More ObamaCare Fallout: McDonalds May Drop Health Plan

By Susan Brinkmann, OCDS
Staff Journalist

The latest example of the disruptive effect ObamaCare will have on workers’ health plans, the McDonald’s Corporation has warned federal regulators that unless it waives a new requirement imposed by the bill, it may be forced to drop its health insurance plan for nearly 30,000 hourly workers.

According to the Wall Street Journal (WSJ), the same requirement impacting McDonald’s will be felt by restaurants and retailers nationwide who offer “mini-med” plans for low-wage employees which would become too expensive to offer.

“Having to drop our current mini-med offering would represent a huge disruption to our 29,500 participants,” said McDonald’s in a memo to federal officials, which was reviewed by the WSJ. “It would deny our people this current benefit that positively impacts their lives and protects their health—and would leave many without an affordable, comparably designed alternative until 2014.”

McDonald’s mini-med plans cover 10,500 workers who pay $14 a week for a plan that offers a maximun annual benefit of $2,000, or about $32 a week to get coverage up to $10,000 a year.

Obama’s new health care plan will require McDonald’s insurer to spend at least 80 to 80 percent of its premium revenue on medical care, which the company says is unrealistic because of high turnover rates combined with low spending on claims. 

“It would be economically prohibitive for our carrier to continue offering” the mini-med plan unless it got an exemption from the requirement to spend 80% to 85% of premiums on benefits, McDonalds said in the memo.

To date, federal officials are offering no guarantees that they will grant mini-med carriers a waiver, and are waiting for the association of state insurance commissioners to draft recommendations on the subject.

According to the WSJ, Sandy Praeger, Kansas Insurance Commissioner and head of the association, says she doesn’t think these types of mini-med plans deserve an exemption.

“If they are sold as comprehensive coverage, we expect them to meet the same [medical-loss ratio] standards as other health plans,” she said.

Insurers say that the outcome of the McDonald’s case could affect dozens of other employers who offer mini-med programs to their hourly workers, such as Home Depot, CVS Caremark, Staples, Disney Worldwide Services, Staples and Blockbuster.

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