NEW YORK (CNNMoney) — Following in the footsteps of several retail peers, Target has announced it will no longer offer health insurance to part-time workers. Instead, it will encourage them to sign up for Obamacare.
Target is making the change because fewer than 10% of its total workforce of 361,000 participate in the part-time plan, said Human Resources Executive Vice President Jodee Kozlak in an online notice posted Tuesday. Some part-timers can find cheaper coverage on the Obamacare exchanges.
“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,” the post said.
The launch of the Obamacare exchanges, which offer premium subsidies for individuals making less than $46,000 a year and families of four earning $94,200, has led some employers to reevaluate their coverage. Home Depot and Trader Joe’s announced last year that they would stop offering coverage to part-timers.
Some experts are concerned more companies will follow suit, though for now, changes remain at the margins. Many employers don’t offer health insurance to their part-time workforce.
Starting in 2015, companies with more than 50 employees will have to provide coverage to full-time workers or face a $2,000 penalty. Most individuals, meanwhile, have to obtain health insurance this year or face a penalty of $95 or 1% of their income, whichever is greater.
Target will provide a one-time $500 cash payment to part-time workers currently enrolled in the plan, which will cease April 1. And it has hired a benefits firm to provide them with support in signing up for alternate coverage.
These employees, who work between 20 and 31 hours a week, will continue to be eligible for dental policies, along with vacation time, 401(k) benefits and disability and life insurance.
Target also said it will not limit hours of team members as a result of the benefits change.