Wal-Mart cutting back on healthcare coverage for new employees

New York City -- Wal-Mart Stores is cutting back healthcare coverage for new part-time workers and significantly raising premiums for many new full-time associates, the New York Times reported. It is a major turnaround for the retailer which, a few years back, under heavy criticism that many of its 1.4 million workers could not afford or did not qualify for coverage, expanded coverage for employees and their families. The move generated of flurry of positive publicity.

Under the new program, future part-time employees who work less than 24 hours a week on average will no longer qualify for any of the chain’s health insurance plans, according to the report.

In addition, any new employees who average 24 hours to 33 hours a week will no longer be able to include a spouse as part of their healthcare plan, although children can still be covered.

Although Wal-Mart cited rising health care costs for the changes in its coverage, the chain said the changes were not a result of the new federal health care law.

“Over the last few years, we’ve all seen our health care rates increase and it’s probably not a surprise that this year will be no different,” Wal-Mart spokesman Greg Rossiter told the Times. “We made the difficult decision to raise rates that will affect our associates’ medical costs. The decisions made were not easy, but they strike a balance between managing costs and providing quality care and coverage.”

According to the Times, Wal-Mart’s new health offerings will require many employees who smoke to pay a big penalty, an extra $10 to $90 each pay period — $260 to $2,340 a year — if they want health coverage. Other well-known companies, including The Home Depot, Macy’s and PepsiCo, also charge smokers more as part of their health plans.

“Tobacco users generally consume about 25% more healthcare services than nontobacco users,” Rossiter said in the Times article.

Wal-Mart also is reducing the amount of money it contributes to the savings accounts workers can use to pay for medical bills that are not covered under their plan, the report said. Last year, the company put $1,000 into accounts for families but it will cut the amount by half for next year to just $500.