Macy's 2013 Annual Report Download - page 82

Table of Contents

In March 2010, President Obama signed into law the “Patient Protection and Affordable Care Act” and the “Health Care and Education Affordability
Reconciliation Act of 2010” (the “2010 Acts”). Included among the major provisions of these laws is a change in the tax treatment related to the Medicare Part D
subsidy. The Company’s postretirement obligations reflect estimated federal subsidies expected to be received under the Medicare Prescription Drug,
Improvement and Modernization Act of 2003. Under the 2010 Acts, the Company’s deductions for retiree prescription drug benefits will be reduced by the
amount of Medicare Part D subsidies received beginning February 3, 2013.
The 2010 Acts contain additional provisions which impact the accounting for postretirement obligations. Based on the analysis to date, the impact of
provisions in the 2010 Acts on the Company’s postretirement obligations has not and is not expected to have a material impact on the Company’s consolidated
financial position, results of operations or cash flows. The Company continues to evaluate the impact of the 2010 Acts on the active and retiree benefit plans
offered by the Company.
The following provides the assumed health care cost trend rates related to the Company’s accumulated postretirement benefit obligations at February 1,
2014 and February 2, 2013:


Health care cost trend rates assumed for next year 7.27% - 9.20%
7.52% - 9.50%
Rates to which the cost trend rate is assumed to decline (the ultimate trend rate) 5.0%
5.0%
Year that the rate reaches the ultimate trend rate 2025
2025
The assumed health care cost trend rates have an impact on the amounts reported for the accumulated postretirement benefit obligations. A one-
percentage-point change in the assumed health care cost trend rates would have the following effects:





Effect on total of service and interest cost $1
$(1)
Effect on accumulated postretirement benefit obligations $13
$(11)
The following table reflects the benefit payments estimated to be funded by the Company and paid from the accumulated postretirement benefit
obligations and estimated federal subsidies expected to be received under the Medicare Prescription Drug Improvement and Modernization Act of 2003:







Fiscal Year
2014 $25
$ 1
2015 22
1
2016 20
1
2017 19
1
2018 19
1
2019-2023 80
3
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