NOTE 22. Retirement Benefits (Continued) Postretirement Health Care and Life Insurance Benefits The expense for our worldwide defined contribution plans was $80 million in 2004, $37 million in 2003 and $23 million in  2002. This includes the expense for company matching contributions to our primary savings plans (U.S. and Canada) of $40  million in 2004 and $0 in 2003 and 2002. The 2004 increase in savings plan expense was due to reinstatement of company  matching contribution on salaried employee contributions in the U.S. and Canada. We, and certain of our subsidiaries, sponsor plans to provide selected health care and life insurance benefits for retired employees.  The Ford UAW Hospital-Surgical-Medical-Drug-Dental-Vision Program covers hourly employees represented by the UAW, and  the Ford Salary Healthcare Plan covers substantially all other Ford employees in the U.S. hired before June 1, 2001. In December  2003, we announced a new postretirement health care plan for U.S. salary employees hired on or after June 1, 2001. The plan  provides for annual company allocations to employee-specific notional accounts to be used to fund postretirement health care  benefits. We also offer company-paid postretirement life insurance benefits to U.S. salary employees hired before January 1, 2004  and all U.S. hourly employees. Our employees generally may become eligible for benefits when they retire; however, benefits and  eligibility rules may be modified from time to time. In 2003, we agreed to relieve Visteon of its responsibility for the postretirement health care and life insurance liability related to  service prior to our spin off of Visteon at June 30, 2000 for the Visteon Hourly Employees. This resulted in a one-time charge to  expense in 2003 of $1.6 billion, and the forgiveness of associated Visteon promissory notes previously included in plan assets.  Pursuant to the agreement, the expense associated with service after June 30, 2000 for Visteon Hourly Employees is charged to  Visteon. Postretirement health care and life insurance expense for former salaried Ford employees who transferred to Visteon and  met certain age and service conditions at June 30, 2000 is also charged to Visteon.  At December 31, 2004, we had a long-term receivable of $835 million representing Visteon’s responsibility for the postretirement  health care and life insurance benefits of the Visteon Employees pursuant to the 2003 agreement. The receivable increased with  expense charged to Visteon during 2004 and is expected to decrease as Visteon or the Visteon Voluntary Employees Beneficiary  Association trust (“Visteon VEBA”) makes cash payments to us directly, in case of a payment from Visteon, or to us as Ford Plan  Administrator, in case of a payment from the Visteon VEBA. Visteon has agreed to make a series of cash payments to the Visteon VEBA so that by December 31, 2049, the assets in the Visteon  VEBA will equal Visteon’s postretirement healthcare and life insurance liability for the Visteon Employees on that date. The cash  payments to the Visteon VEBA will commence no later than January 2, 2006 for the Visteon Hourly Employees and January 1, 2011 for the Visteon Salaried Employees. At December 31, 2004, there was objective evidence that Visteon would be undertaking structural and strategic changes to its  operations. Based on this and other considerations, we recorded a valuation allowance of $600 million against the receivable from  Visteon in order to reflect our assessment of its recoverability. The receivable will be analyzed for recoverability on an on-going  basis as future postretirement health care and life insurance expenses are allocated to Visteon. The effect of the valuation allowance  is not included in the table below. On December 8, 2003, the President signed into law the Medicare Prescription Drug, Improvement and Modernization Act  of 2003. The law provides for a federal subsidy to sponsors of retiree health care benefit plans that provide a benefit at least  actuarially equivalent to the benefit established by the law. We provide retiree drug benefits that exceed the value of the benefits  that will be provided by Medicare Part D, and our retirees’ out-of-pocket costs are less than they would be under Medicare Part  D. Therefore, we have concluded that our plan is at least “actuarially equivalent” to the Medicare Part D plan and that we will  be eligible for the subsidy. We have reflected the impact of the subsidy by reducing our 2004 expense by $250 million. We also  recorded an unrecognized gain, which reduced our benefit obligation by $1.8 billion at December 31, 2003. The measurement date for substantially all of our worldwide postretirement benefit plans is December 31. Our expense for  defined benefit pension, postretirement health care and life insurance benefits was as follows (in millions): Pension Benefits Health Care U.S. Plans Non-U.S. Plans and Life Insurance 2004 2003 2002 2004 2003 2002 2004 2003 2002 Service cost $ 636 $  600 $  556 $ 554 $  492 $  377 $ 542  $  521  $ 427 Interest cost 2,445 2,442 2,453 1,332 1,170 977 1,964 2,004 1,801 Expected return on assets (3,219) (3,202) (3,646) (1,651) (1,382) (1,265)  (289) (37) (85) Amortization of: Prior service costs 502 472 529 106 135 137 (220) (179) (145) (Gains)/losses and other 23 33 (130) 204 148 25 610 532 310 Separation programs 1 - 107 78 128 39 - - 16 Visteon pre-spin liability - - - - - 1,646 - Allocated costs to Visteon (107) (88) (62) (228) (314) (228) Net expense/(income) $ 281 $  257 $ (193) $ 623 $  691 $  290 $  2,379 $ 4,173  $ 2,096 8 4 NOTES TO THE FINANCIAL STATEMENTS