AOL chairman slashes 401K benefits, blames two women who gave birth to sick babies

[Redfairen]

Source: Think Progress

AOL Chairman and CEO Tim Armstrong blamed the babies of two female 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.

“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.

“The Affordable Care Act is simply a convenient whipping boy for any decision an employer makes to cut benefits,” Tim Jost, a law professor at Washington and Lee, said. “Assuming AOL had reasonably generous coverage like most large employers, it should not have experienced any significant changes in its benefit structure for 2014. Perhaps it had to pick up a few more employees that had not been covered before or reduce premiums for a few employees, but it is hard to see $7.1 million here.”


Read more: http://thinkprogress.org/health/2014/02/06/3262101/aol-chairman-benefits-baby/

[mimi85]

1. People still use AOL?

[lostincalifornia]

3. I sure don't

[marias23]

61. Embarassed to say

I still do. Will try to change even though that emailaddress is embedded in so much of my life. These people SUCK>

[lostincalifornia]

62. Email, Instant message, ISP? There are alternatives, but it might be too much trouble to change

and let everyone or business know your new email address. Keep in mind if you are going to do that then most likely you will go to gmail, yahoo mail, or microsoft, etc. In other words, the transition would most likely be with a large corporation which I have no doubt will not be necessarily be "for people"

May not be worth it

[klook]

71. Create your own domain name

via a web hosting provider like Bluehost, Fatcow, or one of the many others. Then you can have an email address like "[e-mail]." It's cheap and easy, and it makes it much easier to avoid spam. I've created quite a few email addresses this way.

[lostincalifornia]

72. yes, you can do that, but you still have to notify your contacts. It also isn't free, is it?

It is an alternative, thanks

[cui bono]

12. AOL owns HuffPo.

And probably a bunch of other stuff.

I know I heard of someone making a show for them, so somewhere they provide online video content.

[Major Nikon]

22. List of AOL acquisitions

http://en.wikipedia.org/wiki/List_of_acquisitions_by_AOL

[NYtoBush-Drop Dead]

43. boycott them all.

[mpcamb]

48. Right on!

Couple a million for sick babies or this rich bastard's retirement - or worse- next year's bonus for making profits on heartless decisions.

[warrant46]

58. Criminal organization

Urinating on the peasants

[progressoid]

23. AOL also owns Mapquest.

They are still worth a billion and a half dollars.

[mwooldri]

35. Mapwhat?

Who uses that anyway? Ahhh... they were the guys that did mapping before Google... but Google improved on it. Seriously I've not visited mapquest in what feels like years.

[progressoid]

37. I use their map app on my phone.

I use Google on my desktop computer but mapquest seems to work better on my phone.

[mbperrin]

47. Billion and a half? No WONDER seven million is bankrupting the company!

Thank God executive compensation is less than seven million!

[olddad56]

41. only the people who don't know how to get off of AOL.

[airplaneman]

69. I learned to hate AOL form the beginning.

They had a 30 day free trial in the beginning. The small print that I saw nowhere said you had to cancel on day 30 only. On day 29 they would cancel if you accepted a charge and on day 31 you had already been billed for 60 days (30 days past and the next 30 days coming) and they refused to refund anything. I called on day 35 and swore I would never do business with them again.
-airplane

[Skittles]

2. lying bastards

that's another corporate vulture trend - they can lay you off anytime during the year and deny you the matching benefit

[nilram]

7. exactly. And restrict mobility of employees who want to switch jobs

during the rest of the year. Creative, but transparent and insensitive towards those with sick kids. If this was a class project for a required 200-level course, Business Obfuscation When Screwing Employees, I'd give him a D.

[aggiesal]

29. AOL will make sure that . . .

layoffs occur in December.
And if you should survive the layoff, quit in January.

[Iliyah]

4. Don'tg blame babies for your fucked up health care coverage

[LibDemAlways]

5. My husband's last company pulled identical shit with its 401K.

They lost a contract and everybody in his office was let go as of Dec. 30th -- so that the company could avoid paying out the matching funds. Total crap. Didn't affect him as he had declined the 401K when he signed on three years ago, but it did affect others. Everybody was picked up by the new contractor (many at reduced salaries), but at least they all still have jobs.

In 2012 Tim Armstrong pulled in 12 million in salary, bonuses, and stock options. He could have paid those medical bills himself without breaking a sweat. Asshole.

[Auntie Bush]

31. Selfish pig! That's why so many people can't stand or hate the rich.

I'll bet many or most of them have done something illegal and are selfish money hoarders. I suppose that's harsh but probably true. Well a lot of them are.

[Retrograde]

32. It's the coming trend

IBM recently announced the same plan leave before 12/31, no matching funds for you. Slimy greedheads.

[shenmue]

6. WTF? Heartlessness alert

This sucks!

[Beaverhausen]

8. How was it that AOL paid the medical bills?

this doesn't even make sense?

No one's employer pays its employees medical bills. I call bullshit.

and dang it, I still use AOL.

[AtheistCrusader]

10. It's called self-insurance.

http://en.wikipedia.org/wiki/Self_insurance

[Beaverhausen]

17. thanks. I never heard of that

[AtheistCrusader]

21. Really big companies use it.

You need several thousand usually, to make it work.

