Trader Joe's makes an Obamacare trade-off

The grocer drops health insurance for part-timers, but it hopes $500 and some help finding new government coverage will ease the blow.

By Jason Notte Sep 12, 2013 7:57AM
File photo of a Trader Joe's in New York City (© Reed Saxon/AP Photo; Andrew Gombert/epa/Corbis)Trader Joe's had a few options for how it could approach the Affordable Care Act. It could continue providing health insurance for workers who put in between 18 and 30 hours, it could give workers a subsidy and send them off to the Obamacare exchanges, or it could drop their coverage.

By taking the middle ground, the discount organic grocer may have shown other retailers and restaurants a way forward that addresses both their corporate interests and their employees' well-being.

In a memo to staffers dated Aug. 30, obtained by The Huffington Post, Trader Joe's CEO Dan Bane said the company will give part-timers a check for $500 in January and help them find a new plan under the Affordable Care Act.

Trader Joe's has long offered health care, dental and vision plans to part-time workers at low cost -- which is rare in the grocery industry. Since those low-wage workers will be eligible for tax subsidies to buy health insurance next year, it appears the company's math indicates that offering insurance to employees working 18 hours isn't worth the cost.

"Depending on income you may earn outside of Trader Joe's, we believe that with the $500 from Trader Joe's and the tax credits available under the ACA, many of you should be able to obtain health care coverage at very little if any net cost to you," Bane wrote.

It still looks like a cost-cutting measure on its surface, but, admittedly, Trader Joe's health care decision seems at least to pay lip service to its part-timers' concerns. The same can't be said for SeaWorld Entertainment (SEAS), which just announced amid declining attendance and the release of an unflattering documentary that it plans to cut part-time workers' hours from 32 to 28 starting in November. The Affordable Care Act's cutoff for mandatory health coverage is 30 hours.

While Sea World didn't mention Obamacare directly in its statement to The Orlando Sentinel, it looked an awful lot like the pre-Obamacare hour-cutting measures being implemented or threatened by White Castle, Papa John's (PZZA), Wendy's (WEN), Dunkin' Donuts (DNKN) and Darden Restaurants (DRI).

By offering its workers some money and some help, Trader Joe's hopes to avoid some of the criticism endured by the other companies. At the very least, the concessions may earn it some of the goodwill earned by other members of the grocery industry, who have attempted to offset health cuts with other perks.

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Sep 12, 2013 10:55AM
Sounds like Obamacare is making a company that use to do a nice thing for its part time employees, now do a less nice thing for their part time employees.
Sep 12, 2013 8:43AM
A check for $500?  How much is the fine for not having insurance?  Cash the check, pay the fine and pocket the difference.  Insurance companies can't deny coverage anymore based on pre-existing conditions, so go ahead and wait until you get sick and then buy health insurance - no need to waste any money on premiums before then.  When you are healthy again, drop the insurance and go back to paying the fine.

Maybe next year they could pass "Obama-car", so you can wait until after you have an accident to purchase car insurance.  They could force car insurance companies to pay for repairs once you buy a policy, regardless of any pre-existing damage to the vehicle.  Or maybe "Obama-life", so you can purchase life insurance on a loved one, even after they're dead.

Sep 12, 2013 10:08AM
Thank you again, Obie; you've been a wonderful leader both here and abroad, which is why our Country is experiencing such great GDP growth, the National debt is plummeting, and everyone in Europe, Asia, and Africa now holds us in such high regard. Phew!
Sep 12, 2013 10:06AM

Omama:  "You can keep the insurance you already have"......


Yeah right.  Unless this law is de-funded, our health care decisions will be determined by our government.  And we've all seen how well that works - just take a look at the Veterans Administration. 

Sep 12, 2013 10:07AM
Barry Obama-Care insurance benefits the free loaders and shysters because the working tax payers will have to pay for their health insurance just like we pay for their Obama phones now.  Anybody for socialism? Anybody want to pay for socialism? Just work another half day each week next year to pay for some free loading shyster's health insurance.
Sep 12, 2013 12:46PM
Too bad that $500 will be taxed like a bonus. They will have to wait until the following year to get those taxes back, assuming they get it back at all.
Sep 12, 2013 10:02AM

Finally, common sense in the business world. Sounds like a great place to work.

Sep 12, 2013 12:44PM

 The Affordable Care Act's cutoff for mandatory health coverage is 30 hours.

