Honeywell 2003 Annual Report Download - page 416

1 percentage point
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(Dollars in Millions) Increase Decrease
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Effect on total of service and interest cost components .. $ 8 $ (7)
Effect on postretirement benefit obligation .............. $127 $(115)
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In December 2003, the Medicare Prescription Drug, Improvement and Modernization
Act of 2003 (the Act) was signed into law. The Act will offer on a voluntary
basis, prescription drug coverage to Medicare beneficiaries. The Act will also
offer a subsidy equal to 28 percent of the prescription drug costs between $250
and $5,000 per plan participant to plan sponsors who offer prescription drug
coverage that is at least actuarially equivalent to that offered by Medicare. In
January 2004, the FASB issued FASB Staff Position No. 106-1, "Accounting and
Disclosure Requirements Related to the Medicare Prescription Drug, Improvement
and Modernization Act of 2003" which permits postretirement plan sponsors to
make a one-time election to defer accounting for the effects of the Act. We have
elected to defer this recognition because specific authoritative guidance on the
accounting for the federal subsidy is still pend-
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