Wal-Mart to Shrink Options For New Hires' Health Care

By Ylan Q. Mui and Amy Joyce
Washington Post Staff Writers
Wednesday, September 27, 2006

Wal-Mart Stores Inc. is scaling back the health-care plans available to new employees, sparking fresh criticism over whether the giant retailer is providing adequate coverage to its workers.

As of Jan. 1, the company will offer new hires only two health benefits packages in which the monthly premium can be as low as $11 but the deductible can reach $6,000, according to documents provided to The Washington Post by Wake-Up Wal-Mart, a union-backed group.

The company's two other benefit plans, which have lower deductibles, will no longer be offered to new employees. However, the plans will remain available to current employees who choose to renew their coverage.

Wal-Mart spokesman Dan Fogleman said yesterday that he expected the change to save most employees money. He said a review of the company's health-benefits plans showed most had opted for a package with a monthly premiums between $70 and $100, and a $350 deductible, but that more than half never paid that much.

That drove the decision to require new hires to sign up for Wal-Mart's new plans that have lower monthly payments but higher deductibles. The option known as the "value plan" starts at $11 per month for employee coverage in some markets and has a $1,000 deductible. The "freedom plan" starts at about $17 per month for employee coverage but has a deductible of $3,000 and the option to create a health savings account. The cheapest monthly cost for an employee and his or her spouse is $38 with a deductible of $6,000.

"We've done the math on this, and we have a pretty good understanding of what this is going to mean," Fogleman said. "Most associates are going to come out better on this."

Wake-Up Wal-Mart disagrees. It has accused the company of depressing wages and benefits, forcing many of its workers to seek public health care.

"Wal-Mart is cruelly hurting its employees, cutting health-care options and shifting costs on to the American taxpayer," said Paul Blank, campaign director for Wake-Up Wal-Mart.

Paul Fronstin, director of health research and education at the Employee Benefit Research Institute, said the new Wal-Mart changes look "pretty standard." But he noted that a biweekly increase in a surcharge from $50 to $75 for spouses who have access to other medical coverage seemed high.

"There is always shifting going on, and it tends to be modest at best. It might be that way here as well," he said.

Fogleman said that about 615,000 employees are covered by the company, about 47 percent of its workforce, and Wal-Mart is working to expand that number.

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