ATT: $1 Billion Non-Cash Charge, Altering Benefits: Thanks, ObamaCare!

Elections, just like bad laws, have consequences. ATT isn't the only company chiming in below. A non-cash charge is a charge against earnings due to extraordinary circumstances, if you aren't familiar with the term.

AT&T will take a $1 billion non-cash charge in the first quarter related to the health care overhaul.

AT&T Inc. said Friday that the charge is to reflect the change of the tax treatment of Medicare subsidies. Companies say the health care overhaul, which President Barack Obama signed Tuesday, will make a subsidy that companies receive for retiree drug coverage taxable in 2011.

AT&T also says it is looking into changing the health care benefits it offers to active and retired workers because of the legislation.

On Thursday, Deere & Co. and Caterpillar Inc. announced similar charges. Both say the health care law will raise their related expenses.

Comments

[Chris]

We will be seeing an ongoing stream of these charges. I wonder why we are seeing a shift to using "non cash" charges. The Deere and Cat articles didn't employ this approach. If you are a stockholder, it is a real hit even if the money doesn't go out the door today.

Basically, every public company with a material exposure to future outlays for employee health benefits is doing the math and will issue a report so as to fulfill their legal obligations to investors.

It will be interesting to see which Friday night, GM & Chrysler decide to drop their bombs - or are they already exempted from having to deal with congressional dictates.

[fdf]

boo hoo they are billionaires

[me]

Why should we feel sorry for AT&T? They charge ridiculous prices to consumers for their services. The average cell phone bill is around $100 a month, plus what they charge for cable and home phone service.... They should give their employees good healthcare! If they don't like what their insurance carrier wants to charge, then do what their customers can do, pick another provider.

[Dan Riehl]

You last two must be progressive idiots. ATT isn't 3 fat-fingered rick guys raking it in. Their earnings are dividends - paid to consumers, pension funds, investment vehicles, all linked to middle class wealth.

You're either fools, or non-capitalists, which makes you irrelevant to the discussion.

[Sarah]

I agree with Riehl, not just on that, but also not knowing that these guys invest in the Infastructure its-self. You get what you pay for- suprisingly. You pay so that they can move forward on towers, new tech, subsidized phones, maintanance...stupid. Or should the Gov't subsidize ALL of that too, for each carrier? IT's called business, if they weren't into making a profit to reinvest, pay expenses, etc YOU wouldn't have any service. Not every coporation is the bad guy ALL of the time.

[Rob]

From an article here http://www.mediapost.com/publications/?fa=Articles.showArticle&art_aid=104657 - 2009 Q1, "AT&T report net income of $3.2 billion, or 53 cents a share" So their first quarter profits were $3.2 Billion. So they could pay that $1 billion their crying about and still have another $2.2 billion to line their already fat pockets. I still don't see the need to fire people and cry like a bitch about it, well except of course for the greed thats the problem with our system. Go ahead call me whatever liberal name you want to, I could care less. They should quit calling it a capilist system and call it by a more accurate name like - greedy soulless corporations own your ass.

[RW]

Rob: As opposed to the greedy soul-less government owning your ass???

BTW, it's "they're", not "their" and "I couldn't care less",not "I could care less". If you could care less, please do so.

[Tim Moore]

"AT&T said Friday that the charge reflects changes to how Medicare subsidies are taxed. Companies say the health care overhaul will require them to start paying taxes next year on a subsidy they receive for retiree drug coverage."

So, who wants to explain why AT&T should be entitled to a tax-free subsidy from the federal government?

[Jamie]

As an AT&T employee I can let you all know that AT&T has been looking for a reason to do this for years.. Now they have it.. Has nothing to do with healthcare legislation.

[buckie]

This my friends is just the tip of the iceburg.

[Sisao Tresed]

If you don't like AT&T or Caterpillar or John Deere, don't do business with them. Please do not slip to the low platform of complaining about a companies fees, and telling us that "they deserve this retribution by the government." Remember when this government comes to your door (which it will eventually...with a man who has a gun) telling them that "I [you] don't like AT&T either" it won't get you anywhere. Millions of honest, hardworking men and women are losing their good jobs for NO GOOD REASON! Their jobs, their stocks and bonds (remember Chrysler) are dropping like stones, their IRA's, their investments for retirement are all being decimated by an administration that cares nothing for the people of this country, your president is disconnected, and disassociated.

