Tune in to Real Money with Ali Velshi at 7 pm EST on Al Jazeera if you’d like to watch me talk about Target’s decision to stop offering health benefits to part-time employees.
Of course the mainstream news angle is that Target’s benefit policy decision shows yet another flaw in the Affordable Care Act (aka ObamaCare). People are losing coverage, all because of the new rules. I really don’t agree with that.
Here’s my take: Target’s move is upsetting for those who are directly affected, but it’s not evidence of any failure of ObamaCare. Benefits plans for part-timers usually do not provide generous coverage, payroll deductions are too costly for workers living paycheck to paycheck, out-of-pocket expenses deter patients from seeking care, and many employees lose their insurance when they get sick because they stop being able to go to work. As a result, not many people enroll in the plans even when they have access, and those with coverage can’t always make use of the benefits.
The Affordable Care Act is a great boon for part-time employees, especially low wage ones. Here’s why:
- Many part-timers working at retail will qualify for Medicaid. A cashier making $8 per hour for 20 hours per week will make about $8000 per year and fall well under the income limit to qualify. With Medicaid they will have comprehensive coverage and pay almost nothing. And what if their state decided not to except the Medicaid expansion? Well, that’s not the fault of ObamaCare
- Those with somewhat higher incomes will be able to buy insurance on a public exchange where they will qualify for premium subsidies and –in many cases– help with out-of-pocket expenses as well
- Workers will be able to cover their families, not just themselves
- If they change jobs or stop working they won’t lose their insurance
As others have pointed out, employers might have an incentive to keep part-timers below the full-time threshold of 30 hours per week in order to avoid the employer mandate. But Target has said they are not doing this, and you don’t build a great company by treating your employees badly. But the good news is that part-time workers now have good alternatives to employer-sponsored coverage, which was lacking before.
By David E. Williams of the Health Business Group.