Wal-Mart Stores Inc., the largest private-sector employer in theU.S., will cut medical benefits to about 30,000 workers in responseto mounting health-care costs and the growth of alternativesavailable under Obamacare.

Wal-Mart will no longer provide health coverage to employees whowork less than 30 hours a week, according to a statement on itswebsite. The change is in line with moves by fellow retailers,including Target Corp., Home Depot Inc. and Walgreen Co., thecompany said.

“We don't make these decisions lightly, and the fact remainsthat our plans exceed those of our peers in the retail industry,”Sally Welborn, senior vice president of global benefits, said onthe company's blog.

The U.S. Patient Protection and Affordable Care Act, known asObamacare, doesn't require companies to cover part-time workers,and offering them health plans may disqualify those people fromsubsidies in government-run insurance exchanges that opened lastyear. The coverage provided by the law softens the blow ofcompanies eliminating benefits, said Ron Pollack, executivedirector of Families USA, a Washington-based group representinghealth-care consumers.

“People who are losing coverage can get it in a way thatprovides high-quality coverage at a much lower price,” he said.“Many of these people will be better off.”

The move, which affects about 2 percent of Wal-Mart's 1.3million U.S. employees, follows the retailer's elimination ofbenefits for many new part-time workers in 2012. Wal-Mart, based inBentonville, Arkansas, will rely on the firm HealthCompareInsurance Services Inc. to help employees find replacementcoverage.

The world's biggest retailer also is increasing premiums as itprojects a more than $500 million rise in health-care spending thisyear. The company's lowest-cost health plan — its most popularoffering — will climb by $3.50 to $21.90 per pay period. Wal-Martpays employees biweekly and covers 75 percent of its employees'premiums.

Assuming the 30,000 part-time workers used the lowest-cost plan,eliminating their benefits would save the company about $50 milliona year, according to Bloomberg estimates.

Wal-Mart shares fell 0.1 percent to $77.30 at the close today inNew York. The stock has fallen 1.8 percent this year.

Target, based in Minneapolis, announced plans to drop coverageof part-time employees in January.

Obamacare Rules

The Obama administration has modified the law's rules foremployer health coverage, requiring companies with 100 or moreworkers to cover 70 percent of their full-time employees beginningnext year. They must cover 95 percent of full-timers beginning in2016, when the mandate will be extended to companies with 50 ormore workers. Those that don't comply may be liable for fines of asmuch as $3,000 per worker.

The Affordable Care Act created new government-run healthinsurance exchanges to sell coverage to uninsured people, oftenwith premiums discounted by federal subsidies. It disqualifiesAmericans for subsidies at the exchanges if they have an offer of“affordable” coverage from their employers, defined as an insurancepremium less than 9.5 percent of their income.

White House press secretary Josh Earnest said today that theadministration wouldn't comment on a decision by an individualcompany. He said that before the health-care law was passed, itwasn't uncommon for workers to find their insurance benefits cut oreliminated.

“The difference now is that those 30,000 employees from Wal-Martwho no longer have access to insurance through their employer nowdo have a legitimate alternative where they can acquirehigh-quality, affordable health care,” he told reporters travelingwith President Barack Obama to a fundraiser in New York.

With the exchanges set up under the Affordable Care Act “theseindividuals now have somewhere to turn in terms of getting healthcare for themselves and their families,” he said.

Bloomberg News

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