[nonya]

Hey Riehl, answer Tim Moore's question.

[Dominick]

And Riehl -- while you're at it -- please remember that the subsidy that will START being taxed in 2011, is one that the companies are already receiving for providing retiree drug coverage. I believe "Jamie" gave a comment that is more to the point: the companies are seeking a popular excuse to do what they've wanted to do for years, something many companies HAVE been doing rather quietly for years.

[cp]

Why would anyone think it is ok for the government to take billions of dollars from companies that give people jobs, reinvest in communities, technology, etc., only to use the money for their own special interests, fancy trips with their families and staffers, or, if you want to stick to healthcare, how about the fact that our tax dollars will be used to give sex offenders viagra? This government disgusts me! Some of you are just ill informed and really need to study politics and especially the political leaders in office right now, you may be surprised at what you may learn!

[cp]

By the way, why do you think product prices are so high? It's because of all of the taxes corporations have to pay to the government. Do you not think they pass those costs on to the consumer?

[Mark]

I'm sure that no drug coverage offers Viagra through a program. Drug companies might offer a discount if you have drug coverage but that's at the companies discretion. Also, who's to say that if these companies weren't taxed that the product prices would be lower. I mean if companies weren't taxed, consumers probably wouldn't be either thus consumers would have more money so product prices would be the same if not higher. I agree that corporations finally found a good excuse to cut jobs/costs as of before they did not. It's all about Greed via corporations and government. Companies that are tanking can still pay 10 million in bonuses? What is that? Instead of paying those bonuses why not lower prices for consumers? Most middle to lower class citizens will never see/make 10 million in a whole lifetime.

[JK]

Hey CP: how indoctrinated are you? "how about the fact that our tax dollars will be used to give sex offenders Viagra?" Please. If the complicated factors of healthcare were so easily reducible then I doubt the legislation would ever have gotten as far as it did. These things are far more complicated than the little sound bytes that conservatives release to get people upset. Remember, you too are being manipulated.

[Haywood Jablome]

Garbage.

[PATRICK CROTHERS]

I GOT HURT AND HAD TO GO ON LONG TERM DISABILITY. I HAD PURCHASED A SECONDARY INSURANCE PACKAGE TO GIVE ME 2/3 OF MY PAY INSTEAD OF 1/2 OF MY PAY i ALSO HAD MY HEALTH INSURANCE. AFTER TWO YEARS AT&T TOLD ME THAT MY POLICY HAD LIMITED ME TO TWO YEARS PAY AND THAT'S ALL. ALSO MY HEALTH INSURANCE WAS DROPPED. THE REASON WAS THEY DIDN'T RECOGNIZE MY INJURY'S DEBILITATING EFFECTS SO WAS ONLY QUALIFIED FOR TWO YEARS.
AS SOON AS I BECAME ELGIBLE FOR SOCIAL SECURITY I GOT MEDICARE AND THE FUNNY THING WAS WHILE I STILL HAD BLUE CROSS (BEFORE THE TWO YEARS) MY DOCTOR WOULDN'T SEE ME ANY MORE AS HE DIDN'T TAKE MEDICARE. BUT I STILL HAVE BLUE CROSS I PROTESTED. THEY SAID THAT DIDN'T MATTER AS SOON AS YOU GET MEDICARE THEN IT PAYS THE FRIST 80% AND YOUR BLUE CROSS IS SECONDARY,

HOW MUCH MONEY DOES THAT SAVE COMPANIES. PEOPLE LIKE MY GIRL FRIEND WORKED AS A PAROLE OFFICER FOR 30 YEARS SO SHE COULD HAVE HEALTH INSURANCE WHEN SHE RETIRED. HER DOCTOR WILL NO LONGER SEE HER AFTER 25 YEARS AS HE DOES NOT TAKE MEDICARE.

THIS CHANGE HAPPENED TWENTY YEARS AGO AND NO WONDER SS IS GOING BROKE AS IT IS PICKING UP BIG BUSINESSES TAB.

