AOL Inc. blamed President Barack Obama’s health-care law for its plan to reduce its spending on contributions to employees’ 401(k) retirement plans.
AOL, owner of websites such as the Huffington Post, will still match employee contributions to retirement plans up to 3 percent of their paychecks, Chief Executive Officer Tim Armstrong said. Under the new policy, it will make the matching payments in a lump sum at the end of the year, forcing employees who leave before then to forfeit the benefit, he said in an interview today on CNBC.
“Obamacare is an additional $7.1 million expense for us as a company,” Armstrong said. “We have to decide whether to pass that expense to employees or cut other benefits.”
The White House is defending the law from criticism that it causes consumers more economic harm than good. Republicans have seized on a report this week by the Congressional Budget Office, which said Obamacare will reduce the hours Americans work by the equivalent of 2 million full-time jobs in 2017.
Armstrong didn’t specify how the health-care law had increased costs for New York-based AOL. AOL’s press office didn’t immediately respond to e-mail requests for comment.
The total number of hours worked will fall about 1.5 percent to 2 percent from 2017 to 2024 as a result of the health-care overhaul, the CBO said. The reduction, about twice the agency’s estimates in 2010, is due “almost entirely” to low-wage employees who may choose to give up extra hours of work to avoid losing subsidies or tax advantages under the law, the report said.
The Patient Protection and Affordable Care Act, known as Obamacare, is expected to cover 6 million people through its insurance exchanges this year, according to the report. About 8 million people will enroll in an expansion of Medicaid, the state-run health plan for the poor, under the law. Both figures represent reductions of 1 million from the agency’s estimates before the Obama administration’s faltering rollout of the insurance expansion began in October.
The Affordable Care Act marks the largest U.S. expansion of health insurance in more than 40 years. The law was passed by a Democratically controlled Congress in 2010 and many of its major provisions took full effect Jan. 1. The ACA set up government-run insurance exchanges where Americans can buy private health plans with the help of federal tax credits and expanded eligibility in Medicaid.