Restaurants fear new reform mandates will jeopardize their ability to offer affordable health insurance to part-time and full-time hourly workers.
An industry organization says new legislation requirements for annual plan limits and overhead expense restrictions threaten limited medical plans – lower-cost alternatives to major medical insurance – and that thousands could lose access to health coverage entirely.
A September survey from The Chain Restaurant Compensation Association and consulting firm Hay Group found nearly 70 percent of chain restaurant employers indicate that hourly employees are currently eligible for limited medical plans and less than 25 percent contribute toward plan costs.
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"Limited medical plans offer low-cost coverage to part-time and full-time hourly workers who otherwise might not be able to afford coverage at all. However, employees' access to limited medical plans may be in danger with health care reform mandates on the horizon, as the coverage is unlikely to meet the minimum standards of acceptable coverage," said John Hennessy, principal and western region benefits practice leader for Hay Group, in a statement.
Beginning Jan. 1, insurers of these mini-med plans are required to spend 80 percent to 85 percent of premiums on medical benefits instead of overhead expenses, a limit which most plans in the industry do not meet.
Among the findings of a September Hay Group survey of 29 CRCA members on health care reform's impact on the use of limited medical plans:
77 percent of employers are considering reducing the hours of its hourly workforce to change their status from full-time to part-time in response to new reform mandates.
54 percent of employers are considering eliminating limited medical plans for their hourly workforce entirely.
67 percent of employers are still considering making no changes in 2011 and will likely apply for waivers
While employers that continue to offer these plans can apply for a waiver from the restricted annual limits for the plan year beginning Sept.23, 2010, there is no guarantee that the waiver process will be extended.
"Eventually, there's going to be a reckoning," said Mr. Hennessy. "Chain restaurants aren't in the position to provide comprehensive coverage to their full-time hourly employees at a price employees can afford, and when these requirements set in, thousands may lose access to health insurance coverage entirely."
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