NEW YORK – Wal-Mart Stores Inc. plans to eliminate health insurance coverage for some of its part-time U.S. employees in a move aimed at controlling rising health care costs of the nation’s largest private employer.
Wal-Mart told the Associated Press that starting Jan. 1, it will no longer offer health insurance to employees who work less than an average of 30 hours a week. The move affects 30,000 employees, or about 5 percent of Wal-Mart’s total part-time workforce, but it comes after the company already had scaled back the number of part-time workers who were eligible for health insurance coverage since 2011.
The announcement follows similar decisions by Target, Home Depot and others to eliminate health insurance benefits for part-time employees. It also comes a day after Wal-Mart said it is teaming up with an online insurance agency called DirectHealth.com to help customers shop for health insurance plans.
“We had to make some tough decisions,” said Sally Welborn, Wal-Mart’s senior vice president of benefits.
Welborn said she didn’t know how much Wal-Mart will save by dropping part-time employees but added that the company will use a third-party organization to help part-time workers find insurance alternatives: “We are trying to balance the needs of (workers) as well as the costs of (workers) as well as the cost to Wal-Mart.”
The announcement comes after Wal-Mart said far more U.S. employees and their families are enrolling in its health care plans than it had expected following rollout of the Affordable Care Act, which requires big companies to offer coverage to employees working 30 hours or more a week or face a penalty. It also requires most Americans to have health insurance or pay a penalty.
Wal-Mart, which employs about 1.4 million full- and part-time U.S. workers, says about 1.2 million Wal-Mart workers and family members combined now participate in its health care plan. And that has had an impact on Wal-Mart’s bottom line. Wal-Mart now expects the impact of higher health care costs to be about $500 million for the current fiscal year, about $170 million higher than the original estimate of about $330 million that it gave in February.
But Wal-Mart is among the last of its peers to cut health insurance for some part-time workers. In 2013, 62 percent of large retail chains didn’t offer health care benefits to any of its part-time workers, according to Mercer, a global consulting company. That’s up from 56 percent in 2009.
“Retailers who offer part-time benefits are more of an exception than the rule,” said Beth Umland, director of research for health and benefits at Mercer.
Wal-Mart, like most big companies, also is increasing premiums and out-of-pocket costs that employees pay to counter rising health care costs. Wal-Mart told the Associated Press it’s raising premiums for all of its full-time and part-time workers: For a basic plan, in which 40 percent of its workers are enrolled, the premiums will go up to $21.90 per pay period, up from $18.40, starting Jan. 1.
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