Verizon Communications Inc. said Thursday it expects to record a one-time noncash charge of $970 million in the first quarter, to account for the anticipated impact of the recently enacted U.S. health-care overhaul.
Recording an Impact
Charges firms are taking to account for the effect of the health bill on retiree drug benefits.
|Company||$ in millions|
|Illinois Tool Works||22|
Source: Dow Jones Newswires
The telecommunication company, which disclosed the charge in a Securities and Exchange Commission filing, is the latest company to take a charge to account for increased costs related to changes that will come from the health-care law. Specifically, the overhaul prevents companies from deducting tax-free subsidies it receives from the federal government for providing retirees with prescription-drug benefits.
Last week, rival AT&T Inc. said it planned to take a one-time noncash charge of $1 billion. The charges are more significant for companies with a large retiree base.
In a separate SEC filing Thursday, electric and gas utility Exelon Corp. disclosed it expects to record a noncash charge of about $65 million in the first quarter, also related to the health-care overhaul. Exelon said the reduction of the tax deductions was estimated to increase the company’s total annual income tax expense by about $10 million to $15 million.
The companies are taking the charges now even though changes in the health-care law don’t take effect until 2013. Administration officials have said companies are exaggerating the impact of the loss of the deduction because of their general opposition to the new law.