Walmart to extend insurance

Maybe they think their new banking scheme will pay for this:

Wal-Mart Stores said today it will relax eligibility requirements for part-time employees who want health insurance, allowing an additional 150,000 workers to gain coverage if they choose.

Until now, the employees have had to work for Wal-Mart for two years to qualify for employer-sponsored insurance. Beginning next month, they will have to work at the company for one. The coverage also will extend to their children.

This addresses part of the problem -- relaxing eligibility rules to one year of employment is fairly significant, and the monthly premiums are quite affordable: purportedly $23 per month, with the option to extend coverage to children for an extra $15 per month. 

But there's a catch: the plans have a $1,000 deductible for individuals, and up to a $3,o00 deductible for families. 

Uwe Reinhardt is well known for discussing health savings accounts in the context of a waitress who makes $30,000 dollars a year.  But let's take your average Wal-Mart employee, makes significantly less than our $30,000 dollar a year waitress.

The average Wal-Mart worker makes $8.23 an hour and typically works less than 24 hours a week. The average Wal-Mart employee working 40 hours a week would earn only $17,118 a year, but a more realistic annual wage for a Wal-Mart worker is about $10,000.

A single parent Wal-Mart employee working part time and electing family coverage would have an annual deductible equal to over 30% of their income.  Let's keep in mind, as well, that a $3,000 family deductible is on the lower end of HDHP/HSA style deductibles, which can run up to $10,000.  (That really makes HDHPs seem like the solution for low income workers, no?)

It's great that Wal-Mart is taking the leap and offering more coverage, and surely some will take advantage of it and enjoy the benefits they deserve.  But when a large percentage of workers elect not to sign up (because they can't afford it), I hope Wal-Mart doesn't claim,"they just don't want it."

Comments

[Martin]

Ah, but the story presumes that this is the only job the wal-mart employee is taking... My understanding, though I do not have the facts, is that Wal-Mart employees tend to hold several jobs, thus the $10,000 figure may be too low.