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Trader Joe's Invites Part-Timers Losing Company Coverage To Seek Additional Obamacare Subsidy

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WASHINGTON -- Faced with employees upset by its decision to drop health insurance for part-timers, grocer Trader Joe's has invited workers who may face higher premiums on the Obamacare insurance exchanges to apply for additional subsidies from the company, according to a memo obtained by HuffPost.

Late last month, Trader Joe's informed part-time employees that as of next year, they would no longer be eligible for company-sponsored health plans. Although employees averaging 18 hours a week had traditionally qualified for the plan, workers with less than 30 hours a week learned they would be given a check for $500 and nudged into state-run insurance exchanges created by the Affordable Care Act.

The health care reform law mandates that companies with 50 or more full-time employees offer coverage to workers logging at least 30 hours a week or face penalties, though the Obama administration has chosen to delay that rule for a year.

Trader Joe's decision apparently infuriated its part-time employees, many of whom wrote to HuffPost describing the move as a betrayal by a company that had been seen as worker-friendly. It's uncommon for retailers or grocers to offer affordable health care to non-union workers, and many employees said they had worked at the grocer in large part because of the generous coverage.

Trader Joe's, a privately held chain based in California, argued in a followup memo to workers that it simply couldn't match the deals to be found under Obamacare, especially when the subsidies for low-wage earners are factored in. The company, however, acknowledged there would be winners and losers on the exchanges, as some workers face higher premiums, depending on their household income.

According to a Sept. 13 memo from Laurie Mead, vice president of human resources, some of those losers may get an additional parachute. The company told workers it would consider increasing the subsidy beyond $500 to employees facing unique circumstances as they seek out coverage on the exchanges.

"We understand that special situations may arise, situations requiring additional careful consideration," Mead wrote. "If the upcoming move to a healthcare exchange exacerbates the burden of an existing hardship for you or your family, we want to know about it. Depending on the situation, Trader Joe's may provide additional money to you to help with your transition to a healthcare exchange."

Workers who think they may fall into that camp were told to submit a letter by Nov. 1 explaining their situation, along with the first page of their 2012 tax return and an estimate for their health care premium on the Obamacare exchanges. Mead said a "panel" would consider every submission and give each worker a response.

To give workers an idea of who may qualify for an additional stipend, Mead told the stories of two theoretical workers.

Scenario #1:
TJ's Crew Member currently works an average of 20 hours per week. Previously, Crew Member worked 30+ hours per week and has reduced the number of hours because of a need to be at home with a terminally ill family member. Crew Member's spouse has a good income working at a small company not required to offer healthcare coverage. The family's healthcare coverage has historically been through TJ's plan. Due to the family's income level, tax credits do not apply and the cost of healthcare coverage will increase significantly. Trader Joe's would likely provide a grant to the Crew Member (in addition to the planned $500) to help offset the additional costs associated with the transition to a healthcare exchange.

Scenario #2
TJ's Crew Member works an average of 20 hours per week. Crew Member's spouse earns substantial income as a contract consultant and does not have healthcare coverage. The family's healthcare coverage has historically been through TJ's plan and will move to an ACA Exchange; due to the family's income level, tax credits do not apply and the cost of healthcare coverage will increase significantly. This scenario will most likely not qualify for additional assistance beyond the planned $500.

It's rare in the U.S. for part-time workers to be enrolled in company health coverage. (According to a recent report, the rate is a mere 8 percent.) Trader Joe's had recently announced other cutbacks for employees -- including pared raises and significantly reduced retirement contributions -- so the advent of Obamacare may have provided an opening for the company to drop a benefit it had already hoped to trim.

As HuffPost's Jeffrey Young wrote last year, rather than offer certain employees health coverage, some employers may simply choose to give workers a little extra cash and steer them toward the exchanges, as Trader Joe's seems to be doing. The company's additional grants would likely insulate more employees from premium hikes on their new plans. But like the exchanges themselves, the panel process will apparently have its own winners and losers, and Mead's mentions of "special situations" and "hardship" suggest a fairly high bar for extra subsidies.

The memo did not say how many workers would receive the grants or how much the company planned to spend on them. A Trader Joe's spokeswoman did not respond to a request for comment, and a message left for Mead wasn't returned.

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