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McDonald's Seeks Waiver Over New Health-Care Law, Official Says

McDonald’s Corp., the world’s largest restaurant chain, asked federal health-care regulators to waive part of a new law that may force the company to seek an alternative insurance plan for some workers, an official said.

McDonald’s doesn’t plan to drop health-care coverage for employees, said Danya Proud, a spokeswoman for the Oak Brook, Illinois-based company, in an interview yesterday. She declined to provide a memo sent to U.S. Health and Human Services in which McDonald’s requested the waiver, saying the correspondence is proprietary. The company doesn’t know how many employees could be affected if a change is made, Proud said.

The law is intended to provide health insurance coverage to 32 million uninsured people by 2019, reduce Medicare spending by about $455 billion over the next decade and create new programs to change the way medical care is paid for. It also implements new consumer protections and overhauls insurance company business practices.

“We’re not going to walk away from health-care insurance completely, but we’re going to have to look for alternatives if we can’t get the resolution we’re seeking from Health and Human Services,” Proud said.

McDonald’s told federal regulators that it may drop health insurance for almost 30,000 hourly restaurant workers unless a requirement in the law is waived, the Wall Street Journal reported yesterday, citing a company letter to the U.S. Health and Human Services. The story isn’t correct, said Jessica Santillo, a spokeswoman for the department in Washington.

Photographer: George Frey/Bloomberg

McDonald's said it may be forced to seek alternative plans to cover 30,000 workers if it can't get a waiver. Close

McDonald's said it may be forced to seek alternative plans to cover 30,000 workers if... Read More

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Photographer: George Frey/Bloomberg

McDonald's said it may be forced to seek alternative plans to cover 30,000 workers if it can't get a waiver.

No Guidance Issued

“The new law provides significant flexibility to maintain coverage for workers,” Santillo said in an e-mailed statement. “Guidance on the new medical loss ratio rules has not even been issued,” she said, referring to another provision of the law that could affect McDonald’s insurance plans.

President Barack Obama’s administration is working with businesses such as McDonald’s that are committed to providing health benefits to protect coverage for employees, she said.

The government may allow some low-cost plans like those offered at McDonald’s, which have limited benefits, to get waivers from the health law’s insurance requirements, according to a Sept. 3 Health and Human Services memo. Those requirements were waived for McDonald’s on Sept. 24, Santillo said.

“In order to ensure that individuals with certain coverage, including coverage under limited benefit or mini-med plans, would not be denied access to needed services or experience more than a minimal impact on premiums, the interim final regulations contemplated a waiver process,” the Health and Human Services Department said earlier this month.

Caps Removed

Without a waiver, plans like McDonald’s would have to comply with provisions in the law that include requiring health plans to remove caps on how much patients can be paid in benefits in a year before their coverage stops, according to the Sept. 3 government memo.

Annual caps and lifetime limits are being eliminated in an overhaul of health care as a way to ensure traditional insurance plans didn’t drop patients’ coverage when they needed it most, in the middle of a serious illness. However, the mandates may be too expensive to be practical for low-cost plans, the government said in the September memo.

To contact the reporters on this story: Duane Stanford in Atlanta at dstanford2@bloomberg.net; Drew Armstrong in Washington at darmstrong17@bloomberg.net

To contact the editors responsible for this story: Jason Gale at j.gale@bloomberg.net; Reg Gale at rgale5@bloomberg.net

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