story by Kim Souza
ksouza@thecitywire.com
Faced with insurance costs that could rise $500 million in the fiscal year, Wal-Mart Stores announced Tuesday (Oct. 7) plans to stop offering health insurance for an estimated 26,000 U.S. employees who work less than 30 hours a week.
“Similar to other retailers like Target, Home Depot, Walgreens and Trader Joe’s, we will no longer be providing health benefits to part-time associates who work less than 30 hours. This will impact about 2% (26,000) of our total U.S. workforce of 1.3 million. We will be working with a specialist, HealthCompare, to personally guide our associates through the process of finding the right, affordable health care,” said Sally Welborn, senior vice president of global benefits at Wal-Mart.
Welborn said Wal-Mart did not make this decision lightly.
“The fact remains that our plans exceed those of our peers in the retail industry. Our premiums remain well below the industry average compiled by expert Aon Hewitt. We also continue to pay the majority of health care costs for associates covered under our medical plans. For example, on average we cover more than 60% of our associates’ total health care costs and more than 75% of their premium costs. In contrast, the retail industry pays, on average, about 54% of total health care costs and 68% of employee premiums,” she said.
Welborn also said the company’s lowest cost plan saw premiums increase by $3.50 per pay period to $21.90, which is half the average premium for other retailer employees.
Mike McCurry, chief operating officer of Mercy Health, said during a June meeting in Rogers that more large employers such as FedEx Corp., Home Depot and Walgreens as are making radical changes to their plans by eliminating health care options for retirees and non-spouses and raising the minimum deductibles to keep costs down.
Wal-Mart execs warned investors that health care costs were spiraling higher at the start of this year, and lowered their earnings guidance in August when the costs predictions were expanded from $330 million to $500 million for this fiscal year.
CRITICAL RESPONSE
Critics say the reality for Wal-Mart workers finding themselves uninsured is that they likely can’t afford to purchase plans on their own, but many may qualify for Medicaid or other government subsidies in their respective states.
“Wal-Mart, like Home Depot, Target and other large retailers, is wrongfully trying to take advantage of loopholes in its employee health care plans which provide coverage to full time employees by deliberately hiring more part time employees with whom they are not required to provide coverage. Just another example of Wal-Mart’s concern for the bottom line then the health and welfare of its employees”, said Jerry Reisman, an expert in workplace law and a partner at the Garden City, N.Y., law firm Reisman, Peirez, Reisman and Capobianco
Reisman said the largest American retailer is allowed to do something which they could not do if these employees were full time by denying them medical coverage under the disguise of being a part time employee.
“The majority of these part timers would want to work full time and get benefits but Walmart’s greed exceeds its concern for it employees who not only need the work but the medical benefits as well,” Reisman added.
He would like to see Wal-Mart be a leader and take a progressive stand to provide full-time work and benefits to its employees, rather than being a follower of Home Depot and Target who also are mostly concerned with their bottom line.
Wal-Mart said part-time workers only account for 2% of its U.S. workforce. In the recent quarter Wal-Mart said it was giving workers options to pick up more hours as it beefs up staffing around its store operations. In the quarter, Walmart U.S. said labor costs rose more than $200 million from the same period a year earlier.
MAYO PARTNERSHIP
Wal-Mart workers who are allowed to keep their insurance coverage will be able to obtain care at the Mayo Clinic Cancer Center locations in Rochester, Minn., Jacksonville, Fla., or Phoenix, Ariz., if they should be diagnosed with breast, lung or colorectal cancer.
Welborn announced this Mayo Clinic partnership agreement on Tuesday (Oct. 7). She said upon diagnosis, employees can obtain a review of the medical records by Mayo Clinic and when recommended, they will receive care at 100% for on-site visits at Mayo Clinic beginning Jan. 1.
“We are proud to expand our Centers of Excellence with Mayo Clinic to help ensure that our associates and their covered family members who are diagnosed with cancer receive the best care,” Welborn said. “The three cancers covered under our program are among the most prevalent experienced by associates on our health care plans.”
Dr. Jan Buckner, the Mayo Clinic deputy director, said Wal-Mart approached the health care provider to form this partnership that extends Mayo Clinic Care to its insured employees. The benefits under the Walmart Centers of Excellence cancer program include: On-site visits will be covered at 100%; recommended treatment, such as chemotherapy, radiation or surgery without deductible or coinsurance; and travel expenses for the patient and a caregiver.
“Our coordinated approach to cancer care offers patients the latest advances in treatment in a compassionate and caring environment,” said Dr. Jan Buckner, deputy director of practice at the Mayo Clinic.
Welborn said anyone who has been following the news for the last several years knows that health care is a major topic of debate. From doctors’ visits and prescriptions to insurance premiums, health care costs have increased for all individuals and the companies that insure them each year.
“Knowing this, Wal-Mart continues to work with health care providers and professionals, using our size and influence to negotiate the best rates and options for our associates,” she added.
The retailer also announced Monday (Oct. 7) a new partnership that allows consumers to compare healthcare insurance rates and shop for coverage in 2,700 of its U.S. stores and it has also set up 11 health clinics inside stores since early this spring that provides doctor visits for $4 for its insured employees and $40 for the general public.