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Report: Reform provision threatens retiree drug coverage

If health care legislation is signed into law, and if this tax is allowed to stand, "employer sponsors of retiree prescription drug coverage will face an immediate hit on their income statements and balance sheets."

By Jenny Ivy | Updated on March 18, 2010

The American Benefits Council released a new report prepared by a former White House Office of Management and Budget (OMB) official that shows how a proposed revenue provision within the health care reform legislation threatens existing retiree health programs.

The provision, which is contained in both the House and Senate bills, would reverse a carefully negotiated element of the Medicare Modernization Act by reducing allowable deductions for the 28 percent subsidy that employers receive for providing drug coverage for retirees, the American Benefit Council stated in a press release. Congress enacted the policy in 2003 to allow employers to maintain such coverage and to save the government money on Medicare expenditures.

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