Wal-Mart to Restrict New Hire Health Coverage

September 27, 2006 (PLANSPONSOR.com) - Wal-Mart - the frequent target of critics who claim it does not properly provide health coverage for its workers - has scaled back its health insurance offerings to new employees.

According to a Washington Post report, the retail giant will no longer offer to new hires two benefit plans with lower deductibles as of January 1, 2007. The newspaper said its report was based on documents provided to it by Wake-Up Wal-Mart, a union-backed group.

New Wal-Mart employees can only select from among two plans in which the monthly premium can be as low as $11 but the deductible can reach $6,000. The Post said the lower-deductible plans will still remain available to current employees who renew their coverage.

Wal-Mart spokesman Dan Fogleman told the Post that he expected the change to save most employees money. He said a review of the company’s health benefits plans showed most had opted for a package with monthly premiums between $70 and $100, and a $350 deductible, but that more than half never paid that much.

“We’ve done the math on this, and we have a pretty good understanding of what this is going to mean,” Fogleman told the newspaper. “Most associates are going to come out better on this.”

Among the two new-hire coverage options, the option known as the “value plan” starts at $11 per month for employee coverage in some markets and has a $1,000 deductible. The “freedom plan” starts at about $17 per month for employee coverage but has a deductible of $3,000 and the option to create a health savings account. The cheapest monthly cost for an employee plus a spouse is $38 with a deductible of $6,000.

Fogleman said in the news report about 615,000 employees are covered by the company, about 47% of its workforce, and Wal-Mart is working to expand that number.

Wal-Mart, in April 2006, agreed to ease eligibility requirements for its part-time employees who want health insurance and said it plans to reduce employee co-payments for certain prescription drugs from $10 to $3 (See Wal-Mart Broadens Health Benefits, To Trim Down Drug Co-Pay ).