Target Corp. announced Tuesday that it would end healthcare coverage for its part-time workers, citing options available to them in state and federal healthcare marketplaces.
In a corporate blog post, the Minneapolis company said that the majority of its part-time workforce does not enroll in healthcare coverage currently offered by the retailer. Target said that less than 10% of its total workforce, about 360,000, participates in the healthcare plans offered to part-time employees.
Healthcare law changes, said Target's executive vice president of human resources, Jodee Kozlak, have made more options available.
President Obama's new healthcare law requires large companies to offer coverage to employees working 30 hours a week or more or pay a penalty. Many employers have been preparing for the the higher costs. Some companies, such as United Parcel Service Inc., have said they would end coverage for employees' spouses if they had access to health insurance through their own employers.
"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," Kozlak said.
Under the healthcare law, some individuals would be eligible for subsidies based on their income to help offset the costs of enrolling for coverage.
The changes will be effective starting April 1.
Part-time workers -- those who work between 20 and 31 hours a week -- who will be bumped off the Target healthcare plan are eligible for a cash payment of $500 to help in the transition, the company said. Additionally, Target has hired a firm that will help those workers select plans in state and federal healthcare marketplaces.
Kozlak said Target had no plans to cut workers' hours.
Shares for Target were down 29 cents, or .49%, Wednesday to $58.91.