AOL 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 Thursday 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."
Armstrong didn't specify how the health-care law had increased costs for New York-based AOL.
The CEO told employees Thursday that the health-care expenses of two employees in 2012 played a role in his decision on which benefits to cut, Capital New York reported. The two workers had "distressed babies that were born," costing AOL $1 million each, he said, indicating that he'd rather prioritize health care over retirement among the company's benefits.
While he didn't name the babies' parents, some AOL employees were upset that Armstrong had discussed the personal situation of two workers, Capital New York said, citing an unidentified person. AOL's press office didn't immediately respond to a request for comment on the report.