Last week, Walmart — the world's largest retailer and the biggest private employer in the world — announced that it would be cutting health insurance coverage for approximately 30,000 of its part-time workers. This change will particularly affect part-time associates who work less than 30 hours a week -- around 2 percent of the company's U.S. workforce.
The move from the retail giant comes as no surprise, as many U.S. companies are starting to make changes to their employee insurance plans in the wake of an Affordable Care Act employer mandate that states beginning on January 1, 2015, large companies must offer coverage to most employees working 30 hours a week or face a penalty beginning around $2,000 for each worker. Large companies are defined as employing 50 or more workers.
In a blog posted on Walmart's corporate website October 7, it was stated that the reason for the health insurance cut was because the company "continues to face rising health care costs."
"This year, the expenses were significant and led us to make some tough decisions as we begin our annual enrollment," said Sally Welborn, Walmart's senior vice president for global benefits.
In addition to the health insurance cut for its 30,000 part-time workers, Walmart also announced that associates who work more than 30 hours a week will see an increase in insurance premiums next year. The lowest-cost associate-only plan, Walmart said, will increase by $3.50 to $21.90 per pay period in 2015.
According to the Kaiser Family Foundation, 47 percent of large firms — defined as having 200 or more workers — that offered health benefits in 2013 extended them to part-time workers. This is a two-percent increase from the year before, when 45 percent of large firms offered benefits to part-time workers. Yet, Walmart is not the first — and surely not the last — American retailer that will continue to cut health benefits to part-time workers.
Walmart defended these changes, saying it is following the lead of other retailers such as Target, Home Depot, Walgreens and Trader Joe's — who also do not offer insurance to part-time employees who work under 30 hours. Home Depot made this announcement last year, which affected almost 20,000 part time workers.
This is not the first time Walmart has cut health insurance coverage to its part-time workers. In 2011, new employees who worked fewer than 24 hours a week saw the loss of their coverage. In 2012, new employees who worked fewer than 30 hours lost coverage.
According to the Healthcare.gov website, part-time employees who are not offered health insurance by their company are encouraged to purchase a plan on the Health Insurance Marketplace exchanges. Free or low-cost coverage through Medicaid or the Children's Health Insurance Program (CHIP) are also options if one qualifies for such coverage.