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 created by the U.S. Affordable Care Act.
Employees who work fewer than 30 hours a week will no longer be given health coverage as of Jan. 1, and instead will get a $500 payment to help them buy insurance elsewhere, the Monrovia, Calif.-based company said Thursday.
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. Trader Joe’s, the owner of about 400 stores, said most 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 as part of the reason.
United Parcel Service Inc. said last month that it would end benefits for 15,000 employee spouses who can get health coverage through their own jobs. IBM Corp. said last week that it would end a company-sponsored health plan for 110,000 retirees. They’ll be sent to private exchanges that work similar to the new public marketplaces.
“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.