* McDonald's denies it cutting health insurance
* U.S. officials also deny report
(Adds background on mini-med use, analyst and restaurant
DETROIT, Sept 30 McDonald's Corp (MCD.N) and
federal health officials denied on Thursday a newspaper report
that the fast-food chain may drop health insurance for nearly
30,000 of its 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 U.S. healthcare laws.
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. "The
new law provides significant flexibility to maintain coverage
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 Wall Street Journal reported on its website on Wednesday.
That rule was designed to put limits on funds being used
for marketing, executive salaries, and other nonmedical uses.
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 newspaper reported.
It said federal officials said there was no guarantee a waiver
would 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 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.
McDonald's did not disclose its current medical-loss
SMALL BENEFITS, SMALL MARKET
Federal regulators, McDonald's and the National Restaurant
Association said they do not want U.S. workers to lose health
coverage during the transition compliance with the new
"This is one issue where I think we're on the same page,"
said Angelo Amador, the National Restaurant Association's vice
president for labor and workforce policy.
McDonald's had about 14,000 U.S. restaurants in 2009. Most
of the company's franchisees offer a limited-benefit plan and
nearly 30,000 employees have chosen to be covered by the
"mini-med" policies, Russell said.
Employees 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,
according to the Wall Street Journal report.
Restaurants and retailers are more likely to offer such
bare-boned plans because they have a high percentage of
part-time and temporary workers and higher employee turnover
than private sector employers overall.
The total market for limited benefit plans is about 1.4
million people, with Aetna Inc (AET.N) and Cigna Corp (CI.N)
among the health insurers with the biggest presence, Wells
Fargo analyst Peter Costa said in a research note.
Aetna's largest limited benefit customer is retailer Home
Depot Inc (HD.N) with 24,000 of those members, said Costa,
adding that limited benefit plans account for a small portion
of the overall health insurance market.
(Reporting by Ben Klayman in Detroit, Lisa Baertlein in Los
Angeles and Lewis Krauskopf in New York, editing by Dave