Weekend Economists Trace the Long and Winding Road February 7-9, 2014

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19. AOL chairman slashes 401k benefits blames 2 women who gave birth to sick babies

http://www.nationofchange.org/aol-chairman-slashes-401k-benefits-blames-two-women-who-gave-birth-sick-babies-1391785331



AOL Chairman and CEO Tim Armstrong blamed the babies of two employees for increasing the company’s benefit costs on Thursday, explaining in a conference call that AOL had to pay millions out in medical bills and alter its entire benefits package. The remarks came just hours after the company announced changes to its 401(k) plans and complained that Obamacare has increased costs by $7.1 million.

“We had two AOL-ers that had distressed babies that were born that we paid a million dollars each to make sure those babies were OK in general,” Armstrong said on a conference call first reported by Capital New York. “And those are the things that add up into our benefits cost. So when we had the final decision about what benefits to cut because of the increased healthcare costs, we made the decision, and I made the decision, to basically change the 401(k) plan.” Under the new program, AOL employees will not be able to collect any matching funds toward their retirement savings from the company for any given year if they leave before Dec. 31 of that year.

But health care experts ThinkProgress contacted questioned why a large self-insured company with more than 5,000 employees could not absorb the additional health care costs associated with the pregnancies. Large employers typically purchase reinsurance, which could cover a substantial share of big claims and ensure stability in cases of larger-than expected medical payouts.