Jan. 23--WATERLOO -- Part-time workers at Target Corp. now have to shop for new health plans.
The Minneapolis-based retailer, which has two distribution centers in Cedar Falls and one store each in Waterloo and Cedar Falls, announced Tuesday that it was cutting all of its part-timers -- employees who work fewer than 32 hours a week -- from its health plan and leaving them to find coverage provided by the newly enacted Affordable Care Act.
Heath insurance coverage for part-time employees currently enrolled in Target's plan will end April 1, the company said.
The law, which Congress passed and President Barack Obama signed in 2010, requires all U.S. citizens to have health insurance coverage as of Jan. 1.
The law requires all employers of 50 or more full-time employees to provide health insurance to those workers; however, Obama extended the deadline on the so-called "employer mandate" until Jan. 1 , 2015.
The law does not require employers to offer insurance coverage to part-time employees.
Target's local stores referred questions to Target's corporate office. The company did not provide any details on how many part-timers were affected in Waterloo and Cedar Falls, but it did email comments prepared by Jodee Kozlak, its executive vice president for human resources.
"Health care reform is transforming the benefits landscape and affecting how all employers, including Target, administer health benefits coverage," Kozlak said, noting that the number of part-timers enrolled in the company's plan was "historically low," anyway.
An Associated Press report said less than 10 percent of the company's total workforce of 361,000 is enrolled in the health plan.
Kozlak said Target is paying each affected worker $500 and has contracted a third party to help enrolled employees find alternative coverage.
Workers who average 20-31 hours per week still will have access to other benefits, including vacation, dental, disability and life insurance, as well as employee discounts and other perks, the company said.
Ian Hussey, 21, is a sophomore at the University of Northern Iowa and works about 25 hours a week at Target.
On Wednesday, he didn't know that Target Corp. had made the decision to cut part-time employer insurance plans. Thanks to the Affordable Care Act, Hussey can stay on his parents insurance since he's under the age of 26.
But if he were past that benchmark, Hussey said he would probably have to try and work full-time to get those health insurance benefits or "sign up for Obamacare."
"You never know when you're going to get hit with something. I don't usually get sick, but I had to go to the doctor to get something checked out a couple of weeks ago. If you put that off to long it could become irreversible," he said.
It's a sign of times to come, said Michael Souers, a retail analyst with Standard & Poor's.
"I think that's what we'll see is more and more will follow that path and push part-time employees to the Obamacare exchanges," Souers said.
He cited, as an example, Atlanta-based home-improvement retail chain Home Depot Inc., which announced in September it would end health insurance coverage for part-timers who work 30 hours a week or fewer.
The "flip side" of the issue, Souers said, is that companies are hiring more part-timers.
"It's causing an increase in jobs created, but these are not high-quality jobs," he said.
It's all about saving costs on escalating insurance costs, Souers said.
"Companies are focused on the bottom line," he said. "Obviously, they want to be good to their employees, as well, but part-time employees are probably a little more expendable. It's a balancing act."
Charles King, principal analyst with Hayward, Calif.-based Pund-IT, which tracks the retail and information technology sectors, said some store and restaurant chains have been criticized for "manipulating employees' hours to avoid providing them benefits or underpaying them so they need to seek out government services."
That's not the case at Target, Kozlak said.
"At any time, our team members can talk to their manager about their interest and availability to work more hours," she said.
Courier Staff Writer MacKenzie Elmer contributed to this report.
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Distributed by MCT Information Services
Original headline: Target to end health coverage for part-time workers
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