The top executive at AOL Inc. blamed the cost of Obamacare Thursday for his company’s decision to revamp how it contributes to employees’ retirement plans.
In an interview with CNBC’s “Squawk Box,” Chairman and CEO Tim Armstrong said Obamacare will add $7.1 million in company expenses, so the Virginia-based firm had to look for new ways to control costs.
AOL will not reduce the amount of its contributions to its employees’ 401(k) plans. Instead, it will provide the matching funds at the end of the year, meaning people who leave the company or are let go will forfeit those benefits.
Mr. Armstrong, who sat for the interview in the wake of his company’s latest earnings report, said AOL executives looked at their options and settled on benefits that could go to people who depart the company.
“We have to look at our benefits programs very seriously,” he said, noting technology is a competitive sector and they still want to attract top talent.
AOL is not the first company to announce changes to its health care plan as Obamacare rolls out in earnest.
In August, UPS said it would drop health care coverage for about 15,000 employees’ spouses who are eligible for coverage from their own workplaces. The company said the move was its best option to keep health care costs in check, given Obamacare’s fees and minimum-coverage requirements.
Last month, retail giant Target Corp. dropped its health care plan for part-time workers, citing low participation and saying its workers will be better off applying for coverage under the Obamacare insurance exchanges.