April 14, 2010 / 8:59 PM / 9 years ago

UPDATE 1-US lawmakers cancel company healthcare tax hearing

* House lawmakers: companies say they need more time

* AT&T exec said company may benefit -lawmakers

WASHINGTON, April 14 (Reuters) - U.S. lawmakers planning to grill executives from AT&T Inc (T.N), Deere & Co (DE.N) and others over predicted financial hits blamed on the recent health care overhaul have abruptly canceled the hearing.

Two Democrats on the House of Representatives’ Energy and Commerce Committee, Henry Waxman and Bart Stupak, sent colleagues a memo on Wednesday citing “the request of several of the companies” in nixing the hearing.

Companies asked for more time to examine the issues, they said. There is no immediate word on when or if the hearing will be rescheduled.

The lawmakers, citing interviews with officials from all the companies invited as well as others that might be affected, said several companies told them they might benefit from the overall impact of the law.

The memo cites AT&T executive Wayne Watts, senior executive vice president, who wrote the committee: “Should the structural reforms intended to reduce the costs of delivering health care under (the law) ultimately prove successful over time, self-insured companies like AT&T would likely benefit from reduced costs.”

At issue is a sweetener added in 2003 by lawmakers to legislation providing a prescription drug benefit to Medicare, the health insurance plan for the elderly.

That incentive was a 28 percent subsidy for retiree coverage, plus a tax deduction for the payment, essentially creating a double benefit not usually granted under tax rules.

The carrot was added to ensure employers would not drop their own retiree coverage. The legislation signed by President Barack Obama last month keeps the subsidy, but no longer lets companies deduct the subsidy from their income.

Just days after the bill was passed, AT&T, Caterpillar Inc (CAT.N), Deere & Co, Boeing Co (BA.N) and others announced the charges to their earnings.

Companies are obligated by disclosure regulations to declare the charges now, though the cash will not leave their pockets immediately.

Under accounting rules, even though the tax change will not occur until 2013, companies must adjust their books when the law changes, a fact committee staff said was uncovered in an initial investigation.

A staff memo said the companies acted properly in filing the charges to earnings with regulators. (Reporting by Kim Dixon, editing by Matthew Lewis)

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