The health insurance plight of part-time workers
The news came as a shock: Wal-Mart, the nation’s largest private employer, would not offer health benefits to new part-time employees, the company said Friday.
But perhaps it shouldn’t have been so surprising, since the retailer was among a minority of U.S. businesses. Only 16 percent of employers offer health insurance to part-timers, according to the Kaiser Family Foundation’s most recent Employer Health Benefits Survey. The number increases to 42 percent among large employers.
Wal-Mart has provided health insurance for part-time workers since 1996, said company spokesman Greg Rossiter.
“There’s been a really striking decline in [employer-based] coverage for these part-time workers,” said Sara Collins, vice president for the Affordable Health Insurance Program at the Commonwealth Fund, a Massachusetts-based nonprofit group.
The health-care law that Congress passed last year is unlikely to change that. While part-time workers will have access to new, subsidized coverage on the individual market, the Obama administration’s signature legislative achievement provides little incentive for employers to cover workers who are not full-time staff.
During the health-care debate, Wal-Mart came out as an early supporter of an employer mandate to require that companies provide insurance for their workers.
The retailer partnered with the Service Employees International Union to write a June 2009 letter to the White House on the issue. “We are for shared responsibility,” they wrote. “Not every business can make the same contribution, but everyone must make some contribution. We are for an employer mandate which is fair and broad in its coverage.”
The Affordable Care Act that Congress passed in 2010 does include such a provision. It requires large employers with more than 50 workers to provide health insurance. If an employer does not, it is subject to a fine of $2,000 for each worker.
The law, however, is largely silent on the subject of part-time workers, and there are no penalties for not offering them coverage.
That makes the divide between “full time” and “part time” a key distinction for the health-care law, and one the Obama administration is fine-tuning.
The law defines a “part-time employee” as one who works fewer than 30 hours a week. But that definition has raised concerns about how to treat employees who do not have regular work schedules, with hours potentially varying from month to month.
The Internal Revenue Service is working on further guidance. Without it, “employees might move in and out of employer coverage as frequently as monthly, which would be undesirable both from the employee’s and employer’s perspective,” the IRS said in a notice released last May, requesting public comment on the issue.
For those who do not receive employer-sponsored insurance, the health law creates new options. Beginning in 2014, new marketplaces called health exchanges will serve as a more organized and easier way to buy health insurance. Anyone who earns less than four times the federal poverty level, about $43,320 for an individual, will be eligible for tax credits to subsidize the purchase of insurance.
“Assuming this is all up and running in 2014, the exchanges will be there, there won’t be preexisting conditions and there will be new subsidies,” said Paul Fronstin, director of the health research and education program at the Employee Benefits Research Institute. Part-time workers “will have something they don’t have. You could argue they don’t really need their employers anymore.”
The law also includes provisions that advocates hope will drive down the cost of health insurance, including a more thorough review of some premium increases and requiring insurers to spend at least 80 percent of premiums on medical costs.
“The new Affordable Insurance Exchanges and tax credits will give part-time workers quality, affordable insurance choices and the security they need and deserve,” said Erin Shields, a spokeswoman for the Health and Human Services Department. “And the law includes aggressive steps to help control health-care costs.”
Critics of the law have worried that many employers will move their employees to the new health exchanges, where the workers will receive tax subsidies, rather than provide coverage themselves. This could become particularly true for part-time employees, since companies face no penalties for such behaviors.
“The economics become compelling for many employers to simply drop coverage and help their employees obtain replacement coverage through an exchange,” former Tennessee governor Phil Bredesen, a Democrat, wrote in a Wall Street Journal op-ed last year.
The law’s defenders say that won’t happen. The Robert Wood Johnson Foundation published a report Friday arguing that employers will continue to offer insurance. It points to Massachusetts, the only state with an employer mandate. There, employer-sponsored insurance increased by 3 percent in the three years after health reform was enacted.
“Employers have been offering coverage for decades, with no threat of a penalty for not doing so,” the report concluded. “They do it for good economic reasons — they are competing for labor — and these economic reasons will determine whether they continue to do so or change their behavior.”