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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.
.... 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.
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