By Alex Wayne
Jan. 22 --Target Corp. will cease providing health insurance to part-time
employees in April, joining Trader Joe's Co., Home Depot Inc. and other U.S.
retailers that have scaled back benefits in response to changes from the
Affordable Care Act, the company announced Jan. 22.
About 10 percent of
part-time employees, defined as those working fewer than 30 hours a week, use
Target's health plans now, according to a posting yesterday on the
Minneapolis-based company's website. Target is the second-largest U.S. discount
retailer by sales and had about 361,000 total employees last fiscal year,
according to data compiled by Bloomberg.
The ACA creates a system of
penalties and rewards to encourage people to obtain medical insurance. The law
doesn't require most companies to cover part-time workers, and offering them
health plans may disqualify those people from subsidies in new government-run
insurance exchanges that opened in October.
“You see a lot of retailers
making adjustments in contemplation of the full effect of the employer mandate
penalties in 2015,” Neil Trautwein, a lobbyist with the National Retail
Federation, a trade group in Washington, said in a telephone interview. “Even
though it is not effective yet, it is already having an effect on the job
market and putting companies where they would probably not otherwise want to
The move also should reduce the cost of Target's health benefits,
The health law requires all
companies employing 50 or more people to offer health insurance to those
working at least 30 hours a week beginning in 2015. Those that don't comply may
be liable for fines of as much as $3,000 per worker.
is transforming the benefits landscape and affecting how all employers,
including Target, administer health benefits coverage,” Jodee Kozlak, Target's
executive vice president of human resources, said in the Jan. 22 web posting.
She cited “new options available for our part-time team, and the historically
low number of team members who elected to enroll in the part-time plan.”
No Target workers will see their hours cut as part of the change, she said.
A Target spokeswoman, Jill Hornbacher, wouldn't say how many part-time workers
the company employs, saying the number “fluctuates often.”
The ACA 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.
Target said it
plans to pay $500 to part-timers losing coverage, and a consulting firm will
help those workers sign up for new plans under the health care law exchanges.
It said on its website that many part-time workers might prefer coverage from
the exchanges, and that by offering them insurance, “we could actually
disqualify many of them from being eligible” for subsidies.
coverage for Target employees who work fewer than 30 hours a week will end
April 1, the company said. Open enrollment for 2014 under the ACA closes a day
Trautwein's organization is lobbying
Congress to raise the threshold that determines whether workers must be offered
insurance to 40 hours per week. Labor unions also have complained that the
30-hour limit could lead to reductions in hours for part-time employees, as
companies seek to avoid offering them health insurance.
been dropping coverage for workers for more than a decade preceding passage of
the ACA, according to Joanne Peters, a spokeswoman for the Department of Health
and Human Services.
“But now, unlike before, employees have the option
of shopping in the marketplace for quality, affordable coverage, where they may
be able to qualify for a tax credit to help pay for the cost,” Peters said.
With assistance from Renee Dudley in New York. Editors: Romaine
Bostick, Bruce Rule
To contact the reporter on this story: Alex Wayne in
Washington at firstname.lastname@example.org
To contact the editor
responsible for this story: Reg Gale at email@example.com
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