable income. The new bill allows companies to only deduct the 72% they spent on those programs.
A number of other companies have announced an expected financial impact from the new health care legislation, including Verizon rival AT&T (see More Companies Report Health Reform Impact).