U.S. to give firms $5B for retiree health care
U.S. companies will get $5 billion from the federal government to help pay for retiree health insurance, a benefit of the health-care overhaul that will offset some of the millions of dollars in costs employers such as Caterpillar Inc. and Deere & Co. announced after the law's signing.
U.S. companies will get $5 billion from the federal government to help pay for retiree health insurance, a benefit of the health-care overhaul that will offset some of the millions of dollars in costs employers such as Caterpillar Inc. and Deere & Co. announced after the law's signing.
President Obama spoke about the program Tuesday at an appearance before the Business Council. Companies will be able to start tapping the funds June 1: The money is meant for early retirees older than age 55 who aren't eligible yet for Medicare, according to a White House fact sheet describing the program.
"A lot of the companies [represented] in this room can apply for this assistance starting in June," Obama said to the Business Council. "This is going to be a welcome reform for many businesses who are trying to provide assistance for retirees."
Caterpillar, the world's largest maker of bulldozers and excavators, said in March that the health-care law would cost it $100 million, and it took a charge to earnings. Farm-machinery maker Deere & Co., of Moline, Ill., said the law would cost it $150 million. The companies pointed to an overhaul provision that ended a tax break for providing drug coverage to retirees. Many other major companies, including AT&T, Valero Energy, and AK Steel, also have announced charges prompted by the new law.
The program announced by Obama is likely to offset some of those charges.
Towers Watson & Co., an Arlington, Va., benefits consultant, estimated the cost of the tax change at $14 billion for U.S. companies. The aim of the administration's action is to encourage more employers to offer health-care coverage to early retirees, the statement said.
Under the program, the government will reimburse businesses for 80 percent of early retirees' health-care expenses, amounting to from $15,000 to $90,000 per individual.
The program would be in place until 2014, when the overhaul requires a system of exchanges, or marketplaces, for consumers to shop and select health-insurance coverage.
Business Roundtable, a lobbying and advocacy group that represents U.S. companies with a combined $6 trillion in annual revenue, said Obama's effort would make it easier for employers who provide health coverage to workers who retire early to continue to do so.