Now That Wasn't So Bad, Was It?Larry Light
For a time, it seemed as big a threat to Corporate America as foreign competition or a deep recession: a change in accounting rules that could well deplete the net worth of many of the nation's largest companies. For years, employers habitually took care of their medical bills on a pay-as-you-go basis, with no regard for the future. But under a new accounting rule adopted last year, big companies are required, no later than 1993, to set aside large sums for a decade or two's worth of retiree health benefits (table). Companies with fewer than 500 workers get until 1995. Employers can either amortize the cost over 20 years or zap earnings in the first year. The total hit: up to $1 trillion.
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