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McDonald's Challenges Healthcare Regulation

As the first phase of the health care reform bill has completed its first week, McDonald’s is challenging regulations that will require mini-med plan insurers to channel 80% - 85% of premium revenue toward covering medical expenses.

Not to be confused with major, comprehensive health insurance, mini-med plans are considered supplemental only.  According to the Employee Benefit Advisor, they are typically designed for seasonal, and/or hourly workers in an effort to try and provide them with insurance that pays for doctor’s visits and certain medical procedures.

The downside of these policies is that benefits are limited; should a major medical event occur, an employee covered by a mini-med plan can be burdened with substantial medical bills.

Although limited medical plans have been criticized in the past, they have become more main stream as of late; currently, 1.4 million Americans are covered by such plans, and major insurance providers such as Aetna now offer them.  Much of the criticism surrounding these plans is the fact that some workers may become confused as to what the plan covers vs. what they will have to pay out of pocket. 

Even still, employers and insurers can help fill in the gap by providing at least some medical coverage to people who otherwise wouldn’t have health plans at all.

At issue, according to the Los Angeles Times, is that the 80% medical benefit ratio is well above what these plans currently provide.  Typically, their premium revenues pay for 70% or less of medical expenses; this is because although they pay only limited benefits, their administrative costs can be as high as they are for companies providing major medical plans.

Currently, McDonald’s provides mini-med plans to its 30,000 restaurant employees.  Although the Wall Street Journal reported that McDonald’s is planning to drop these plans altogether, the fast food giant vehemently denied this by issuing a statement saying they won’t drop mini-meds altogether, but they might have to change insurers in order to cut costs.

According to the LA Times article, the National Association of Insurance Commissioners has been focusing on how to keep workers from experiencing a coverage gap in mini-med plans until they become partially funded through subsidies in 2014.

Industry analysts have been stressing the fact that until all phases of the Affordable Care Act are implemented in 2014, there will be a steep “learning curve” as insurers struggle to acquiesce to the new law.