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McDonald's denies it is cutting health insurance

McDonald's Corp and federal health officials denied a newspaper report that the fast food chain may cut health insurance for its nearly 30,000 hourly workers.
/ Source: Reuters

McDonald's Corp and federal health officials denied a report Thursday that the fast food chain may cut health insurance for its nearly 30,000 hourly workers.

The Wall Street Journal, citing a company memo, reported that McDonald's might cut the insurance unless U.S. regulators waived a requirement of new healthcare legislation championed by President Barack Obama.

McDonald's officials called the report "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 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 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.

"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 previously called the report "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.

Most of the company's franchisees offer a limited benefit plan and nearly 30,000 employees are enrolled in the medical coverage, with participation more than doubling since 2005, Russell 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 non-medical 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.