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McDonald's Wants Waiver to New Law on Health Coverage for Hourly Workers

Source: WSJ

Posted on 30 Sep 2010

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The Wall Street Journal reported, citing a company memo, reported that McDonald's Corp may cut health insurance for its nearly 30,000 hourly workers unless U.S. regulators waive a requirement of new health care legislation championed by President Barack Obama.

The 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 newspaper said on its website on Wednesday.

McDonald's told federal regulators in the 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, the Journal reported.

Federal officials say there is no guarantee a waiver will be granted, it said.

The company called reports that it will drop health care coverage "completely false" in an email to Reuters on Wednesday evening.

"McDonald's is committed to providing competitive pay and benefits," Steve Russell, the company's head of human resources, said in an emailed 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.

Many McDonald's hourly workers are covered by the "mini-med" policies and pay around $14 per week for a plan capping annual benefits at $2,000 per year, or a similar plan in which they pay $32 per week and annual benefits are capped at $10,000, the Journal said.

The legislation had been designed to limit funds from being used for marketing, executive salaries, and other nonmedical uses, according to the report.

The article quoted a U.S. Department of Health and Human Services official as saying officials do not want employers to drop coverage because of the law. The Journal said McDonald's declined to disclose its current medical-loss ratio.