[PATRICK CROTHERS]

I GOT HURT AND HAD TO GO ON LONG TERM DISABILITY. I HAD PURCHASED A SECONDARY INSURANCE PACKAGE TO GIVE ME 2/3 OF MY PAY INSTEAD OF 1/2 OF MY PAY i ALSO HAD MY HEALTH INSURANCE. AFTER TWO YEARS AT&T TOLD ME THAT MY POLICY HAD LIMITED ME TO TWO YEARS PAY AND THAT'S ALL. ALSO MY HEALTH INSURANCE WAS DROPPED. THE REASON WAS THEY DIDN'T RECOGNIZE MY INJURY'S DEBILITATING EFFECTS SO WAS ONLY QUALIFIED FOR TWO YEARS.
AS SOON AS I BECAME ELGIBLE FOR SOCIAL SECURITY I GOT MEDICARE AND THE FUNNY THING WAS WHILE I STILL HAD BLUE CROSS (BEFORE THE TWO YEARS) MY DOCTOR WOULDN'T SEE ME ANY MORE AS HE DIDN'T TAKE MEDICARE. BUT I STILL HAVE BLUE CROSS I PROTESTED. THEY SAID THAT DIDN'T MATTER AS SOON AS YOU GET MEDICARE THEN IT PAYS THE FRIST 80% AND YOUR BLUE CROSS IS SECONDARY,

HOW MUCH MONEY DOES THAT SAVE COMPANIES. PEOPLE LIKE MY GIRL FRIEND WORKED AS A PAROLE OFFICER FOR 30 YEARS SO SHE COULD HAVE HEALTH INSURANCE WHEN SHE RETIRED. HER DOCTOR WILL NO LONGER SEE HER AFTER 25 YEARS AS HE DOES NOT TAKE MEDICARE.

THIS CHANGE HAPPENED TWENTY YEARS AGO AND NO WONDER SS IS GOING BROKE AS IT IS PICKING UP BIG BUSINESSES TAB.

[C]

I love how people say taxing companies that make billions in profits every year is just wrong. "OMG you're taking away 1 billion of my 3 billion dollars, now I can't afford my solid gold 757 jumbo jet." Do I want the government to own everything... no. What I would like to see is everyone, regardless of income, pays a flat tax based on percentage of income. Say 15%, if you taxed 3 billion dollars 15% that's 450 million. Now how many companies in America make profits 2, or 3, or even 10 times more than that a year. If that were done, sure the top 1% of wealthy people would moan and complain non-stop about it, but it is more fair, you make more money you pay more taxes.

Would anyone really feel 450 million hit when they have billions of dollars, I doubt it.

[R]

So many distortions and exaggerations on both sides. Business isn't the enemy, nor is the Government. In the ebb and flow of this representative republic these differences are going to occur. The solution isn't extremeism. If it weren't for businesses, large and small, none of us would have jobs to go to. We wouldn't be a world power just another 3rd world country. Government provides for our protection both from outside and within. Both need to have checks and balances. What we are experiencing now is what happens when neither is being checked and balanced. The people in our government are elected officials both nationally and locally. If we want to execute change isn't it our responsibility to be involved in the election process? We still expect the few to make the right choice for the many. Do get polarized, get active. Don't like your local council person? Find enough others who think like you and get them unelected. Don't like a company making huge profits? Find enough others who think like you and stop buying their products. Let the market decide its fate, not the government. These companies are responding to health care system that is being mandated by a government who isn't even willing to listen to the majority of people it supposedly represents. Shame on us for allowing it. Don't kid yourself into thinking this new healthcare is going to be less expensive and better than the current delivery system, it won't. The government will be treated as just another middle man in the process who expects a cut of the money exchange and that cut will be passed on to the consumer. Ideally, we need less government intrusion into our daily lives and more freedom to make our own decisions. Is that always fair? No, but it is far more democratic than what we are experiencing now.

[ITCS Retired]

Where were all of you haters, when Bush lied and manipulated our country into two bull... wars? These wars that has not only put us into this financial mess but, ruined our political effectiveness around the world, and put millions of American lives abroad in danger as well. As a retired military member, I know most of you are ill informed. We as Americans have targets painted on our backs whenever we leave this country. Thanks Mr. Bush! So, stop your moaning or pack your bags and leave! You can't have it your way all the time! Most of you sound like spoiled children!!!

