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McDonald’s Denies Insurance Cuts For Employees

September 30, 2010

McDonald’s Corp. and federal health officials said a report that the fast food chain may cut health insurance for its 30,000 hourly workers is false.

The Wall Street Journal reported that McDonald’s might cut employee insurance unless U.S. regulators waived a requirement of new healthcare legislation that is pushed by President Barack Obama.

McDonald’s officials said the report is “completely false.”

“This story is wrong,” U.S. Department of Health and Human Services spokeswoman Jessica Santillo said in a statement on Thursday. “The new law provides significant flexibility to maintain coverage for workers.”

The newspaper said on its website on Wednesday that the fast-food restaurant chain is at odds over the new law’s stipulation that so-called “mini-med” insurance plans spend at least 80 percent of premium revenue on medical care. 
 
The journal reported that McDonald’s told federal regulators in a memo that it would be “economically prohibitive” for its insurance carrier to continue to cover hourly workers unless it receives a waiver to the 80 percent minimum requirement.  It said that federal officials say there is no guarantee a waiver will be granted.

“This story is premature as guidance on the new medical loss ratio rules has not even been issued,” Santillo said. “The administration is working closely with businesses like McDonald’s that are committed to providing health benefits to protect health coverage for their employees.”

McDonald’s officials said the report was “purely speculative and misleading.”

“McDonald’s is committed to providing competitive pay and benefits,” Steve Russell, the company’s head of human resources, said in a statement.

“We’ve had the opportunity to speak with regulatory agencies directly to better understand the implications of the law and to share our point of view,” he said.

Russell said that most of the company’s franchises offer a limited benefit plan and nearly 30,000 employees are enrolled in the medical coverage program.

The Journal said that many McDonald’s hourly workers are covered by the “mini-med” policies and pay about $14 every week for a plan capping annual benefits at $2,000 each year, or a similar plan in which they pay $32 each week and annual benefits are capped at $10,000.

According to the report, the legislation had been designed to limit funds from being used for marketing, executive salaries, and other non-medical uses.

The Journal reported that a U.S. Department of Health and Human Services official said officials do not want employers to drop coverage because of the law.  It said that McDonald’s declined to disclose its current medical-loss ratio.

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