A Nasty Surprise for Retirees in the Senate Health Bill

Current law:

Under the 2003 law that created a prescription-drug benefit known as Medicare Part D, companies that continued to provide such benefits on their own qualified for a 28% tax-free subsidy — worth about $600 a year per retiree. Hundreds of major companies took advantage of the provision.

After health reform takes the subsidy away:

One industry group estimated that as many as one-third of the companies providing the benefits could drop them to avoid the hit to earnings… An analysis by the American Benefits Council, an advocacy group for large employers, found the tax change could result in a one-time 35% reduction in earnings for a typical company now receiving the subsidy.

Full report on cuts to retiree benefits.

Comments (2)

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  1. Joe S. says:

    This is a nasty surprise. One that the unions have been slow to focus on.

  2. John Goodman says:

    Here is a Wall Street Journal editorial on the topic: