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Should you cut retiree medical benefits?
Author(s) -
Bunsis Howard
Publication year - 1999
Publication title -
journal of corporate accounting and finance
Language(s) - English
Resource type - Journals
eISSN - 1097-0053
pISSN - 1044-8136
DOI - 10.1002/(sici)1097-0053(199922)10:4<1::aid-jcaf1>3.0.co;2-s
Subject(s) - health benefits , business , medical costs , health care , medical care , cost–benefit analysis , actuarial science , economics , accounting , law , political science , medicine , nursing , economic growth , traditional medicine
Are companies right in cutting retiree medical benefits? Although many cite a 1993 accounting rule as the reason, the author mostly blames rising health care costs and an increase in expected retirees. He reviews the methods companies have used to cut benefits, and analyzes whether it was really profitable—or prudent. Some conclusions: To avoid public relations and legal problems, the author suggests cutting benefits for future—not current—retirees. And if you want to improve your firm's financial statements, consider setting up a voluntary employee benefits trust (VEBA). © 1999 John Wiley & Sons, Inc.