Wal-Mart Cutting Health Benefits to Some Part-Time Employees

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Wal-Mart Stores Inc., the largest private-sector employer in the U.S., will cut medical benefits to about 30,000 workers in response to mounting health-care costs and the growth of alternatives available under Obamacare.

Wal-Mart will no longer provide health coverage to employees who work less than 30 hours a week, according to a statement today on its website. The change is in line with moves by fellow retailers, including Target Corp., Home Depot Inc. and Walgreen Co., the company said.

“We don’t make these decisions lightly, and the fact remains that our plans exceed those of our peers in the retail industry,” Sally Welborn, senior vice president of global benefits, said on the company’s blog.

The U.S. Patient Protection and Affordable Care Act, known as Obamacare, doesn’t require companies to cover part-time workers, and offering them health plans may disqualify those people from subsidies in government-run insurance exchanges that opened last year. The coverage provided by the law softens the blow of companies eliminating benefits, said Ron Pollack, executive director of Families USA, a Washington-based group representing health-care consumers.

“People who are losing coverage can get it in a way that provides high-quality coverage at a much lower price,” he said. “Many of these people will be better off.”

Previous Cutbacks

Today’s move, which affects about 2 percent of Wal-Mart’s 1.3 million U.S. employees, follows the retailer’s elimination of benefits for many new part-time workers in 2012. Wal-Mart, based in Bentonville, Arkansas, will rely on the firm HealthCompare Insurance Services Inc. to help employees find replacement coverage.

The world’s biggest retailer also is increasing premiums as it projects a more than $500 million rise in health-care spending this year. The company’s lowest-cost health plan -- its most popular offering -- will climb by $3.50 to $21.90 per pay period. Wal-Mart pays employees biweekly and covers 75 percent of its employees’ premiums.

Assuming the 30,000 part-time workers used the lowest-cost plan, eliminating their benefits would save the company about $50 million a year, according to Bloomberg estimates.

Wal-Mart shares fell 0.1 percent to $77.30 at the close today in New York. The stock has fallen 1.8 percent this year.

Target, based in Minneapolis, announced plans to drop coverage of part-time employees in January.

Obamacare Rules

The Obama administration has modified the law’s rules for employer health coverage, requiring companies with 100 or more workers to cover 70 percent of their full-time employees beginning next year. They must cover 95 percent of full-timers beginning in 2016, when the mandate will be extended to companies with 50 or more workers. Those that don’t comply may be liable for fines of as much as $3,000 per worker.

The Affordable Care Act created new government-run health insurance exchanges to sell coverage to uninsured people, often with premiums discounted by federal subsidies. It disqualifies Americans for subsidies at the exchanges if they have an offer of “affordable” coverage from their employers, defined as an insurance premium less than 9.5 percent of their income.

White House press secretary Josh Earnest said today that the administration wouldn’t comment on a decision by an individual company. He said that before the health-care law was passed, it wasn’t uncommon for workers to find their insurance benefits cut or eliminated.

“The difference now is that those 30,000 employees from Wal-Mart who no longer have access to insurance through their employer now do have a legitimate alternative where they can acquire high-quality, affordable health care,” he told reporters traveling with President Barack Obama to a fundraiser in New York.

With the exchanges set up under the Affordable Care Act “these individuals now have somewhere to turn in terms of getting health care for themselves and their families,” he said.