Honeywell 2006 Annual Report Download - page 124

HONEYWELL INTERNATIONAL INC.
NOTES TO FINANCIAL STATEMENTS—(Continued)
(Dollars in millions, except per share amounts)
Medicare Prescription Drug, Improvement and Modernization Act of 2003 (the Act) for employers that sponsor postretirement health
care plans that provide prescription drug coverage that is at least actuarially equivalent to that offered by Medicare Part D. The impact
of the Act reduced other postretirement benefits expense by approximately $37 and $45 million in 2006 and 2005, respectively.
December 31,
2006 2005
Assumed health care cost trend rate:
Health care cost trend rate assumed for next year 9.0% 9.0%
Rate that the cost trend rate gradually declines to 5.5% 5.0%
Year that the rate reaches the rate it is assumed to remain at 2014 2010
The assumed health care cost trend rate has a significant effect on the amounts reported. A one-percentage-point change in the
assumed health care cost trend rate would have the following effects:
1 percentage point
Increase Decrease
Effect on total of service and interest cost components $ 6 $ (5)
Effect on postretirement benefit obligation $ 87 $ (78)
Benefit payments reflecting expected future service, as appropriate, are expected to be paid as follows:
Without Impact
of
Medicare Subsidy
Net of
Medicare Subsidy
2007 $ 211 $ 189
2008 212 192
2009 214 193
2010 214 193
2011 215 195
2012-2016 1,016 930
Employee Savings Plans—We sponsor employee savings plans under which we match, in the form of our common stock, savings
plan contributions for certain eligible U.S. employees. Shares issued under the stock match plans were 4.5, 4.1 and 4.3 million at a
cost of $179, $153 and $151 million in 2006, 2005 and 2004, respectively.
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