A recent survey of chain restaurant employers found more than 75 percent of respondents are considering cutting the hours of full-time hourly workers in response to new health care reform mandates.
While recent election results may bring change to health care reform legislation, 29 chain restaurant employers surveyed before Election Day expressed concern over commonly used “mini-med,” or limited medical plans for hourly workers, according to the survey by Hay Group along with the Chain Restaurant Compensation Association.
Under the reform plan, starting in 2011, insurers of mini-med plans will be required to spend 80 percent to 85 percent of premiums on medical benefits instead of on overhead expenses, a limit that most benefit plans in the restaurant industry do not meet, survey officials say. Because turnover in the restaurant industry is high, such plans tend to have high administrative costs.
“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,” said John Hennessy, principal and Western region benefits practice leader for Hay Group in Philadelphia. “However, employees’ access to limited medical plans may be in danger with health care reform mandates on the horizon, as coverage is unlikely to meet the minimum standards of acceptable coverage.”
According to the survey of 29 chain restaurant employers, which was conducted in September, 70 percent said they offer mini-med plans to their hourly employees, although fewer than 25 percent of those employers contribute toward plan costs, the survey found.
Health care reform is likely to change that number, however, the survey found. As a result of reform mandates, 77 percent said they are considering reducing the hours of full-time workers to part-time.
Under the reform bill in September, the annual limits on coverage were raised significantly on mini-med plans for full-time employees, making such plans prohibitively expensive. The higher limits would not apply to part timers, so employers might see that shift as a way out.
Hennessy, who called the employers’ response a “knee jerk” reaction, warned that reducing hours likely would result in “workforce issues,” including higher turnover.
Another 54 percent of respondents in the survey said they are considering eliminating limited medical plans entirely for hourly workers.
Many — 67 percent — said they are not considering changes in 2011 and will likely apply for waivers, the survey notes.
Last month, McDonald’s, Jack in the Box and a Denny’s franchisee were among 30 companies that were granted one-year waivers from the U.S. Department of Health & Human Services for their mini-med plans. The waivers will not require companies to raise the minimum annual coverage, as required by the health care mandate.
“Eventually, there is going to be a reckoning,” Hennessy said. “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.”
The Chain Restaurant Compensation Association is a professional organization with about 90 member companies representing about 164 restaurant concepts.
Contact Lisa Jennings at [email protected]