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Target made a very big announcement this week ---one that, for the first time in awhile, had nothing to do with credit card breaches.
The Fortune 500 company said Tuesday that it would stop providing health-care benefits to its part-time workers, instead directing them to purchase coverage through the health law's exchange. This adds Target to a growing list of companies that have dropped health benefits for part-time workers --including Home Depot and Trader Joe's -- pointing a finger squarely at Obamacare.
Like companies before it, Target has framed the change, which begins April 1, as not so bad for employees, arguing that the decision could instead prove advantageous.
"The launch of Health Insurance Marketplaces provides new options for health-care coverage that we believe our part-time team members may prefer," a Target blog post says. "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."
Is this window-dressing on a bad decision for workers? Or is it actually, as Target suggests, an improvement for part-time employees? That depends a lot on each individual employee. Some probably will find themselves in a better situation, with access to more affordable health care. Others will likely be furious that their benefits from Target are ending.
The best place to start is with how the Affordable Care Act treats workers. And there are two important things to know on this front. First, the health-care law does not require employers to provide insurance to anyone who works less than 30 hours a week. Employers will not be penalized if they leave these people uncovered, as they will be if they do not offer insurance to full-time employees next year.
Second, an affordable employer offer of insurance bars a worker from using the health law's new insurance subsidies. Affordable is defined here as an insurance plan that costs less than 9.5 percent of an individual's income. The idea here is to encourage workers who do get insurance through their employer to stick with that plan, rather than have the federal government kick in a contribution.
That is what Target means when it says that its offer of insurance can have a negative impact, by "disqualifying" workers from federal insurance subsidies.
The glass-half-empty reading of Target dropping coverage is that workers are losing access to an employer-sponsored insurance. The half-full interpretation is that many are gaining access to government-subsidized insurance.
A hypothetical 25-year-old Target sales floor leader, for example, who earns $15 an hour and works 29 hours per week would qualify f0r a monthly health-care subsidy of $96 if Target does not offer insurance. The worker could not access that subsidy if Target did offer coverage -- but the worker would then, of course, have access to that employer plan. Generally speaking, those who will get the best deal here are the workers with the lowest salaries because, for the first time, their premium will be directly tethered to the amount of money they earn.
Part of Target's argument for this move is that few of its part-time employees actually take up health benefits. The retailer's executive vice president of human resources, Jodee Kozlak, estimates that 10 percent of part-time workers enroll in company health benefits. That's low compared with other companies, where separate research suggeststhat about half of all part-timers take up benefits.
Target obviously has a financial interest in not offering insurance coverage. Premium prices keep rising, and many executives cite benefits as an area where they need to cut costs.
But there's a compelling human interest here, too. If Target keeps offering insurance to all its part-time workers, the 10 percent who do take up the offer remain relatively happy. The other 90 percent, however, get shut out of the health law's subsidies. Those subsidies might make insurance coverage affordable for those workers in a way that Target's wasn't.
The health-care law is definitely changing how employers offer coverage, Target included. But whether those changes are good or bad depends on who you are, how much you earn and whether you're getting benefits right now. Like many other parts of the health-care law, its complicated -- and varies a lot from person to person.
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