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"
·PauI
J.
Gaeta·
<Paul.Gaeto@cat.com>11/20/200908:01
AM
To"GregoryFolley"<Folley-Gregory_S@cat.com>cc"KathrynHimes"<HIMES_KATHRYN_S@cat.com>,"JerryDuggan"<Duggan_Jerry_W@cat.com>
bee
SubjectFw:HealthcareReform
Caterpllar:ConfidentialGreenRetainUntlt
02126/2011
~ l ~ " ,
Greg:
Please
see
Jerry's
note
belowsummarizing
the
impact
on
Caterpillar
of
the
House
version
of
the
Healthcare
Reform
Bill.
The
most
significant
issue
is
theeliminationofthetax
exemption
on
thePart
D
subsidy.
Corporate
Accountinghas
advised
that
we
would
have
a
one-time
write-off
of
a
taxdeferred
asset
of
up
to
$110
million
when
the
legislation
is
passed.
The
annualimpactgoing
forward
would
be
around
$8
million.
The
otherversionsofhealthcare
reform
legislation
being
circulated
contain
a
similar
provision.
Katie
and
Jerry
are
putting
together
a
letter
for
you
to
send
to
key
members
of
Congress.
We
will
be
reviewing
it
in
the
next
few
days.
Please
let
me
know
if
youwant
to
meet
to
discuss
in
advance.Paul
Original
Message
From:
Jerry
W.
Duggan
Sent:
11/19/2009
04:19
PM
CST
To:
Kathryn
Himes;
Valerie
Johnson
Cc:
Paul
Gaeto
SUbject:
Healthcare
ReformHere
is
the
latest
update
on
impact
of
the
various
provisions
of
the
House
Bill:
Medicare
Part
D
Subsidy
Current
estimates
are
that
if
we
losethe
tax-free
treatment,
we
will
need
to
take
a
one
time
tax
charge
at
time
of
enactment
that
could
be
ashigh
as
$llOm.
Corporate
Accounting
is
working
with
Towers
Perrin
to
more
finely
tune
the
estimate
as
it
will
beimpacted
by
our
announcement
related
to
retiree
coordinator
model.
If
we
can
delay
the
implementation,
would
have
a
favorable
impact
from
a
cash
flow
perspective
but
will
notdelay
the
time
when
we
would
need
to
recognize
thetax
charge.
We
could
also
impact
the
amount
ofthetax
charge
if
we
were
to
announce
a
plan
design
change
related
to
our
retiree
healthcareforthe
impacted
population
(bargained
and
pre-1991
retirees)priorto
the
enactment.
If
we
announced
after
the
enactment,
we
would
still
incur
the
tax
charge.
Offer
coverage
for
dependentsthrough
age
26
We
could
have
as
much
as
a
$20m
annual
impact
to
Cat.
We
currently
have
on
averageabout1,730dependents
for
each
age
14
-
18,
while
only
600
on
average
for
each
age
19
-
26.
Worst
case
scenario
is
that
with
the
bill,
all
eligible
dependents
19
-
26
are
added
to
our
plan
(and
we
assume
1,730
eligible
for
eachage
19-26).
Based
on
our
CONFIDENTIAL
BUSINESS
INFORMATION
CAT
_W
AX
MAN_000360
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