Target Corp. on Tuesday said it will stop offering health
coverage for part-time employees, citing insurance options
available through public exchanges.
Target will stop covering part-time employees on April 1, the
company said in a corporate blog post quoting human resources chief
Jodee Kozlak. Less than 10% of Target's roughly 360,000 employees
take part in the plan being discontinued. Those employees will be
given $500 due to the coverage being ended.
Target said the health-insurance marketplaces, spurred by
President Barack Obama's Affordable Care Act, could provide options
its part-time workers may prefer.
"By offering them insurance, we could actually disqualify many
of them from being eligible for newly available subsidies that
could reduce their overall health insurance expense," Target
said.
The health law requires large companies to offer coverage to
employees working 30 hours a week or more, from 2015, or pay a
penalty starting at $2,000 per worker. The law also requires most
individuals this year to have coverage, or pay a penalty, and many
big employers have been bracing for higher costs as employees who
previously turned down participation in the company health plan now
sign up for it.
Retailers, along with restaurant and hospitality companies, are
bracing from some of the biggest cost increases under the new
insurance mandates due to their sizable workforces.
Several other big employers have already said they are paring
back the benefits they offered that aren't required by the law to
try to keep their benefits spending in check. In August, United
Parcel Service Inc. said it was cutting off coverage for workers'
spouses who had access to insurance through their own
employers.
The online health insurance exchanges allow individuals to
compare health plans and apply for tax credits toward the cost of
their coverage. People can get tax credits on a sliding scale if
they fall within certain income brackets--between $11,490 and
$45,960 for a single person -- but only if they don't have access
to insurance through their employer that costs 9.5% or less of
their wages.
Some employers have also sought to trim workers' hours to
minimize the number for whom they have to provide coverage or pay a
penalty. In its statement, Target said it wouldn't be limiting
hours for workers as a result of the change and its workers that
average at least 32 hours a week will be eligible for comprehensive
health insurance coverage.
Officials at the Department of Health and Human Services didn't
immediately respond to a request for comment.
Write to Paul Ziobro at Paul.Ziobro@wsj.com and Louise Radnofsky
at louise.radnofsky@wsj.com
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