PARIS (Dec. 22, 2005) — Changes in the U.S. Medicare program's prescription drug plan will allow Michelin North America Inc. to reduce its spending on health care for retirees, resulting in a one-time before-tax gain this year of $317 million and annual savings of about $37 million thereafter, the company said recently.
Specifically, Michelin said the introduction of Part D prescription drug coverage has permitted it to offset a portion of the increases in prescription drug costs.
The change affects primarily Michelin's 5,000 non-union retirees and their dependents, a spokeswoman said. Unionized retirees have separate coverage under their respective contracts.
Michelin said it has informed its U.S. retirees of the changes in the prescription drug plans, which take effect Jan. 1.
The changes allowed under the new Medicare rules will reduce Michelin's projected benefit obligation by $476 million, which will result in the $317 million pre-tax gain, the company said.
Michelin went on to say the savings would help it strengthen its “global competitive position.”