Target to Drop Health Benefits for Part-Timers. Good News for Employees?

This week, Fortune 500 retailer Target announced it would no longer provide health insurance for part-time employees as of April 1st. Instead, Target will provide $500 to those losing coverage and provide assistance in signing up for a new ObamaCare plan. For the majority of these part-time employees, this is really good news. Here's why.

According to Target's news release, the decision came in light of new insurance options through the Health Insurance Marketplaces, and the fact that only 10% of part-time employees had enrolled in its part-time plan. 

"The launch of Health Insurance Marketplaces provides new options for health care coverage that we believe our part-time team members may prefer. 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," said Target EVP of Human Resources Jodee Kozlak.

In other words, if Target had continued to offer health insurance to the part-time employees, it would have shut out up to 90% of these employees from the health insurance tax credits. That's because under ObamaCare, if workers are offered qualified, affordable health insurance through an employer they do not qualify for the tax credits (even if they don't enroll).

By not offering health insurance to the part-time employees, Target is allowing the eligible employees to have access to health insurance coverage that is likely more affordable than the Target-sponsored plan.

Target also has an obvious financial interest in not offering insurance coverage. Premium prices keep rising, and health benefits are an area where they need to cut costs. 

Other retailers, like Trader Joe's and Home Depot have also changed health benefits strategies in response to health care reform.