Trader Joe’s cut health benefits last week. Here’s its side of the story from the Sarah Kliff writing at the
Washington Post:
Last week I wrote about Trader Joe's decision to cut health insurance benefits for employees who work fewer than 30 hours a week. After that, one reader forwarded along a response received from Trader Joe's after inquiring about the matter. It's one of the more thorough explanations I've seen from a company cutting in benefits, so I've posted it here. It acknowledges, surprisingly bluntly, that some employees will be worse off for the decision and that others might benefit. Here is the full response:
Thank you for writing to us. It's possible you have been misled, at least to some degree, by the headlines in some articles regarding our reasons for implementing the [Affordable Care Act] in January. We'd like to take this opportunity to clarify some facts.
For over 77% of our Crew Members there is absolutely no change to their healthcare coverage provided by Trader Joe's.
The ACA brings a new potential player into the arena for the acquisition of health care. Stated quite simply, the law is centered on providing low cost options to people who do not make a lot of money. Somewhat by definition, the law provides those people a pretty good deal for insurance ... a deal that can't be matched by us -- or any company. However, an individual employee (we call them Crew Member) is only able to receive the tax credit from the exchanges under the act if we do not offer them insurance under our company plan.
Perhaps an example will help. A Crew Member called in the other day and was quite unhappy that she was being dropped from our coverage unless she worked more hours. She is a single mom with one child who makes $18 per hour and works about 25 hours per week. We ran the numbers for her. She currently pays $166.50 per month for her coverage with Trader Joe's. Because of the tax credits under the ACA she can go to an exchange and purchase insurance that is almost identical to our plan for $69.59 per month. Accordingly, by going to the exchange she will save $1,175 each year ... and that is before counting the $500 we will give her in January.
While we understand her fear of change, at her income level this is a big benefit that we will help her achieve.
Clearly, there are others who will go to the exchanges and will be required to pay more. That is usually because they have other income and typically a spouse who had a job with no benefits and they do not qualify for the subsidies under the ACA.
One example of that we had yesterday was the male Crew Member who worked an average of 20 hours per week but had a spouse who is a contract consultant who makes more than $200,000 per year. The Crew Member worked for the medical benefits and unfortunately for them they are likely to have to pay more because of their real income. We understand how important healthcare coverage is to our Crew Members and we are pleased to be able to provide and support this program.
We do hope this information helps, and we appreciate your interest in Trader Joe's.
