Retail giant Target this week announced that it would discontinue health insurance coverage for part-time workers, beginning April 1, 2014. Target joins other big-name employers like Home Depot and Trader Joe’s in making the change.

Significantly, Target EVP of Human Resources Jodee Kozlak cited the availability of Affordable Care Act health insurance exchanges as a reason for dropping coverage.

“Health care reform is transforming the benefits landscape,” said Ms. Kozlak, and “the launch of Health Insurance Marketplaces provides new options for health care coverage,” including “newly available subsidies” for many enrollees.

Is Target’s decision a harbinger of what employers will consider in 2014 and beyond? The tea leaves tell us, yes. Read more.

Human Resources Legislation

INTELLIGENCE FOR HCM PROFESSIONALS

Stay Informed About Changing Compliance Regulations & Workforce Trends
Read the HR Legislation Blog to stay on top of complex HR & Payroll policy issues

ACA 2014 and Employers: Reading the Tea Leaves—Part III

Fri Jan 24, 2014

Retail giant Target this week announced that it would discontinue health insurance coverage for part-time workers, beginning April 1, 2014. Target joins other big-name employers like Home Depot and Trader Joe’s in making the change.

Significantly, Target EVP of Human Resources Jodee Kozlak cited the availability of Affordable Care Act health insurance exchanges as a reason for dropping coverage.

“Health care reform is transforming the benefits landscape,” said Ms. Kozlak, and “the launch of Health Insurance Marketplaces provides new options for health care coverage,” including “newly available subsidies” for many enrollees.

Is Target’s decision a harbinger of what employers will consider in 2014 and beyond? The tea leaves tell us, yes.

Mark Bertolini, CEO of health insurance company Aetna, must also be reading the tea leaves. In a January speech in San Francisco Mr. Bertolini predicted that by 2020 enrollment in public and private health insurance exchanges could reach 75 million, as more employers evolve health benefits toward defined contribution-type models.

aetna-chart-jan-20141.jpgTo be sure, employers will proceed cautiously to change health benefits, and costs will remain a principal decision-driver. But the changes at Target and elsewhere demonstrate that the Affordable Care Act, with all of its cost and compliance uncertainty, compels employers to think creatively about health benefits. In 2014 many employers will take a serious look at what Ms. Kozlak calls the “new options available,” including health insurance exchanges.

With some 5 million U.S. employers, from mom-and-pop stores to global titans, employer creativity about changes in health benefits will express itself in an infinite number of ways. Many employers will gravitate toward consumer-directed, high-deductible, HSA-based health plans. Self-funding will become a more popular insurance option. Some employers no doubt will manage worker hours to stay below the new 30-hour weekly “full-time” threshold. And many will refer some or all of their workers to public or private health insurance exchanges, as Aetna predicts.

But Target’s announcement reminds us that in 2014 and beyond every employer-sponsored health benefits plan will have one constant: Change.

*Graphic source: Aetna presentation at 32nd Annual JP Morgan Healthcare Conference Jan. 15, 2014