[ITCS Retired]

R,

While, I don't agree totally with your comment. I did like how you stated it. This is the type of conversation we need to have. Respectful and mature, it is the type of debate that informed educated people have. We as Americans are reverting to simple school yard rants over the issues. What we need to do is elect the people who you feel best represents you. Then, all we can do is hope they represent us to the best of their ability.

[R]

Hey PATRICK CROTHERS , TURN YOUR CAP LOCK OFF!!!

[shawn]

Yea the repubs are sorry losers,,The Dems voted with Bush most of the time unfortunately, but we thought it was best for the country,,but now the repub are the vote no party just dying to gt back into power.

[Steve]

Social Security, Medicare and Medicaid have put us in this mess and driven health costs through the roof. Afghan and Iraq have nothing to do with it. By the way, over 80% of the Congress voted for those wars, not 50.5%.

We do need reform and it was one of the good things Bush tried. Kill SS, Medicare and Medicaid by opting young people out and let them create their own savings accounts. Ones that they can give to their kids or families when they die. The Gov is too big and too complicated. The IRS should be cut to 10% of it's size. Taxes should be taken out as a straight percentage of PAY ... no "returns", the current tax state is ridiculous and it reflects the non-sense that is in Washington and has been for 40 years .. just a bunch of lawyers that don't understand the people or concepts other than rhetoric and confusion ...

I'm not sure how to fix it ... it may be a case of us just having to hope one person can get into a position to do the right thing ... i.e. George Washington, he could have turned us into a European mess in 1787, but he made a 200 year difference for us almost by himself by doing the right thing

[GeoDubyahLozer]

The reason this country is in such a mess economically is because the large Wall Street banks was because the banks were not being regulated or the Bush governments regulators were not enforcing the rules. Accross America individuals were setting up loan companies that were writing loans to folks who had no ability to even understand the details of the loan. These loan sharks were turning these loans to the Wall Street bankers even before the ink dried on the paperwork and Wall Street moved these loans to Fanny Mae in a heartbeat. This is a perfect example of the Bush government officials looking the other way in the face of disaster. Don't tell me these large coroporations do not need to be regulated! A free market without regulation is soon to collapse because of corporate greed. That is exactly what ATT&T is crying about here. Why in the hell are they getting a subsidy anyway to provide Medicare benefits to their employees? When these greedy corporations here Obama is going to do something for the working man and the poor in this country. we hear the screams of socialism and the illiterate in this country join the likes of the crowd listening to Rush Limbaugh and other loudmouth fools. If Limbaugh cannot create a controversy, he has no show, no income, and to be truthful no honor when he attempts. Has he packed his bag yet after the President signed the health care law? If he has not yet left the country, he is nothing but a damn liar because he said he would leave. I say, "Don't let the door slap you in the ass Rush, the sooner the better."Ge

[D W]

"AT&T said Friday that the charge reflects changes to how Medicare subsidies are taxed. Companies say the health care overhaul will require them to start paying taxes next year on a subsidy they receive for retiree drug coverage."

So, who wants to explain why AT&T should be entitled to a tax-free subsidy from the federal government?
=======
Becasue it results in their retirees getting better drug coverage than what the federal Medicare program provides. Now they'll just say "screw it", and add the costs for those retirees to the Medicare budget. Taxpayers lose more by not providing the subsidy because they now must bear the full cost. Great.

[County]

Medicare is the biggest denier of coverage in the US....since the govt runs medicare that makes Mr Obama no better than the big insurance companies everyone loves to hate.

[db68]

To fdf,What about the retirees like my mother who put in her 32years,I will feel horrible for her!She work her but off to help provide for my family growing up!You are an offensive puke!

[diana morton]

i worked for att and had to go on short term disability. it was like pulling teeth. with all of their new policies in place the disability team is run by att.. so they would not pay me and then i would get paid it was so messed up. most of my short term was denied even tho i had multi drs reports. and then they came back and send me letters stating overpmt and when i did go back to work i was harrased to the point i had to quit. then i get letters taking my vacation pay and saying they are going to sue me over overpmt. i worked for them for 7 years and was treated terribly for being ill. they always had an excuse as to why they would not pay me and i do not think i was over paid. they said it was accounting errors and just not posted on my ck correctly. so that is my fault???? att has been terrible at health care and looking for a way to take it away and not pay. i dont think big gov is the way but the big companies should be overseen.

