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Wal-Mart Stores Inc., the nation's largest private employer, is scaling back health care coverage for future part-time workers while raising premiums for many of its full-time workers, particularly tobacco users.
The discounter, which employs more than 1.4 million workers, said that rising health care costs are forcing it to eliminate health care coverage for future part-time workers who work less than 24 hours a week. Many workers will also see their premiums rise, and the company will be reducing by half the amount it contributes for health care expenses that are not covered under their plan. Tobacco users will particularly be hit hard, seeing premiums increase by about 40 percent, the company said.
Greg Rossiter, a Wal-Mart spokesman, said that the decision was not in response to the new health care law but rather to the harsh realities of escalating health care costs.
"Health care costs are continuing to go up faster than anyone would like," said Rossiter. "It is a difficult decision to raise rates. But we are striking a balance between managing costs and providing quality care and coverage."
Rossiter said the premium increases vary by plan, but noted that for the most popular health care plan, an associate who paid $11 per pay period, will be paying $15 per pay period next year. He noted that tobacco users with a spouse would pay $141 per pay period for one plan as compared with $108 per pay period for a non-tobacco user.
Rossiter reasoned that "tobacco users consume 25 percent more health care services than non-tobacco users."
The company noted that preventative care such as annual checkups and mammograms remain fully covered. But Wal-Mart will now provide $500 for families to use for health care expenses that are not covered, down from $1,000. For individuals, Wal-Mart will contribute $250 for associates, down from $500.
Rossiter also noted that while eligibility rules for new part-time associates have changed, it will not change for current associates. For those who average 24 hours to 33 hours a week, their children will still be able to be covered. Their spouses had never been eligible.
The moves come as the discounter is working hard to reverse nine straight quarters of decreases in revenue at stores open at least a year, and may see a gain by the third quarter. Like many other retailers, Wal-Mart has been on a campaign to cut costs by having more workers on duty during peak sales times without being overstaffed during lulls. But the company's cuts on health care represent a reversal from only a few years ago when Wal-Mart, under pressure from union-backed groups, announced that it would provide health care coverage to part-time workers, including those who work less than 24 hours a week, after one year on the job. Prior to that, part-time workers had to work at Wal-Mart for two years before being eligible for coverage. It also lowered premiums and lowered co-pays for prescription drugs.
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 still full-time employees.