Trader Joe's Does The Math On Part-Timer Insurance Cuts

Trader Joe's is responding to critics after the grocery chain told part-time employees last month that it will end health-insurance benefits in January for those working less than 30 hours a week, the Washington Post reported.

The grocer has been sending out form letters that walk through the math for part-timer health-insurance under the Affordable Care Act, which requires states to set up insurance exchanges. It includes the example of an $18-per-hour employee who works 25 hours per week who currently pays $166.50 per month for her coverage through Trader Joe's. "Because of the tax credits under the ACA she can go to an exchange and purchase insurance that is almost identical to our plan for $69.59 per month. Accordingly, by going to the exchange she will save $1,175 each year," the grocer's letter says, noting that the tax credits are only available if the company doesn't offer the employee insurance.

The chain also plans to give each part-time employee $500 in January and provide guidance for finding insurance through the exchanges.

The Trader Joe's letter also acknowledges that some part-time employees will pay more, using the example of a part-time employee whose spouse is a $200,000-per-year contract consultant. That extra income will make the employee ineligible for subsidies or credits, so the cost of insurance will be higher. (In reality, many contract employees weren't able to get health insurance at all before the ACA, so the practice of a high-income worker's spouse working just for the insurance may become less common.)

The explanatory letters aren't likely to change many minds about the retailer's decision to modify or eliminate insurance benefits. But the Trader Joe's approach of running through the numbers—along with helping part-time employees navigate the insurance-finding process—may help at the level of pointing out that not every employee would be better off staying on the company plan.

Still, all this is happening in a vacuum for both employees and retailers. Until insurance exchanges are actually operating—and employees have acquaintances who have actually been through the process and figured out what the price difference will be—employees are likely to be unhappy and fearful about anything that cuts benefits.

For more:

- See this Washington Post story
- See this story

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