LOS ANGELES—Retail giant Wal-mart announced on Tuesday, Oct. 7, that it would terminate health insurance coverage for about 30,000 part-time workers in the US.
Wal-Mart joins a line of retailers that have cut back benefits in response to the Affordable Care Act, which requires large companies to offer coverage to employees working 30 or more hours a week, or be penalized.
Starting Jan. 1, 2015, Wal-mart will no longer cover part-time employees who work less than 30 hours a week, a move that will affect almost 5 percent of its total part-time workforce. This comes after the company had already scaled back the number of part-timers who were eligible for health insurance coverage since 2011.
The percentage of Wal-mart’s part-time workforce of about 600,000—including in-store, logistics and corporate workers—that would be affected was not disclosed; however, many part-timers were already not covered for a variety of reasons, said Brooke Buchanan, a company spokeswoman.
Other large wholesalers like Trader Joe’s, Target and Home Depot have already made motions to completely eliminate health insurance benefits for such employees.
“We’ve had to make some tough decisions,” said Sally Welborn, Wal-mart’s senior vice-president of global benefits. “This year, [health care] expenses were significant.”
The company also said that the Affordable Care Act—which requires most Americans to enroll in health insurance or face a tax penalty—prompted larger-than-expected numbers of employees to enroll in its health plans, driving up annual expenses. The retailer expects to spend an estimated $500 million on health care costs this year alone, far more than the $330 million increase it predicted in February.
Wal-mart employs about 1.3 million people in the US, and provides health coverage to about 1.2 million workers and their family members, Buchanan also said.
“We are trying to balance the needs of [workers] as well as the costs, as well as the cost to Wal-Mart,” said Welborn.
Welborn added that she did not know exactly how much the company will save by dropping the coverage, but Wal-Mart plans to use a third-party organization and health specialists to help find insurance alternatives.
The company also announced a new move to make one-stop shopping even easier at its hundreds of stores. Wanting to be the go-to place for all your health care needs, it expanded into a new area: selling health insurance.
Wal-mart is teaming up with DirectHealth.com, an online health insurance comparison agency, to allow shoppers to compare their coverage options and enroll in Medicare plans or the public exchange plans under the Affordable Care Act.
The strategy is an aggressive move into the insurance market, hoping to target shoppers without insurance and those who have been confused about enrolling in programs. Ironically, these include workers who have had their health coverage scaled back.
Wal-mart’s move is “shameful,” Stuart Appelbaum, president of the Retail, Wholesale and Department Store Union, commented.
“Not only do they deny their workers full-time jobs, now they’re denying them health care coverage,” said Appelbaum.
Though Wal-Mart is not the first company to cut health insurance for part-timers, benefits for these employees are the exception rather than the rule among retailers. Last year, 62 percent of large retail chains offered no benefits to their workers, up 56 percent in 2009, said Mercer, a global consulting firm.
“Now employees can go somewhere else to get coverage,” said Beth Umland, Mercer’s director of research for health and benefits, who admits that more large retailers are likely to drop coverage for part-timers. “It’s an easier decision to make than before.”
Many of the affected employees are obviously concerned.
Nancy Reynolds, 67, who has worked part-time at a Florida store for the last six years, is worried that losing her health insurance would mean higher treatment costs for her diabetes, glaucoma and arthritis. She also depends on the insurance to supplement her Medicare coverage.
“I depend on Walmart’s health care,” said Reynolds. “I’m not sure what I’m going to do.”
(With reports from the New York Times, the Huffington Post, and the Associated Press)
(www.asianjournal.com)
(OCIE October 10-16, 2014 Sec. A pg.1)