[Sgent]

45. Much smaller ones do too

Most companies I know of with > 500 or so employees use it. Most employees aren't aware of the fact because they usually hire an outside company (Blue Cross, etc.) to manage the plan.

That being said, especially smaller companies purchase re-insurance.

[LiberalArkie]

25. It is a growing trend.

The place that I retired from made that move the year before I retired. My payroll deductions doubled that year and the HR people blamed it on "Obama Care".

[Swede Atlanta]

9. AOL publicly disclosed they are "incompetent"

I am also surprised they exist. I used them in the "early days" and paid through the you-know-what for something that was really nothing.

Companies that offer health insurance usually choose two options:
(1) Self-insured - they select an insurance company simply as an administrator of their offering BUT they usually purchase "re-insurance" to cover those unexpected losses
(2) Premium plan under which they actually purchase policies for their employees and pay the premiums. They are subsequently compensated in part by contributions from their employees.

It sounds like AOL was so stupid they elected option 1 without the (b) part - reinsurance

And of course they are going to blame this all on two employees and find another scapegoat, the ACA for THEIR INCOMPETENCE.

Those suffering for this should be the asshole CEO and shareholders for their MISMANAGEMENT of the company, not the employees.

[slumcamper]

11. Had either of these been HIS children, I doubt he'd be so deceitful & mean spirited. n/t

[quakerboy]

39. Im sure he would

they still would have made the changes to screw the worker while retaining his salary, hopefully with a nice raise. He just would have used nicer words to describe the kids.

Or maybe not. Maybe he would have just divorced the mother to avoid having any financial liability.

[CanonRay]

13. The answer to his problem is: Single Payer

[TexasTowelie]

52. Ding, ding, ding!

+1 for the correct answer.

[cui bono]

14. Single Payer.

Now.

[jsr]

59. Yep.

[JBoy]

15. Sounds to me like they just wanted to cut their 401(K) program. n/t

[Blue_Tires]

63. Precisely...

This plan was already in motion; he just needed some minor justification...Like a small-town factory that complains nonstop about not being able to compete and threatens to move/file bankruptcy, etc.... And of course *after* squeezing all the union concessions tax breaks and political kickbacks they can out of the community, they STILL pack up and leave...

I promise you that if the sick babies didn't exist, he would have found some other reason to do it...

[packman]

16. Reminds me

of the line gas companies spout when gasoline prices skyrocket -" a pipe burst in a refinery in Kickapoo, Alabama" or "A ship hit a reef off the coast of Tinbucktoo" - therefore, we have to raise prices.
Heartless bastard probably went out and bought a new car or house after blaming these women.

[BodieTown]

18. AOL CEO's 2012 Compensation: $12,071,422

Tim Armstrong does not work so hard that he's worth over $12 million a year...that's nearly $12 million too much.

This CEO and ALL CEOs who are making this kind of money: No trade-offs. We take your millions away, and you be content with earning fair compensation...and STFU or "get another job if you're not happy."

American values regarding CEO pay are insane. We HAVE to realize that we're not being reasonable or rational on this pay thing and the way profits are divvied up.

[Fearless]

20. +10000!!

[denverbill]

19. So without Obamacare, those babies would have been denied care and died?

Or left their families bankrupt?

Poor AOL. How much did the net last year again?

[edbermac]

24. Tim should start handing out chastity belts to all his female employees.

He'd save millions...MILLIONS!!

[Mass]

26. Single payer.

Of course, the claim is ludicrous, but it points to a more general problem. Health coverage should not depend on your employment status.

Anyway, I am lost. What increased the costs? ACA or the two women' s babies? And why slash 401 K benefits? This claim is just bunk. Get employers out of the business of choosing coverage for their employees.

[Nye Bevan]

27. So, he took a gamble by not buying insurance to cover this, and lost.

And somehow this is the fault of Obamacare.

[quakerboy]

40. Before obamacare it wasnt a gamble

You decline to buy insurance, then took your employees money, and had a profit. And if one of them dared get too sick, you got to deny them care unless the PR was going to be bad enough to make it worth paying out.

[DallasNE]

28. So What Is The Connection Between Health Care Costs And 401(k) Benefits

Obviously, there is none other than both are business expenses, just like wages and electricity.

Besides, most self-insurance plans involve a high-deductible reinsurance plan. AOL likely had to pay the first $100,000 for each of these babies and having 2 might have driven up the reinsurance premium by a small amount. Outwardly it looks like AOL just stuffed another $6 million in their pockets, taken from the backs of its work force.

[frylock]

30. you can't spell asshole without AOL

[LittleGirl]

38. that's brilliant

as a former IT administrator, I hated HATED AOL. Screwed up more computers...

[TygrBright]

33. Wow. Stay classy, Tim. n/t

[grandpamike1]

34. What !

AOL is still around ? Why ?

[heaven05]

36. such greed. such lying deceit.

state of the working class and their owners in america today. sad indeed. the rich get richer.........

