Wal-Mart Trims Health Care Coverage For Some

Walmart health care for employeesBy Anne D'Innocenzio


NEW YORK (AP) -- Wal-Mart Stores Inc., the nation's largest private employer, is scaling back the eligibility of health care coverage offered to future part-timers and dramatically raising premiums for many of its full-time workers. Industry observers say the changes could have implications for millions of other workers, as more companies on the fence could replicate its moves.

The discounter, which employs more than 1.4 million workers, said the changes were forced by rising health care costs. All future part-time employees working less than 24 hours a week, on average, will not be covered under the plan, starting next year.

Premiums will rise for many existing workers, and the company will reduce by half the amount it contributes for each worker to help pay for health care expenses not covered under their plan. Tobacco users will be particularly hit hard, seeing premiums more than double compared with increases of as much as 41 percent for singles, according to Making Change at Wal-Mart, a group backed by the United Food and Commercial Workers International Union, which has been pressuring Wal-Mart on worker rights.

"Health care costs are continuing to go up faster than anyone would like," said Greg Rossiter, a Wal-Mart spokesman. "It is a difficult decision to raise rates. But we are striking a balance between managing costs and providing quality care and coverage." He emphasized that Wal-Mart's health care coverage remains "top tier" among its peers.

A number of companies have been looking for ways to cut health care costs and have been shifting more of the burden to their employees. The costs of employer-sponsored health insurance surged 9 percent this year, according to a report released last month by Kaiser Family Foundation and the Health Research and Educational Trust. But Drew Altman, president and CEO of the Kaiser Family Foundation, said that a big package of cuts from one company is unusual.

"While we do see increases in cost sharing, this is unusual and is outside the bounds," said Altman. "I don't think this will have a major impact on those who tend to do a little bit of everything to control costs, but it could provide more cover for other employers who are looking to move in that direction."

Still, only about 42 percent of overall companies offer health care coverage to part-time employees, according to Kaiser. About 28 percent of retailers don't even offer health care coverage for its part-time workers, according to Mercer, a benefits consulting company.

Retailers, in particular, have been under more pressure to cut costs, particularly in labor, as they look to offset a slow recovery in consumer spending. Wal-Mart and other merchants have scheduled employees on duty during peak sales times while reducing staffing during lulls, for example. But the latest moves underscore the increasing pressure that Wal-Mart is under as it works hard to reverse nine straight quarters of decreases in revenue at stores open at least a year, though it is seeing the trend reversing in the last three months.

With the economy still challenging, the discounter is under the gun to cut more costs and put those savings into lower prices for shoppers to remain the low-price leader. But for Wal-Mart's own associates, many of whom mirror their own blue-collar customers - who live from paycheck to paycheck - that means they'll have to shoulder even more costs while grappling with higher prices in the food aisle and at the pump.

"Wal-Mart's plan to roll back health care coverage for part-time workers and raise premiums for full-time employees should set off alarm bells for American workers," said Joseph Hansen, president of the UFCW in a statement." This lowering of working standards will have repercussions throughout the retail industry - particularly for part-time workers."

Wal-Mart's Rossiter said the premium increases vary by plan. For the most popular health care plan - basic coverage for a single person - the cost will go from about $11 per pay period, which is every two weeks, to about $15 per pay period starting next year, he said. But Andrew McDonald, a spokesman for Making Change at Wal-Mart, noted smokers will feel even more pain. Starting next year, smokers will be forced to pay $25.40 for that same plan every pay period.

For associates with families under a basic health care plan, they will have to pay $52.50 per pay period next year, up from $32.70 this year. For families with one smoker, they will have to pay $62.50.

"This is drastic," said Bonnie Shoaf, a smoker who works as a department manager in photos and toys and gets paid $16.51 per hour. "There goes my food money. I don't have any choice, but I will have to pay for it. I am 60 years old and I can't start over."

The Blue Ridge, Ga., resident, who received her packet of health care benefits this week, said she will see her premiums per pay period soar 92 percent, to $127, up from the current $66.

"Tobacco users consume 25 percent more health care services than non-tobacco users," Rossiter said. But he added that Wal-Mart has programs that smokers can take advantage of for free that can help them quit smoking.

Wal-Mart isn't alone. Companies have started to penalize smokers. According to Mercer, 28 percent of the largest employers, those with 20,000 workers or more, vary premium contributions based on smoker status.

Preventative care, such as annual checkups and mammograms, will remain fully covered under the plans. Wal-Mart is cutting in half the amount it gives families to pay for uncovered expenses to $500. For individuals, Wal-Mart will contribute $250, down from $500.

Current part-timers will remain eligible for coverage for themselves and their children, Rossiter said.

The changes on health coverage represent a reversal from only a few years ago. Since 2005, Wal-Mart had shortened its eligibility for part-time workers, allowed part-time workers to cover children, lowered premiums and reduced co-pays for prescription drugs. One of the biggest changes was that it provided coverage to part-time workers, including those who worked less than 24 hours per week, after only one year on the job instead of two. Since 1996, the company had offered overall coverage to all part-time workers.

Wal-Mart, based in Bentonville, Ark., defines full-time workers as anyone who works 34 or more hours per week. Rossiter declined to say how many part-time workers it has, but he noted that a majority of its workers are full-time employees.



Next: Former Saleswoman Sues IBM For $1.1 Million, Allegedly Told To 'Get Boobies Out'



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