[old fritz]

The government gave the subsidy so that companies would not dump retirees onto Medicare. With the subsidy now being taxed only a fool would continue to provide benefits. This is the same move that the government used with Social Security. You paid taxes in order to receive it in retirement and now they changed the rules and taxed it again when you got it. The Obama plan is to make the government the provider of EVERTHING you need, and to control everything. Sounds like an evil plan to me.

[GLP]

This whole nighmare odumbo healthcare plan will be repealed, replaced, and redone in total.

Vote out the libturds in 2010 and 2012.

[Steve Zink]

I am an at&t retiree. I think contracts should be honored until 1 party dies or dissolves the contract. I think this applies to all dealings with corporations and governments. Once a person retires, they have earned the right to know what they will be receiving in retiree benefits, pension payments, and social security payments & benefits. If the governments and corporations want to change the rules, do so with new workers, so future plans can be made.
Applying negative actions to people who can no longer work is not the way to run a society.

[Crystal]

LOL!!!!! That is why I'm not subscribed to AT&T!!! A BUNCH OF NEOCON TEABAGGERS!!!! They're just doing this because they're bitter and want to save some money.

LOSERS!!!

VOTE OUT THE REPUKELICKINS IN NOVEMBER!!!!!!

[john]

wow I have never read such stupidity. No wonder half of the country voted for Obama, probably the half that can't read. Ive read numerous comments about greedy billionaire AT&T lining their pockets with profits etc. AT&T is a publically owned company, which means in easy to understand terms, that their profits are spread around to each stockholder, which is made up mostly of everyday americans who bought the stock. There is no person AT&T who walks away with all of this profit! Of course the higher ups most likely own a good amount of stock themselves, but you cant complain about them making a profit, when they make money, so do the shareholders.

I read a quote about greedy large corporations, but who do you think employs the majority of americans, as well as provides the majority of TAX income to the government(so OBama has more money to spend) its those same large companies. WIth 10% of the country collecting unemployment, dont you think you should be rooting for these companies to do well so they can employ more of our peers and get people back to work? Instead of making coroprations out to be awful? It makes no sense to me how people cannot see common sense. I swear people with certain iq's should not be allowed to vote.

Btw Im not a registered republican and believe Bush made mistakes

[NICK]

not many of you know mutch about this companys they all have union employes and have contracts with the unions

[Sam]

R,

I happened to have worked in the research industry for the last 2 years. With that being said I can tell you that somehow the polls I and many of my colleagues were reading to have filled out were on the mark in predicting who would make what election and who would be voted for and when well before the primaries and final elections were ever had. These polls were done by very prestigious, well-known, and well trusted sponsors. President Bush was appointed by the Supreme Court the first time he was put into office. A fact that got lost to the public when the tragic day of 9/11 happened. The second time the Electoral colleges had their votes cast and counted before the popular votes were even finished being counted. The same for this last election.

And you really believe that we still have a say in who is put into office?

[RICH SELLERS]

Demonizing business has been a favored tactic of the left for the last 100 years. We are now closer to a socialist view of utopia then ever before and you have folks out there cheering and hoping the sled picks up speed while slidding down the mountain at a record pace. It has long been known in philosophical circles the end of democracy is in sight as soon as the public figures out they can feed uncontrollably from the public funds until they run out-thinking they are getting things for free and bankrupting democracies ever since Greece. Don't believe me? Do the research. The government needs a bogeyman to slam everytime they want to overstep their authority and slowly erode freedoms in the name of security and economics. Not one of the major health care programs or the social security system run by the government is solvent near or long term. What makes anyone think the this new health care reform run by the government will be any different? Sorry folks, I just don't get it. And neither do most Americans. But for a lot of you folks facts make no difference-full speed ahead head-on towards the oncoming train. It really makes little difference though. When rubber meets the road and reality sets in eventually, as it inevitably will whether you want it to or not, the train wreck will be over and no one will be able to pick up the pieces. And we will have ourselves and OUR greed to thank for it.

