Wal-Mart Stores Inc. is cutting health insurance for
another 30,000 part-time workers and raising premiums for its other employees,
as U.S. corporations push to contain costs in the wake of the federal
health-care law. This is the first such enrollment period since employers could
assess the full financial impact of the federal health-care overhaul, and it is
a key moment as companies work to lower their spending ahead of looming taxes
on the most generous plans.
Many businesses are continuing to shift more costs to
workers. For Wal-Mart, that push from the individual mandate contributed to an
influx of workers who signed up for coverage, jacking up costs. Wal-Mart, the
country’s largest private employer, with about 1.4 million employees, forecasts
that its health-care costs will rise by $500 million more than it had expected
in the year ending Jan. 31, 2015.
Private-sector employers spent $446 billion on health
insurance premiums in 2012, the most recent year for which the federal Medicare
agency has published figures, and they were expected to pay $483 billion this
year, up 22% from 2007. Households spent $284 billion on premiums in 2012. They
are expected to spend slightly less this year to $282 billion, but it is still
up 20% from 2007.
Under the Affordable Care Act, large companies beginning in
2015 must offer coverage to most employees working 30 hours a week or more or
pay a penalty starting at around $2,000 per worker. Most individuals,
meanwhile, must show that they have health insurance or pay an individual
penalty.
Critics of the law have been concerned that companies would
drop coverage and force workers onto government exchanges.
Twenty-four percent of all companies that provide health
benefits offer them to part-time workers, according to a 2014 study by the
Kaiser Family Foundation and Health Research and Educational Trust, down from
25% last year.
Wal-Mart, which at one point offered health-care coverage to
all part-timers, has been paring back such coverage in recent years. In 2011,
it cut coverage for new employees who worked fewer than 24 hours a week. The
following year, it stopped insuring new workers who worked fewer than 30 hours
a week.
On Tuesday, Wal-Mart said it would drop coverage beginning
Jan. 1 for existing workers who were grandfathered into the company’s health
plan. Now, only those part-timers working 30 to 34 hours a week will qualify
for the company’s health coverage.
Wal-Mart also is raising premiums for all workers next year.
About 40% of enrolled workers are on its least expensive and most popular plan
and will now pay $21.90 per two-week pay period, a 20% increase, starting Jan.
1. Across all three plans, Wal-Mart said it estimates workers will pay an
additional $10 a pay period. The average Wal-Mart hourly worker earns $11.81 an
hour.
Elsewhere, the tax on higher-priced plans, set to take
effect in 2018, is already playing into employers’ benefit decisions. A survey
released in August by the National Business Group on Health found that, to
minimize the impact of the tax, 57% of employers were planning to implement or
expand high-deductible plans, while 42% were boosting employees’ cost-sharing.
Wal-Mart has retained a third-party benefits adviser to help
affected workers find coverage on public and private health exchanges or by
using a spouse or partner’s health insurance.
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