December 10, 1:30 p.m. ET

December 9, 2009
For additional information:
Jason Hammersla:
Office: 202-289-6700

Health care tax provision could rock financial markets, will threaten prescription drug coverage for retirees

Business, union, former government official will explain impact of prescription drug subsidy tax provision

WHO: James A. Klein, president, American Benefits Council
Gerald Shea, assistant to the president, AFL-CIO
Tom Scully, former administrator, Centers for Medicare and Medicaid Services

On Thursday, December 10 at 1:30 p.m. Eastern Time, the American Benefits Council will hold a briefing for the news media to discuss a little-discussed provision in the Senate health care reform bill that would impose a new tax on prescription drug subsidies for Medicare-eligible seniors.

"Unless a tax provision tucked into the Senate health reform measure is deleted, then on the day the legislation is signed into law, employer sponsors of retiree prescription drug coverage will face an immediate hit on their income and balance sheets, with corresponding financial market implications. In addition, the ability of employers to obtain needed capital to finance operations will be impaired. This will compel many employers to drop the coverage, forcing millions of retirees into the Medicare Part D program and costing the taxpayers billions of dollars," said Council President James A. Klein.

The provision reverses a policy of the Medicare Modernization Act by taxing the 28 percent subsidy that employers receive for providing drug coverage for retirees. Congress enacted the policy in 2003 to allow employers to maintain such coverage and to save the government money. Now the policy is to be reversed, which will undoubtedly destabilize this vital coverage and impose more costs on the federal government. Both labor and management are united in their opposition to this ill-advised and disruptive proposal.

Tom Scully, former administrator of the Centers for Medicare and Medicaid Services, wrote an op-ed in the December 7 Wall Street Journal decrying the provision, saying: "if the changes that are proposed for employer subsidies in the current Medicare Part D program are enacted, everyone will lose. Unions will lose as employers seek ways to drop retiree drug coverage. Seniors will lose as employers drop them into Medicare Part D. Medicare and taxpayers will lose as they face higher costs. And employers will lose as they find it harder to provide benefits." Mr. Scully and Gerald Shea, Assistant to the President of the AFL-CIO will participate in the briefing.

WHERE: The briefing will be held via conference call. Please note that the briefing is not at the Council offices. For call-in information, please RSVP using the link below.

WHEN: 1:30 p.m. to 2:30 p.m. Eastern Time on Thursday, December 10, 2009.
CONTACT: For more information, or to arrange a separate interview with Council staff, please contact Jason Hammersla, Council director of communications, at or by phone at 202-289-6700 (office) or (202) 253-5458 (cell)

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The American Benefits Council is the national trade association for companies concerned about federal legislation and regulations affecting all aspects of the employee benefits system. The Council's members represent the entire spectrum of the private employee benefits community and either sponsor directly or administer retirement and health plans covering more than 100 million Americans.