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GM Expects Jump in Health Costs

From Reuters

General Motors Corp. expects that a change in a rate used to calculate future healthcare costs, which have come under the scrutiny of U.S. regulators, could cause those expenses to rise by about $170 million next year.

In a securities filing Wednesday, the world’s largest automaker said it expected to cut the discount rate it used to determine future healthcare obligations to 6% from 6.25%.

A cut of that size would raise its pretax U.S. healthcare expenses by $170 million and would increase future healthcare obligations by $1.9 billion, GM said in its annual report earlier this year.

The Securities and Exchange Commission is looking into healthcare and pension cost accounting, and its review is focusing on six large companies, including GM.

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The SEC is concerned about the possibility of over-aggressive bookkeeping being used to boost corporate profits, SEC Chairman William H. Donaldson said last month.

Last year, GM spent $4.6 billion on healthcare for its 1.1 million employees, retirees and their dependents. It expects those costs to rise to $5.1 billion this year.


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