Wal-Mart is cutting health insurance for some of part-time workers in an attempt to curtail rising costs, Shelly Banjo reports on the News Hub with Sara Murray. Photo: Getty.

Wal-Mart Stores Inc. WMT +0.55% is cutting health insurance for another 30,000 part-time workers and raising premiums for its other employees, as U.S. corporations push to contain costs in the wake of the federal health-care law.
Autumn is typically when U.S. companies unveil changes to employee insurance plans. This is the first such enrollment period since employers could assess the full financial impact of the federal health-care overhaul, and it is a key moment as companies work to lower their spending ahead of looming taxes on the most generous plans.
Many businesses are continuing to shift more costs to workers. Phoenix-based technology distributor Avnet Inc., AVT -6.82% for example, is paring back its traditional plans in favor of high-deductible options. Other companies are reducing coverage for spouses, according to consultants at Towers Watson & Co.
Still others are going further, ending their traditional coverage for employees who will instead get a fixed sum of money to buy their own insurance on private exchanges. AonAON -1.01% PLC’s Aon Hewitt is set to announce that enrollment in its exchange will grow to around 850,000 workers and dependents next year, as another 15 employers sign up.
Several facets of the health-care overhaul are driving concerns about costs: one is the coming tax on so-called Cadillac plans, which carry high premiums and offer rich benefits, and another is the individual mandate that requires most workers to obtain coverage or else face a penalty.

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For Wal-Mart, that push from the individual mandate contributed to an influx of workers who signed up for coverage, jacking up costs. Wal-Mart, the country’s largest private employer, with about 1.4 million employees, forecasts that its health-care costs will rise by $500 million more than it had expected in the year ending Jan. 31, 2015.
“We can’t take our eyes off costs,” said Sally Welborn, senior vice president of global benefits at Wal-Mart. Ms. Welborn declined to say how much Wal-Mart will save from the plan changes.
Private-sector employers spent $446 billion on health insurance premiums in 2012, the most recent year for which the federal Medicare agency has published figures, and they were expected to pay $483 billion this year, up 22% from 2007. Households spent $284 billion on premiums in 2012. They are expected to spend slightly less this year to $282 billion, but it is still up 20% from 2007.
Under the Affordable Care Act, large companies beginning in 2015 must offer coverage to most employees working 30 hours a week or more or pay a penalty starting at around $2,000 per worker. Most individuals, meanwhile, must show that they have health insurance or pay an individual penalty.
Critics of the law have been concerned that companies would drop coverage and force workers onto government exchanges.
Several other retailers already have moved away from providing health insurance to part-time workers. Target Corp. TGT -1.64% earlier this year said it would stop offering such benefits, citing options available through public exchanges. Home Depot Inc. HD -0.56%last year ended health-care coverage for almost 20,000 part-time workers, while United Parcel Service Inc. UPS -0.78% cut coverage for workers’ spouses who had access to insurance through their own employers.
Cashiers work at the checkout lanes of a Walmart store in the Porter Ranch section of Los Angeles.Reuters
Not all companies are gravitating toward exchanges, though. Appliance-maker WhirlpoolCorp. WHR -0.46% considered shifting its employees to public exchanges this year, despite the potential for financial penalties. Whirlpool calculated that the move would save millions of dollars, but ultimately decided against it for nonfinancial reasons, according to Ed Mohr, a human-resources executive at Whirlpool.
Twenty-four percent of all companies that provide health benefits offer them to part-time workers, according to a 2014 study by the Kaiser Family Foundation and Health Research and Educational Trust, down from 25% last year.
Wal-Mart, which at one point offered health-care coverage to all part-timers, has been paring back such coverage in recent years. In 2011, it cut coverage for new employees who worked fewer than 24 hours a week. The following year, it stopped insuring new workers who worked fewer than 30 hours a week.
On Tuesday, Wal-Mart said it would drop coverage beginning Jan. 1 for existing workers who were grandfathered into the company’s health plan. Now, only those part-timers working 30 to 34 hours a week will qualify for the company’s health coverage.
Wal-Mart also is raising premiums for all workers next year. About 40% of enrolled workers are on its least expensive and most popular plan and will now pay $21.90 per two-week pay period, a 20% increase, starting Jan. 1. Across all three plans, Wal-Mart said it estimates workers will pay an additional $10 a pay period. The average Wal-Mart hourly worker earns $11.81 an hour.
“Half of my paycheck is gone before I even get the money,” said BJ Marhefka, 49 years old, who works about 40 hours a week in the Wal-Mart automotive department in Southport, N.C., and makes $10 an hour.
Despite the increased costs, she said she won’t drop Wal-Mart’s health-care program because her son has asthma and has to see a doctor regularly. She said she would cut back on other things instead.
Elsewhere, the tax on higher-priced plans, set to take effect in 2018, is already playing into employers’ benefit decisions. A survey released in August by the National Business Group on Health found that, to minimize the impact of the tax, 57% of employers were planning to implement or expand high-deductible plans, while 42% were boosting employees’ cost-sharing.
Employers with higher-cost plans are extremely concerned about the tax, said Randall Abbott, a senior consultant at Towers Watson. FedEx Corp. FDX -1.12% and JetBlue cited the tax when they moved their workers into high-deductible plans.
Avnet, the technology distributor, added two new high-deductible offerings this year, and for next year it will keep them and pare down to one traditional plan from two. All of Avnet’s plans next year will have at least a $1,500 deductible for a single worker, but the company will also contribute as much as $500 to individual employees’ health-savings accounts.
Concern about the 2018 tax “was driving it,” said MaryAnn Miller, chief human resources officer at the company, which has around 6,000 U.S. employees. The company had estimated that without changes, the tax would cost it $1.4 million in 2018.
JetBlue replaced its four traditional health-care plans with two high-deductible plans last year. With the new plans, the discount airline operator also agreed to make fixed contributions to employees’ health-care spending accounts with a twist. For employees who engage in healthy activities, JetBlue will increase how much it contributes. Run a marathon, double the contribution, said Harry Spencer, the airline’s vice president of compensation and benefits.
Wal-Mart has retained a third-party benefits adviser to help affected workers find coverage on public and private health exchanges or by using a spouse or partner’s health insurance.
“We can’t predict where they will go, but we are going to help them find affordable health care,” Ms. Welborn said. (http://online.wsj.com/)
—Stephanie Armour contributed to this article.
Write to Shelly Banjo at shelly.banjo@wsj.com, Anna Wilde Mathews atanna.mathews@wsj.com and Theo Francis at theo.francis@wsj.com