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By Staff Report
Sep. 27, 2006
A week after announcing a plan to make prescription drugs more affordable for Wal-Mart customers and employees, the retail giant confirmed Wednesday (September 27) its plan to eliminate its lowest-deductible health plan for new employees.
Beginning January 1, new Wal-Mart employees eligible for health plans will see their lowest-deductible plan rise to $1,000 annually from $350. Wal-Mart employees can expect to pay lower premiums of $11 to $23 a month if enrolled in this plan.
New employees are eligible for health insurance after six months of full-time work or after 12 months for those who work less than 34 hours a week. Wal-Mart, which called the new benefits package a matter of “streamlining,” will continue to offer a high-deductible plan with a health savings accounts for those who have been eligible for health care benefits for a year. In areas where an HMO is available, new hires would have the HMO plan as a third option, Wal-Mart spokesman Dan Fogleman says.
Wal-Mart has attempted to repair its sullied image as an employer that is generous to customers but stingy to employees. To do so, the company earlier this year cut by half, to 12 months, the waiting period for part time employees to become eligible for health insurance. Last week, it announced that consumers will pay $4 per prescription for 291 different generic drugs.
The plan changes were first disclosed by WakeupWalmart.com, a critic of the Bentonville, Arkansas, company’s health care benefits. A spokesman for WakeupWalmart.com, Chris Kofinis, says the limited offering will force employees with high health care costs to choose a plan in which they would face larger out-of-pocket costs. For an associate making $10.11 an hour, the $5,000 out-of-pocket limit could eat up close to 30 percent of that person’s $17,874 annual salary.
Kofinis says the company is shifting more of the cost of health care to its sickest workers and their dependents.
“Here you have a company that is setting a terrible health care precedent that other companies will want to follow,” Kofinis says.
Fogleman says the change, which he calls a matter of “streamlining,” came about because most workers who enrolled in the plan with the lowest deductible of $350, opting to pay as much as $1,040 annually in premiums, never met their deductible.
“Over half of our associates did not meet their annual deductible, which means they were paying for insurance coverage they weren’t using,” Fogleman says.
The low-premium, high-deductible plan, known as the value plan, includes three doctors visits and three prescription fills with a co-pay and is available to more than 40% of Wal-Mart workers in America for $11 a month.
“We are doing all we can to make sure our plans are accessible and affordable,” Fogleman says.
Wal-Mart also plans to increase this year its “spousal surcharge”, a levy that is becoming increasingly popular among employers who want to save money on dependent health care. The surcharge at Wal-Mart will cost $1,800 and will be assessed if a spouse who has health care benefits through their current employer chooses instead to enroll under Wal-Mart’s plan.
Wal-Mart is the world’s largest private employer, with 1.3 million employees. It is the second-largest provider of health care benefits, covering about 1 million people, trailing only GM. Wal-Mart CEO Lee Scott has spoken openly about the need to reduce health care costs.
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