The ink may still be drying on the Obama administration's new healthcare reform bill, but it's already having an effect on AT&T, which says it will have to take a $1 billion non-cash charge for Q1 2010.
Although other major corporations such as 3M would also take an $85 to $90 million charge, for example, AT&T is taking one of the largest healthcare charges announced by major U.S. corporations. The reason why AT&T's charge surpasses other corporations is the amount of retired employees, a majority of which are unionized, with guaranteed benefits.
At issue are the prescription-drug benefits AT&T provides to its retirees. Up till now, AT&T and other corporations that provide these benefits get a federal subsidy, which can be deducted from their taxes. However, the Obama healthcare reform plan does not allow companies to deduct the subsidy.
Even though the charges are "noncash," AT&T and other companies that were currently able to deduct the subsidy will have to pay higher tax bills.
- Wall Street Journal has this article
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