It seems like every time Obama and the Democrats pass legislation it becomes another, “I told you so moment”. For months, we have been telling anyone with an open mind and willing to listen that the health-care Bill, if passed, would require corporations to cut benefits, or drop coverage. In the article below, AT&T says that it will have to book a $1 billion charge in the first quarter because of the recently passed health-care Bill. Now some liberals would argue that “greedy” corporations like AT&T can afford it. Unfortunately, this myopic group fail to understand the long term affects that these charges have on jobs and retirement funds. For example, many pension, IRA accounts, and 401k accounts invest in corporations, if these corporations are making less money then these stocks fail to rise accordingly, therefore, there’s less earning potential for those retiring. Additionally, corporations will lay-off more workers in order to cut expenses.
Only yesterday, I read that Verizon may cut as many as 1,500 employees to reduce the financial burden the health-care legislation places on it. We will continue to see companies laying off workers, but retirement benefits, and increasing employees’ contributions for health-care. For those who work for companies like AT&T and supported this Bill, look for the memo and think about how your Party lied to you.
AT&T Inc. will book $1 billion in first-quarter costs related to the health-care law signed this week by President Barack Obama, the most of any U.S. company so far.
A change in the tax treatment of Medicare subsidies triggered the non-cash expense, and the company will consider changes to the benefits it offers current and retired workers, Dallas-based AT&T said today in a regulatory filing.
AT&T, the biggest U.S. phone company, joins Caterpillar Inc., AK Steel Holding Corp. and 3M Co. in recording non-cash expenses against earnings as a result of the law. Health-care costs may shave as much as $14 billion from U.S. corporate profits, according to an estimate by benefits consulting firm Towers Watson. AT&T employed about 281,000 people as of the end of January.
“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,” said Chris Larsen, an analyst at Piper Jaffray & Co. in New York, who rates AT&T shares “overweight” and doesn’t own any himself.
AT&T previously received a tax-free benefit from the government to subsidize health-care costs for retirees, who would otherwise be on a Medicare Part D plan. Under the new bill, AT&T will no longer be able to deduct that subsidy.
“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,” the carrier said in the filing.
AT&T’s announcement was followed about an hour later by 3M, the St. Paul, Minnesota-based maker of products ranging from Post-It Notes to respiratory masks. 3M said it expects a one-time expense of $85 million to $90 million after tax, or about 12 cents a share, in the first quarter because of the new law, according to a statement. 3M had about 75,000 employees as of Feb. 5.
Michael Coe, a spokesman for the carrier, declined to comment. Peter Thonis, a spokesman for Verizon Communications Inc., which also employs more than 200,000 people, declined to comment.
New York-based Verizon, the second-largest U.S. phone company, told employees in a note after the law was signed that the tax will make the subsidy less valuable to employers like Verizon and so “may have significant implications for both retirees and employers…
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