Trader Joe's, UPS and Others Make Strategic Benefit Choices as a Result of Health Care Reform
Author: Tracy Morley, XpertHR Legal Editor
September 17, 2013
There has been much speculation over the last few years on what effect the Affordable Care Act (ACA) - often referred to as health care reform - will have on employer-sponsored health plans. While the delay in the employer mandate provides employers with a little more time to evaluate their workforce and benefit strategy, some companies are already making headlines based on their strategic benefit choices.
Last week, Trader Joe's told its part-time employees that, beginning in 2014, many of them will no longer be eligible for coverage under the company's health plan. The grocery store chain plans to end health insurance coverage for part-time employees working fewer than 30 hours per week. Instead of having coverage under the company-sponsored plan, these employees will be given $500 and directed to the Health Insurance Marketplace established by the ACA.
In a statement made by the company: "Depending on income earned outside of Trader Joe's, we believe that with the $500 from Trader Joe's and the tax credits available under the ACA, many crew members should be able to obtain health care coverage at very little, if any, net cost."
Trader Joe's is the latest, but certainly not the only, employer to revisit its benefit plan strategy and make changes as a result of the health reform law.
United Parcel Service (UPS) announced last month that, beginning January 1, 2014, it will no longer offer benefits to spouses of employees who can obtain health coverage through their own job. This decision - which UPS attributes in part to rising health care costs combined with costs associated with the health reform law - affects approximately 15,000 employee spouses.
The University of Virginia made a similar announcement, citing the health care law as a reason for increased health care costs.
We are also seeing the end of traditional, retiree health plans as companies like Time Warner, Inc. and International Business Machines Corp look to steer retired workers to privately run insurance exchanges.
Even with the postponement of the employer mandate, employers are still proceeding cautiously with their hiring plans and are still reducing the number of hours worked by their employees in an effort to avoid the employer mandate completely. Other employers are continuing to evaluate their strategies to determine if it is more cost effective to drop health coverage all together and pay the penalty instead.
As implementation of the health reform law proceeds, more than likely we will continue to see an uptick in employers' willingness to make significant changes to employee benefits, once viewed as an entitlement by workers.
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