Wal-Mart to End Health Insurance for Part-Time Employees

By Hiroko Tabuchi for the New York Times:

Walmart Stores, the world’s largest retailer and the nation’s largest private employer, said on Tuesday that it would terminate health insurance coverage for about 30,000 part-time workers, joining a string of retailers that have rolled back benefits in response to the Affordable Care Act.

Starting on Jan. 1, Walmart will no longer offer insurance to employees working less than an average of 30 hours a week, a move the retailer said was in response to an unexpected rise in health care costs.

“This year, the expenses were significant and led us to make some tough decisions,” Sally Welborn, Walmart’s senior vice president for global benefits, said in a blog post announcing the changes.

The workers losing their coverage make up about 5 percent of the company’s part-time work force of about 600,000, including in-store, logistics and corporate workers, said Brooke Buchanan, a company spokeswoman. Walmart did not disclose what percentage of the part-time work force would be left without coverage. Many part-time employees were never covered for a variety of reasons.

Over all, Walmart employs about 1.3 million people in the United States, and provides health coverage to about 1.2 million workers and workers’ family members, Ms. Buchanan said.

In scaling back coverage for part-time employees, Walmart joins retailers including Home Depot, Target and Trader Joe’s, which have dropped benefits in response to the Affordable Care Act, the health care overhaul enacted by the Obama administration. In 2011, Walmart eliminated health insurance for employees working fewer than 24 hours a week.

The company said that the health law’s introduction had prompted larger-than-expected numbers of employees to enroll in its health plans, driving up expenses.

The retailer expects to spend an additional $500 million on health care costs in the United States this year, it said in a filing in August, far more than the $330 million increase it forecast in February.

The Affordable Care Act, the most comprehensive overhaul of the nation’s health care system in decades, requires most Americans to enroll in health insurance or face a tax penalty. From Jan. 1, 2015, it will require companies with 50 or more employees to offer health insurance coverage to employees working at least 30 hours a week, or pay a penalty.

Employees working less than that can apply for subsidies in new government-run insurance exchanges that opened last year. But some experts say that the exchanges make it easier for employers like Walmart to eliminate health care coverage for part-time workers.

Walmart said that it would work with a health coverage specialist to guide workers through the process of finding alternative coverage.

It also said that it would raise health insurance premiums in 2015. But it said that its premiums remained lower than the industry average, citing figures from the human resources consulting firm Aon Hewitt. Representatives at Aon Hewitt were not immediately available to confirm that.

Stuart Appelbaum, president of the Retail, Wholesale and Department Store Union, called Walmart’s move “shameful.”

“Not only do they deny their workers full-time jobs, now they’re denying them health care coverage,” Mr. Appelbaum said.

Still, health benefits for part-timers are the exception rather than the rule among retailers. Last year, 62 percent of large retail chains offered no health care benefits to their part-time workers, up from 56 percent in 2009, according to the New York-based consulting firm Mercer.

Beth Umland, Mercer’s director of research for health and benefits, said that more retailers were likely to eliminate health care coverage for part-timers. “Now employees can go somewhere else to get coverage,” she said. “It’s an easier decision to make than before.”

Nancy Reynolds, 67, who has worked part time at the Walmart store in Merritt Island, Fla., for the last six years, said she worried that losing her insurance would mean higher costs for treatment of her diabetes, glaucoma and arthritis. Ms. Reynolds is covered by Medicare, but she said that she relied on company coverage to supplement it.

“I depend on Walmart’s health care,” Ms. Reynolds said. “I’m not sure what I’m going to do.”