Trader Joe’s Explains Why It’s Cutting Health Benefits For Part Timers

  • Share
  • Read Later
Jessica Rinaldi / Reuters

Trader Joe’s announcement last week that it would do away with health insurance options for its part-time employees drew strong reactions from some.

The Huffington Post, which originally obtained the internal memo outlining the retailer’s plans, quoted one employee who called her health coverage one of the best things about the job. “I can say that when I opened and read the letter yesterday my reaction was pure panic, followed quickly by anger,” she reportedly said.

The full impact of lost private insurance options under Obamacare is not so simple, however. In an email published (by all appearances) in full by The Washington Post Monday, Trader Joe’s responds to the concerns of someone who wrote to corporate about the coverage employees stand to lose. The retailer’s explanation offers a convenient window into how the health insurance landscape is set to change under Obamacare.

Rather than provide affordable options for purchasing health insurance to part timers (those working less than 30 hours weekly), as Trader Joe’s does now, as of January the company will simply cut them a $500 check to help cover the costs of obtaining coverage under the new exchanges forming under the rubric of the Affordable Care Act.

This, in a nutshell, is Trader Joe’s reasoning, quoted from the email:

Stated quite simply, the law is centered on providing low cost options to people who do not make a lot of money. Somewhat by definition, the law provides those people a pretty good deal for insurance … a deal that can’t be matched by us — or any company. However, an individual employee (we call them Crew Member) is only able to receive the tax credit from the exchanges under the act if we do not offer them insurance under our company plan.

The email offers the example of a single mom making $18 an hour working 25 hours a week who currently pays $166.50 per month for her Trader Joe’s coverage. With the tax credits under the ACA, the message says, she can get nearly identical insurance for roughly half that under an Obamacare health insurance exchange. Add to that the $500 she’ll get in January and the bleak picture of lost benefits starts to change rather dramatically.

The message acknowledges that for some part timers—namely those who, for whatever reason, report real income above the threshold for receiving subsidies to buy insurance (400% of the poverty line)—the benefits change will mean higher insurance costs. And, the message says, for 77% of Trader Joe’s employees — presumably those working more than 30 hours per week — there will be no change in insurance coverage options.

[The Washington Post]