Target is following in the footsteps of several large companies, including Home Depot and Walmart, which have decided to stop offering health insurance for part-time employees in response to the Affordable Care Act (commonly referred to as “Obamacare”). Target announced that it will stop offering health insurance benefits to its part-time employees as of April 1, 2014.
Jodee Kozlak, Target’s EVP of human resources, wrote that the healthcare marketplace may offer more preferable options as well as subsidies that could further reduce insurance costs for its employees. Consumer advocates are concerned that Target is simply pushing the cost of insuring its employees onto taxpayers, however.
A Growing Trend?
The recent wave of companies discontinuing coverage for part-time employees may be part of a larger trend that will continue into the future, especially as the ACA requirement for large employers to offer coverage approaches in 2015. Large companies (with 50 or more full-time-equivalent employees) must ultimately evaluate whether it’s in their best interests financially to continue offering health insurance to employees. If the cost of insuring employees exceeds the cost of the penalties for not offering coverage ($2,000-$3,000 annually per employee beyond the first 30 employees), employers may increasingly elect to direct employees to the healthcare exchanges.
It may not be as straightforward as simply comparing the cost of insurance to the penalties, however. Today large employers and employees both can get tax breaks for the money they spend on health insurance, according to Forbes. Employee health benefits also make employers more attractive to prospective employees, so clearly there is quite a bit for employers to consider when deciding whether to offer health coverage to employees.
If you have been affected by a recent change to your employer’s health care offerings, contact the experts at Benefit Packages for assistance obtaining coverage through the California health insurance exchange and to find out whether you are eligible for tax breaks or cost-sharing subsidies.