New health benefits rule has big impact on businesses and workers

The Financial Accounting Standards Board recently issued FAS 106: Employers' Accounting for Post-retirement Benefits other than Pensions. FAS 106 requires that US companies accrue future retiree medical and life insurance costs during the careers of eligible employees. This change will result i...

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Bibliographic Details
Published in:Business forum (Los Angeles, Calif.) Calif.), 1993-09, Vol.18 (4), p.26
Main Authors: Hayes, Rick Stephan, Baker, C. Richard
Format: Article
Language:English
Subjects:
Accounting
Accrual basis accounting
Employee benefits
Employees
Employers
FASB statements
Finance
Financial accounting standards
Health care expenditures
Impacts
Methods
Other postemployment benefits
Retirees
SFAS 106
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Summary:The Financial Accounting Standards Board recently issued FAS 106: Employers' Accounting for Post-retirement Benefits other than Pensions. FAS 106 requires that US companies accrue future retiree medical and life insurance costs during the careers of eligible employees. This change will result in higher reported expenses and liabilities. The new rule has triggered a bewildering array of responses including lawsuits, establishment of corporate wellness programs, and headaches in accounting units. Although reactions to the rule have yet to be played out, it is forcing business to grapple with the true cost of health care. Many companies are revamping or terminating their retiree health care coverage, believing the cost of the benefits is unaffordable.
ISSN:0733-2408