Macy's 2014 Annual Report Download - page 83

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
F-36
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 January 31, 2015 and February 1, 2014:
2014 2013
Health care cost trend rates assumed for next year ................................................. 7.27% - 8.90% 7.27% - 9.20%
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:
1 – Percentage
Point Increase 1 – Percentage Point Decrease
(millions)
Effect on total of service and interest cost............................................................... $— $—
Effect on accumulated postretirement benefit obligations...................................... $17 $(15)
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:
Expected
Benefit
Payments
Expected
Federal
Subsidy
(millions)
Fiscal Year
2015.......................................................................................................................... $ 21 $ 1
2016.......................................................................................................................... 20 1
2017.......................................................................................................................... 19 1
2018.......................................................................................................................... 19 1
2019.......................................................................................................................... 18 1
2020-2024................................................................................................................. 79 3