NEW YORK — 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 fewer 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 particularly be 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 union-backed group 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.”
Furthermore, Altman said that he hasn’t seen companies just drop coverage of a chunk of part-time workers. 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 been cutting hours for their workers and have scheduled employees on duty during peak sales times while reducing staffing during lulls.