Wal-Mart scales back health insurance benefits
Wal-Mart Stores, Inc., the nation's largest private employer, announced yesterday that it will stop offering health insurance coverage in January to about 30,000 part-time employees who work fewer than 30 hours a week, the New York Times reported.
The recent decision made by Wal-Mart may prompt other companies to follow suit, according to Reuters. Employer-sponsored health insurance coverage has been declining steadily since 2008, as FierceHealthPayer reported.
Offering health benefits to part-time staff is becoming increasingly rare in retail, since companies are "trying to cut expenses, to keep things lean," Edward Jones analyst Brian Yarbrough told Reuters.
Case in point: Target Corporation--America's second largest discount retailer--stopped offering health insurance to part-time staff earlier this year, as FierceHealthPayer reported.
Wal-Mart will also raise out-of-pocket health insurance contributions for 1.3 million workers. Bi-weekly premiums for Wal-Mart's most popular and cheapest individual plans will climb from $3.50 to $21.90. That increase may be hard for people to absorb, since Wal-Mart workers earn an average of $12.92 an hour, Reuters reported.
Wal-Mart's decision to reduce coverage came a week before the company's CEO is scheduled to face fund managers and analysts at an annual meeting of investors, Reuters noted. The company's U.S. same-store sales have been flat or falling over the last six quarters.
Implementation of the Affordable Care Act caused waves of Wal-Mart employees to enroll in its health plans, and the resulting expenses fueled the retailer's decision to pare down its benefit offerings.
Starting on January 1, 2015, the ACA requires companies with 50 or more employees to offer health insurance coverage to employees who work at least 30 hours weekly or pay a penalty, the Times noted.
Some experts point to a silver lining in Wal-Mart's decision, saying it frees part-time workers to apply for subsidies on the exchanges that wouldn't be available to them through private insurance. Wal-Mart will guide staff through the process of finding replacement insurance, the Times added.
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