Target (NYSE:TGT) has now joined the growing ranks of companies ending health-insurance coverage for part-time workers.
Instead, the retail giant now says it will shift part timers to the new health exchanges established under the health-reform law.
Continue Reading Below
Target says in a statement: "By offering (part-time workers) insurance, we could actually disqualify many of them from being eligible for newly available subsidies that could reduce their overall health expense."
Target does face mounting costs from the holiday cyber attack. But it is now joining other companies like Walgreens, Trader Joe’s, Home Depot and other retailers that have scaled back health benefits in response to changes from health reform.
The Target development is part of the growing trend of businesses and local governments taking a second look at their health-care costs in light of health reform. In turn, many are undoing the link between jobs and health insurance that has existed since the 1940s. Business trade groups continue to report that chief executives and chief financial officers are in discussions about how to contain health expenses, an important cost center.
America’s biggest employers, from IBM (NYSE:IBM) to Time Warner (NYSE:TWX) and potentially GE (NYSE:GE), are also increasingly moving retirees to insurance exchanges. UPS (NYSE:UPS) has moved to drop coverage for employed spouses. On top of that, employers across the country, including cities and about 100 school districts, are cutting full-time worker hours down to part-time status.
Target said it would pay $500 each to part-timers losing coverage and will arrange for an outside consultancy to assist part-time workers in their efforts to enroll in the new exchanges.
Getting coverage on the exchanges may prove tricky; workers can apply for tax credits only if their pay is within a certain income range.
To be eligible for subsidized coverage, their income must be between 100% and 400% of the federal poverty level, or $11,490 to $45,960 for a single person in 2013.
Income here is defined as modified adjusted gross income, meaning the total of the workers’ adjusted gross income from their tax returns and any tax-exempt interest income they have as well as certain foreign income, Kaiser Health News notes. The workers also can get tax credits, but only if the insurance at their jobs costs more than 9.5% of their wages.