AT&T Sets $1 Billion Aside for Health Reform Costs

Funds needed to cover changes in taxation on prescription drugs for seniors

AT&T said on March 26 it took a one billion dollar charge in the first quarter of 2010 to cover changes in U.S. health care law. Just days after President Barack Obama announced landmark overhaul of health care, AT&T said it would need the sum to cover changes in the taxation on prescription drugs for seniors.

"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 new measures would see a cut in subsidies that companies get for providing prescription drug coverage to seniors.

The Dallas, Texas-based company joins at least three other firms who have projected high costs because of the reforms, which would spread health care insurance to around 32 million more Americans.

On March 23 Caterpillar announced it had set aside $100 million after tax in the first quarter to cover expected costs. AK Steel predicted a charge of $31 million while John Deere said it might cost the firm $150 million.

The new levies are not due to come into effect until 2011.

Copyright Agence France-Presse, 2010

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