Wal-Mart Stores Inc. announced Tuesday it will no longer provide health insurance to many of its part-time workers as of Jan. 1, following in the footsteps of other big retailers, citing rising costs and new coverage options outside of the workplace.
The change will affect roughly 30,000 employees who work less than 30 hours per week, or 2 percent of the company’s total U.S. workforce and 5 percent of its part-time workers, the Bentonville, Arkansas-based company said.
“Like every company, Wal-Mart continues to face rising health care costs,” Sally Welborn, Wal-Mart’s senior vice president for global benefits, said in a blog post. “This year, the expenses were significant and led us to make some tough decisions as we begin our annual enrollment.”
The nation’s biggest retailer had been scaling down its health coverage in recent years, although it held out longer than some of its competitors. In February 2012 it said employees must work at least 30 hours to qualify for health benefits after the passage of the Affordable Care Act in 2010 expanded coverage for low- and middle-income Americans. However, there were previously eligible Wal-Mart workers who were still covered.
“The health care landscape today is changing,” company spokesman Randy Hargrove said, noting there are more coverage options for part-time workers outside of traditional employer-based coverage.
About 1.2 million employees are covered by Wal-Mart’s health plans, and Obamacare’s individual mandate now requiring most Americans to hold coverage or pay a fine might have motivated some of them.
That in turn ate into Wal-Mart’s bottom line, with health costs expected to cost the company $500 million for the fiscal year — up $170 million from its estimate of $330 million in February, The Associated Press reported.
OUR Wal-Mart, an advocacy group for the retailers’ workers, condemned Tuesday’s move in a statement from Nancy Reynolds, identified as a Wal-Mart cashier from Florida who is poised to lose coverage.
“Taking away access to health care, even though many of my co-workers couldn’t afford it anyway, is just another example of Wal-Mart manipulating the system to keep workers like me in a state of financial crisis,” she said, adding that she works only 22 hours because of health reasons.
House Speaker John A. Boehner, Ohio Republican, blamed the company’s moves on the higher costs imposed by Obamacare, saying in a statement that Wal-Mart workers will face unaffordable options on the Obamacare coverage exchanges as premiums go up and middle-class incomes go down.
Even as it dropped coverage for some, the company extolled its health benefits as competitive: It pays for 75 percent of an employee’s premiums, and in 2015 will offer $250 to $1,000 to help pay for medical expenses.
Wal-Mart said employees’ premiums are rising next year — its most popular plan will increase by $3.50 to $21.90 per pay period — but that it is “still half the average premium” other retail employees pay, the company said in its blog post.
The company also noted that Target, Home Depot, Walgreens and Trader Joe’s also rolled back or eliminated coverage for part-time workers, saying part-time workers could find more affordable coverage, with federal subsidies, on the Obamacare exchanges.
Wal-Mart said it will work with an outside company, HealthCompare, to help its affected workers find coverage.
Obamacare, for instance, set up state-based health exchanges where qualified persons can shop for private health plans, often with the help of income-based subsidies.
Wal-Mart’s announcement came one day after the company launched a new initiative to help customers find health insurance for themselves.
The retailer is partnering with DirectHealth.com, a health plan comparison website, to provide in-store assistance ahead of Medicare’s open enrollment this month for customers over 65 and before Obamacare’s second round of sign-ups kicks off Nov. 15.
• Tom Howell Jr. can be reached at thowell@washingtontimes.com.
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