WASHINGTON – Trader Joe’s Co., the closely held grocery store chain, will end health benefits for part-time workers next year, directing them instead to new insurance marketplaces as companies revamp medical coverage to fit the U.S. Affordable Care Act.
Employees with fewer than 30 hours a week will no longer be given health coverage as of Jan. 1, and will receive $500 to help them buy insurance elsewhere, the Monrovia, Calif.,- based company said in a statement.
The move makes Trader Joe’s the latest U.S. employer to cut benefits or reduce hours in response to the 2010 act, which requires companies to offer affordable coverage to full-time workers starting in 2014. Among the others are UPS and IBM.
Trader Joe’s, the owner of about 400 stores, including one set to open Oct. 11 in Amherst, said most of the affected employees will find a better deal on the health-law exchanges, where buyers may be eligible for federal subsidies.
“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,” the company said in its statement.
The health-care law mandates that companies provide coverage for those who work more than 30 hours a week or pay a $2,000-per-person penalty. Some large U.S. employers have pulled back on health benefits citing the law’s expenses and new insurance options.
“This is a move to enhance Trader Joe’s bottom line and what’s unfortunate is they are using some of the loopholes in the Affordable Care Act,” said Tim Schlittner, a spokesman for the United Food & Commercial Workers International Union, which represents unionized grocery store employees.
The cutbacks are “a source of increasing frustration for us,” Schlittner said. Trader Joe’s workers aren’t unionized.
Trader Joe’s said more than 77 percent of its employees would see no change to their medical coverage. For those who are affected, it estimated more than 70 percent will pay less for comparable health insurance on the exchanges, according to the statement.
The company cited the example of an employee who worked 25 hours a week and now pays $166.50 per month for insurance through Trader Joe’s plan. On the exchange, she could find “comparable coverage” for $69.59 a month, the company said. That, combined with Trader Joe’s $500 contribution, would translate to a savings for the employee of $1,675 next year, the company said.
Some workers may end up paying more, Trader Joe’s, said because tax credits on the exchange will be based on a buyer’s household income.