Wal-Mart said Tuesday that it would eliminate health insurance coverage for about 30,000 of its part-time workers, a move that the nation’s largest retailer says is aimed at slashing its rising health-care costs.
All Wal-Mart employees who work less than 30 hours a week will no longer be eligible for coverage, a policy change that will affect 2 percent of the company’s 1.3 million U.S. workers and about 5 percent of its part-time workforce.
The company also said it will raise health-insurance premiums for its entire workforce in 2015.
Wal-Mart’s Senior Vice President of Global Benefits, Sally Welborn, said in a blog post that these were “tough decisions” made amid a climate in which businesses of all kinds are struggling to deal with their employees’ rising health-care costs.
“Wal-Mart’s change is not surprising and it does follow a number of retail employers who have moved in this direction since the Affordable Care Act,” said Brian Marcotte, chief executive of the National Business Group on Health, an organization that represents large employers on health-care issues.
Target said in January that it would cease to provide coverage for part-time workers. At the time, Target human resources executive Jodee Kozlak said that the company believed that these employees might prefer the options that were now available to them through the health insurance marketplaces created under the Affordable Care Act. Trader Joe’s and Home Depot announced a similar moves in fall 2013.
Greg Foran, chief executive of Wal-Mart U.S., told investors during a conference call in August that health-care costs were up $180 million compared to the previous year, a figure he said was “well above” the company’s initial estimates. By the end of the fiscal year, Wal-Mart expects to see a $500 million increase in health-care expenses due to higher levels of employee enrollment in its plans and higher costs. Almost 1.2 million employees and their family members are covered by Wal-Mart health-care plans.
In 2012, Wal-Mart said it would no longer offer coverage to new employees who worked less than 30 hours per week. However, existing employees who worked less than 30 hours were at that time permitted to continue getting health insurance coverage through Wal-Mart. This latest move means that those employees who had previously been grandfathered in will no longer be able to obtain coverage through Wal-Mart.
Wal-Mart will provide affected workers with assistance in finding new health insurance plans.
Previously, in 2011, the company got rid of health-insurance coverage for employees who worked less than 24 hours a week.
These recent reductions to health insurance offerings come less than a decade after Wal-Mart made a big push to expand its health-care coverage for workers. At the time, the company was facing sharp criticism from labor groups and legislators who said the Wal-Mart didn’t provide adequate coverage options for its employees.
Wal-Mart says its that its health insurance offerings compare favorably to those of its retail competitors. The Bentonville, Ark.-based company says that in 2014, its employees on average paid 32 percent less for their health coverage than other workers in the retail sector and 25 percent less than workers in other industries.
Workers enrolled in Wal-Mart’s most popular insurance plan will see their premiums increase in 2015 from $18.40 to $21.90 per pay period. Using data from benefits consulting firm Aon Hewitt as a benchmark, Wal-Mart says that those costs are about half what other retail employees face.
Marcotte said its not likely that Wal-Mart’s move will spur other major employers to change their insurance offerings. The Affordable Care Act might mean different things to different companies, he said, based on the size of their part-time workforce, how many low-wage workers they have and other factors.
“It’s really going to come down to a very company-specific decision,” Marcotte said.