Wal-Mart slashes health insurance for 30,000 people
The country’s largest employer announced this week it would follow in the footsteps of many smaller businesses and terminate health insurance coverage for many of its part-time workers.
The move, which will affect 30,000 employees of Wal-Mart, is meant to garner the superstore significant savings in wake of increased healthcare costs related to the Affordable Care Act. Beginning Jan. 1, Wal-Mart will no longer offer insurance to employees working less than 30 hours a week.
“This year, the expenses were significant and led us to make some tough decisions,” said Sally Welborn, Wal-Mart’s senior vice president for global benefits.
While workers losing their insurance only make up about 5% of the retailer’s part-time workforce, the sheer size of Wal-Mart means many employees nationwide will now be looking at other ways to satisfy individual requirements under the Affordable Care Act.
That could mean a few new clients for independent agents and brokers assisting individuals with state and federal insurance exchanges.
However, the broader trend of companies slashing benefits in order to save money is concerning to producers working in the employee benefits field. According to a survey from Towers Watson, 12% of companies are planning to bar healthcare coverage of spouses with similar aims to cut costs.
According to Francis DeYoung, a retired insurance professional and consultant with the Small Business Association, fear and uncertainty surrounding the implementation of Obamacare is fueling such cost-cutting measures.
“There’s such a big cost factor involved. When you’re looking at a family plan and you’ve got to provide coverage for even four or five employees, it’s a big number,” DeYoung said. “There’s so many uncertainties in the future and these businesses are scared to death.”
Scott Leavitt, owner of Scott Leavitt Insurance in Boise, Idaho, last year predicted producers would start to feel the effects of this business owner anxiety.
“Some of the companies I’ve worked with have already dropped benefits because of the exchanges. Some even say ‘Am I hurting my employees by offering insurance?’” Leavitt said. “[Dropping coverage] saves money for the company and, in some cases, gives workers better benefits for a cheaper price.”
Leavitt noted that he “really want[s] the employer system to stick around,” but isn’t feeling too hopeful.
“I’m usually an optimist in this industry, but it’s not looking too good anymore,” he said.
by Caitlin Bronson | Oct 09, 2014