Target Cuts Health Benefits for Part-Time Employees

Author: Tracy Morley, XpertHR Legal Editor

January 27, 2014

Target Corp. announced it will stop offering health insurance coverage to part-time employees effective April 1, citing low participation and the new health insurance marketplaces as the rationales for this decision. Target joins Trader Joe's and other companies that have made significant changes to their employee benefit plans as a result of the health reform law.

"Health care reform is transforming the benefits landscape and affecting how all employers, including Target, administer health benefits coverage, according to Jodee Kozlak, Target's Executive Vice President of Human Resources. "Our decision to discontinue this benefit comes after careful consideration of the impact to our stores' part-time team members and to Target, the new options available for our part-time team, and the historically low number of team members who elected to enroll in the part-time plan."

According to the company's blog, less than 10 percent of the company's employees participate in the part-time plan. Target said, "The launch of Health Insurance Marketplaces provides new options for health care coverage that we believe our part-time team members may prefer. In fact, by offering them insurance, we could actually disqualify many of them from being eligible for newly available subsidies that could reduce their overall health insurance expense."

Target will provide a $500 cash payment to part-time employees losing coverage as a result of this decision, and is partnering with an outside vendor to support employees through the transition.

As implementation of the law continues, more than likely we will continue to see more employers looking to make changes in an effort to tackle rising health care costs.