[William]

My apologies I did not run for president, congress, or the senate I'm a U.S. Citizen. So since I did not run for any office who I'm I to blame for this mess. A.T.&T who I no longer use because of the abuse I felt when I had A.T.& T an a 24.00 bill and I did not make a phone call a third in taxes and fees. I now use Magic Jacks 5 year plan 59.95 for 5 years poor service getting better just like the cars and space trips. So all of our problems could have been fixed by all the above people whom I could of had in my cabinet or on my staff to run this great country that I'am a VET of cause that know so much and all ran for office because they are all good U.S. Citizen... A.T.&T. gives people what they want and capitalize on it simple phone serve not good enough bright new shiny object that does not put money in your pocket is what greedy people want, T.V. to pay for is what greedy people want that puts no money in pocket. Greedy people complain because there a sucker born everyday and they are one. Free T.V not good enough have to have pay T.V... Sorry this is not me now how can I make a buck off these greedy people too? Read Who Moved My Cheese instead of T.V.
Read and Act on Rich DAD Poor DAD. Help the sick and for the sick go down swing like it's the bottom of the nine and two outs and you are batting you have two strikes as long as I or people see your trying and not crying people will do there best to help. I know I will do my best to help you.
Too the other people how is two Negatives or two Positives going to keep the human race from becoming extinct like the Yangtze giant soft-shell turtle one female one male. A Negatives and a Positives
came together to create you what ever you are, when a name die's or a blood line ends it one more step of man kind becoming extinct. Now after what I said in this little Post lets all set back relax and watch all the fur fly and still enjoy what's left in our lives.
Nuff said WR

[Tim Moore]

D W and old fritz, thanks for responding.

Under the new rules, companies like AT&T still receive a subsidy, and they still receive a tax break on their own contributions. They just no longer receive a tax break on the money they receive from the government. This is not a very radical change (certainly less radical than the law that established Medicare drug coverage in the first place), but obviously does impact profits for large companies in a large way.

I guess my question is what do you see as the ideal situation here?

If you want government to provide all of the funding, then you should celebrate AT&T dropping benefits.

If you want employers to provide all of the funding, then you should celebrate the government closing tax loopholes that put more of the burden on taxpayers.

If you think that retiree drug benefits should be funded by a mix of government and employer contributions, well that's basically the situation we have now, so what would you change to improve it? Bigger tax breaks? At some point that costs the government (i.e., taxpayers) more than providing the benefit themselves.

If you think that the problem is that Medicare shouldn't provide a prescription drug benefit in the first place, and should leave that entirely to employers and individuals, then shouldn't you be taking issue with the 2003 Bush-era legislation that established it? I haven't heard any conservatives here suggest that the Medicare benefit should be repealed.

old fritz, you say that only a fool would continue to provide benefits with the new change, but there's still an incentive to do so. Each company has to calculate the cost and benefit of providing this benefit, and while the change increases the cost, that doesn't mean that it increases it to the point where it outweighs the benefit for all companies. Under the old rules, not all employers provided this benefit, either (none of mine ever have), so if you think that more companies should be providing this benefit, what would you do? Subsidies are only useful if they cost less than providing the benefit through Medicare in the first place.

For the liberals here that are criticizing AT&T over this, it only means that more people will be participating in the government Medicare program. Isn't that what you want?

The debate around health care and the new law has only convinced me that most people in the US only want to participate in partisan bickering and knee-jerk name-calling. How can that result in solving real problems?

[Xmas]

So, if I'm understanding this correctly, AT&T has to write off 1 billion in earnings this quarter...which could be, what, a couple hundred million in taxes paid this quarter? The Volokh Conspiracy guys were saying that this sort of charge off has too be taken immediately according the SEC rules, it cannot be spread out of a few years, carried over, or whatever other crazy account BS can be done with losses.

That doesn't seem...right. But complicated accounting, sometimes requires stupid things.
I hope, but don't expect, the CBO scoring took this sort of thing into account. Remove the payoff to large corporations for keeping their lots of retirees off of Medicare Part D and you'll probably end up with more retirees on Medicare Part D.