Walmart cuts health benefits for some part-timers

NEW YORK - Walmart Stores Inc. plans to eliminate health insurance coverage for some of its part-time U.S. employees in a move aimed at controlling rising health care costs of the nation's largest private employer.

Walmart told The Associated Press that starting Jan. 1, it will no longer offer health insurance to employees who work less than an average of 30 hours a week. The move affects 30,000 employees, or about 5 percent of Walmart's total part-time workforce, but comes after the company already had scaled back the number of part-time workers who were eligible for health insurance coverage since 2011.

The announcement follows similar decisions by Target, Home Depot and others to completely eliminate health insurance benefits for part-time employees. It also comes a day after Walmart said it is teaming with an online health insurance agency called DirectHealth.com to help customers shop for health insurance plans.

"We had to make some tough decisions," Sally Welborn, Walmart's senior vice president of benefits, told The Associated Press.

Welborn said she didn't know how much Walmart will save by dropping part-time employees, but added that the company will use a third-party organization to help part-time workers find insurance alternatives: "We are trying to balance the needs of (workers) as well as the costs of (workers) as well as the cost to Walmart."

The announcement comes after Walmart said far more U.S. employees and their families are enrolling in its health care plans than it had expected following rollout of the Affordable Care Act, which requires big companies to offer coverage to employees working 30 hours or more a week or face a penalty. It also requires most Americans to have health insurance or pay a penalty.

Walmart, which employs about 1.4 million full- and part-time U.S. workers, says about 1.2 million Walmart workers and family members combined now participate in its health care plan. And that has had an impact on Walmart's bottom line. Walmart now expects the impact of higher health care costs to be about $500 million for the current fiscal year, or about $170 million higher than the original estimate of about $330 million that it gave in February.

But Walmart is among the last of its peers to cut health insurance for some part-time workers. In 2013, 62 percent of large retail chains didn't offer health care benefits to any of its part-time workers, according to Mercer, a global consulting company. That's up from 56 percent in 2009.

"Retailers who offer part-time benefits are more of an exception than the rule," says Beth Umland, director of research for health and benefits at Mercer.

Walmart has been scaling back eligibility for part-time workers over the past few years, though. In 2011, Walmart said it was cutting backing eligibility of its coverage of part-time workers working less than 24 hours a week. And then in 2013, it announced a threshold of 30 hours or under.

Taking into account the latest move, Walmart declined to say what percentage of total part-time workers will not have company-sponsored health care coverage starting next year.

Walmart, like most big companies, also is increasing premiums, and out-of-pocket costs that employees pay, to counter rising health care costs. Walmart told The Associated Press that it's raising premiums for all of its full-time and part-time workers: For a basic plan, of which 40 percent of its workers are enrolled, the premiums will go up to $21.90 per pay period, up from $18.40, starting Jan. 1.

Walmart employees and their dependents will pay slightly more out-of-pocket for their care next year because the retailer has lowered the percentage of the bill it will cover for doctor visits, tests, and other services to 75 percent from 80 percent after the deductible is paid. But Walmart spokesman Randy Hargrove also noted that the company hasn't changed the maximum amounts that people will have to pay out of pocket annually.

Tom Murphy in Indianapolis contributed to this report.