Trader Joes

Trader Joe's interior in Union Square in New Y...

Trader Joe’s interior in Union Square in New York City. (Photo credit: Wikipedia)

Two-Buck Chuck is not what put Trader Joes in the headlines this week; instead it was their decision regarding health coverage for part-time employees. More specifically, the company announced that it will stop providing health insurance benefits for employees who work less than 30 hours a week, sending them instead to the new Insurance Marketplaces with an extra $500 to help purchase coverage.

Anti-health reform advocates are up in arms and touting this as the latest example of how Affordable Care Act will fail Americans and drive up the cost of premiums. They have it wrong. Let’s take a step back and review the facts.

The crux of the new health care law is the provision of low-cost options for people who don’t make a lot of money and can’t afford health insurance under the current health care system. The new law provides low-income individuals with incentives and options to obtain health insurance at an affordable rate. It turns out that for low income individuals and families, this rate is lower than what most companies can provide.  Tax credits will be available for individuals to help subsidize the cost of health care for individuals, but in order to receive the tax credit from the insurance exchanges, health insurance can’t be offered to them under their company’s plan.

According to the Department of Health and Human Services, the new state-level marketplaces will enable approximately 6.4 million Americans to purchase insurance for less than $100 each month. The Kaiser Family Foundation estimates that 48 percent of the Americans who need to buy insurance on the marketplaces will receive federal subsidies to help them afford it.

Americans who make up to 400 percent of the federal poverty level — which works out to be $94,200 for a family of four — are eligible for subsidies that ensure they’ll only pay a certain percentage of their income for a health plan. Using census data on Americans’ income levels, researchers were able to extrapolate how many of them would be paying less than $100 for monthly premiums for silver plans.

The Washington Post was forwarded a response of a letter that Trader Joe’s sent to a reader regarding their decision. It provides a concrete example which explains their rationale:

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 I’m not trying to sell Trader Joes as the greatest company on earth (though I admit their prices and food selections are pretty awesome), it is hard to deny that the company has proven that it values its employees. It was one of the first companies to offer health benefits to part-time employees because the company recognized the importance of health care. Healthy individuals lead to happier and more productive employees.

As we transition into a new health care system, we need to remember that this is a new system. Change is never a smooth ride, but you can’t compare apples to bananas. Under the new law, individuals and families will have more options to obtain affordable, adequate coverage. Companies will need to make adjustments. Individuals will need to make adjustments. But the overall benefit is that more Americans will have access to affordable and adequate health care coverage. This is a win-win situation for all.

Have a perspective? We want to hear it – leave your comment below.

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Shannon is an advocate for social change. Her passion for systemic, holistic approaches to the health of individuals and communities has taken her to cities across the US and to Guyana. Read more.

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