Friendly's Dramatically Reduces Health Benefits

January 25, 2006 ( - Wilbraham, Massachusetts-based Friendly's Ice Cream Corp has slashed health care benefits for 454 of its full-time employees.

The Boston Globe reports that, according to enrollment materials, employees can choose from three tiers of coverage, with the lowest-priced plan paying a maximum annual benefit for outpatient care of $1,000 and the highest paying a maximum of $2,000. Until October, Friendly’s had provided employees with comprehensive health care coverage. Employees at the assistant-manager level and higher can still choose comprehensive coverage, employees told the Globe.

The move to the limited-benefit plan follows a trend of cost-shifting by employers to combat the high cost of providing health care benefits (See Study: Workplace Health Coverage Cost-Shifting Efforts Pick Up Steam). Many employers are switching to consumer-driven health plans in their efforts to reduce costs (See CDHP’s Remain Employers’ Cost Saving Choice).

Many Friendly’s employees do not qualify for coverage through the company and rely on MassHealth, the state Medicaid program for low-income residents, or free care that hospitals are required to provide, the Globe reports.

”Friendly’s is asking the hospitals and other employers to foot the bill for treating its employees,” said Hank Porten, chief executive of Holyoke Medical Center, a 202-bed community hospital, to the newspaper. “We end up charging more, and other companies who provide insurance pick up more of the tab for those that offer limited insurance in the community. More companies are walking away from their responsibility.”

The so-called practice of “dumping” employees on public health care systems has prompted many states to introduce legislation forcing large employers to spend a required amount on employee health care (See Doyle Accuses Wal-Mart of Health Care ‘Dumping’).