[dembotoz]

42. oh shit--i don't want to stop using mapquest because the ceo is an asshole

i don't like walmart so easy to boycott that
don't like hobby lobby so yet no pain there.
chick fila--none near by and they are not that good anyway so sign me up.


buy i like map quest......

it works
it is easy

shit

[blkmusclmachine]

44. SICK

[valerief]

46. Yeah, Armstrong, it's the sick babies.

http://www.forbes.com/profile/tim-armstrong/

Tim Armstrong
Age: 41

Mr. Tim Armstrong has served as Chairman and Chief Executive Officer of AOL Inc. since April 2009. Prior to that, Mr. Armstrong served as President, Americas Operations of Google Inc., a global technology company. Mr. Armstrong joined Google Inc. in 2000 as Vice President, Advertising Sales, and in 2004 was promoted to Vice President, Advertising and Commerce and then in 2007 was named President, Americas [...] more

AOL, Inc.
Compensation for 2011
Salary $1,000,000
All other compensation $12,534
Non-equity incentive plan compensation $2,204,000
Total Compensation $3,216,534
Options Exercised for 2011
Number of securities underlying options exercisable 469,466
Stock Ownership for 2011
Number of shares owned 876,511

[steve2470]

49. 1996 called, and it told you to come home nt

[davidpdx]

50. No doubt!

LOL

[davidpdx]

51. AOL is an example of how a good company can be fucked up

and how good companies can be bought up by a fucked up company. They bought some half decent companies that probably would be doing something productive if they weren't part of the twisted wreckage.

Armstrong can go blow himself for fucking over his employees.

[cloudbase]

53. If you self insure, it a good idea

to purchase stop loss insurance.

[tanyev]

54. Seems like something that should OUTRAGE! the RW pro-lifers.

But I'm not going to hold my breath.

[cui bono]

60. Yeah, didn't think of that. OTOH, those babies are already born so they're SOL

since those loons are really anti-choice, not pro-life. We need to stop using their term. It's not true or accurate.

[Incitatus]

55. AOL must be circling the drain if a few million hurts them that much.

They used to be the Internet provider. It sound like a failure to innovate and keep up with the times has really caused to fall.

[Brigid]

56. OK, we have laws about medical malpractice and legal malpractice . . .

Last edited Fri Feb 7, 2014, 03:10 PM - Edit history (1)

Now we need laws about management malpractice. The workers always get blamed when a company is having problems, when that is almost never the case. And now we this guy wants to blame a couple of sick babies??

[eppur_se_muova]

57. Profits up 13% , must ... screw ... employees.

This guy was interviewed on NPR. Tried to sound like a helpless victim of Big Gummint, but came through as a whining weasel for all to hear.

Oh, and he was blaming $14M in costs on Obamacare in the interview.

That quote from Prof. Jost sums it all up very precisely.

[JDPriestly]

64. Self-insurance = insurance when we want to pay for it.

Babies with disabilities are born every once in a while. A self-insured company should figure in the possible costs associated with disabilities when it decides to forgo other insurance.

I'm sorry for the AOL employees. But self-insurance???? It can work with extremely large companies, but I doubt that AOL is that large.

What does the ACA have to do with a company that insures itself? Can anyone explain?

[airplaneman]

65. this CEO has to be a POS republican.

These guys lie though their teeth and wouldn't hesitate to fuck each and every employee if it would benefit them personally some way. They speak out when a Democrat is in charge and keep silent when a republican is in charge but their behavior never changes.
-Airplane

[Shoulders of Giants]

66. Once we get single payer healthcare, all this nonsense ends.

[kelliekat44]

67. Greed does it again. Shameful . nt

[JusticeForAll]

68. Is it a HIPPA violation if the AOL workforce can identify either of the two mothers?

With them being self-insured, are they bound by HIPPA? If AOL is bound by HIPPA, I hope Timmy gets his ass sued if any of these mothers' identities can be discerned....

[debunkthis]

70. They wouldn't have that problem with a single payer system

would they?

[Helen Borg]

73. So, what are those mothers supposed to do?

Really...

[AnnieBW]

74. They laid off my friend who got cancer

One of my closest friends used to work for AOL in Reston. She was one of their top sysadmins. She got spinal cancer and required a lot of medication. When they laid off employees, guess who the first one cut was? Yep. Ironically, she was one of two people that could delete employee accounts - and both of them were laid off!

[LeftOfWest]

75. I think this guy has reversed this.

http://www.washingtonpost.com/business/aol-chief-reverses-changes-to-401k-policy-after-a-week-of-bad-publicity/2014/02/08/0aec4056-911f-11e3-b227-12a45d109e03_story.html?hpid=z2

"AOL chief reverses changes to 401(k) policy after a week of bad publicity"

Idiot.

These people making these mega dollars are our best and brightest???

No...

[Lifelong Protester]

76. Assh*** 1%er, that's all I can say

n/t

[pansypoo53219]

77. how much did this CEO get paid?

[HoosierCowboy]

78. The Elephant in the room

ought to be why does it cost one million dollars in America to save a sick baby?

[Zorro]

79. I think he may be resigning in the near future to spend more time with his family