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Reform Taxing for Companies with Retiree Drug Benefits

A new tax on companies that provide retiree drug coverage will translate for some into a charge to earnings

By staff Writer | Updated on April 01, 2010

Healthcare reform will start off with a bang for those companies that still provide their retirees with prescription drug coverage. The legislation imposes a tax on the federal subsidy to employers providing such coverage, and accounting regulations will translate that tax into a charge to earnings.

The tax on the drug benefit subsidy “has nothing to do with health reform. It doesn’t help the uninsured get insurance, it doesn’t keep people in the game,” says Kenneth Porter, chief actuary and senior vice president at the American Benefits Council, which represents large companies on employee benefit issues.

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