----------Seems to me that is nothing new, the over whelming number of retailers did that before ACA.
Isn't that the previous law? And what kind of insurance is it? Many small business owners are not able to give their employee's any kind of decent coverage anyway, they do not have a huge number of employee's or belong to a large group. My niece had to pay 300 a month (she is 27) and it covered basically nothing until you were hospitalized. I wish this country would wake up and see that we need a REAL structural change in regards to healthcare. A true open market would be better. Get healthcare off the backs of the gov. (we can't afford it as taxpayers) and business. If the reason it was there to begin with was to attract good workers, allow the employee's to get a healthcare dollar amount tax free from the employer( tax free for them too) and let people shop on the open market. 
Sep 12, 2013 3:20PM
Why didn't anyone uderstand that this would be the consequence of a bad law like Obamacare?  Great, now the taxpayer will pay for what this company used to provide to it's workers.  Someone has to repeal this before it's way too late!
Sep 12, 2013 6:07PM
More and more employers are going to drop health care coverage. Watch your tax dollars go to supplement everyone who says they can't afford it.
Sep 12, 2013 1:53PM
Sep 13, 2013 2:56AM
There was a time when all you really needed was a good work ethic and you would be rewarded with a decent living. For many, the 40 hour work week with one employer is dead. Now a person can have 3 part time jobs to work 40 to 50 hours and still have no health coverage because it is too expensive to purchase on their own. BTW...$500 in many cases will not even pay a month of premiums. Not blaming Trader Joes, they need to make a profit like any other business to keep their doors open. 
Sep 12, 2013 3:48PM
Whatever Trade Joe offers, it will not be enough for the liberals. They will continue to complain, itch and moan. It is their nature.
Sep 12, 2013 3:22PM
How could this administration not foresee the consequences of the 30 hour rule?  My son, who works retail was told not to expect more than 30 hours when this kicks in.  So more jobs in this country with a less than livable wage.  Our out of pocket insurance cost went up 140% as of July 1st.  Nice job Barrack Hussein.  You have screwed us in so many ways for your failed ideology.  I just hope for the good of this country that our low information voters learn from this experience and vote out any scum who supported this moron and his policies.  Support defunding this failed law before it is too late!
Sep 13, 2013 12:13PM
Why do so many think health insurance is a right, and why do so many believe employers should provide it?   Personal responsibility, people.  Try skipping the latest smart phone or video game station every time a new one is released, and use the money to pay for basic needs. 

Anytime government gets involved in health insurance, I cringe and wonder about the motive.  Why?  Because I personally witnessed a program where a city required any employer who did business with the city to give employees insurance, or else give them a $1.50 an hour subsidy for getting their own - the choice being the employee's.  The goal was to get the low wage employee's off of medicare, and out of free clinics.  Oh, but the politicians "forgot" to require the employees who took the $1.50 an hour subsidy to use it on insurance.  So, the employees took the $1.50, and still used medicare and free clinics for their health care needs.  The politicians didn't even have the grace to say "oops" - because all these people who took the $1.50 and ran expressed their forgiveness for the "mistake" by voting those politicians back into office.

And as far as Obamacare goes, interesting how Obama failed to put the promised caps on insurance rates.  So, the low wage earners get subsidized insurance, the rich insurance companies get richer, and those of us in the middle get stuck with the bill...  again.
Sep 13, 2013 8:41PM

What a "shocking surprise"!!!!!


You'll see many other companies following this one. Even the fortune 100 company I work for is on their way there. I bailed from our insurance years ago seeing it coming. Right now I'm lucky my wife's insurance is still good, but the day will come when we are "forced" into the POS ACA. I despise this A$$hole administration for cramming this down our throats.


Sep 12, 2013 2:14PM

It's pretty simple...  Here is what employers need to do...   DROP coverage.  Then reduce pay by $2000 a year and use the money  saved to pay the Obamacare fine.     This eliminates the employer from the decision.  It has the people the people that benefit pay the democrat fines.


I encourage every employer in the country faced with Obamacare 'fines' to simple reduce pay by the amount of the democrat tax...

Sep 12, 2013 12:54PM
Obama is going to cut the unions that are complaining a special deal to shut them up.  Time to get your marching shoes on!!!!!  Ohhh, Howwww00000000, the Socialist has got to go.
Sep 13, 2013 2:59PM
Obama wants to give all the benefits to the poor people and illegal citizens. They have found out if you keep making babies the government will provide you up to $30,000 a year in benefits and this beats working. Obama want us to depend on the government so he keeps his job. When is America going to wake up. Its time to take control of our destiny and keep the politicians  from spending are hard working money. Wake up America. Obamacare is not in our nations best interest. So much for being healthy and taking care of yourself. Now will pay for all those smokers and obese people who milk the government. OMG, Am I the only one that sees this!!!!
Sep 12, 2013 7:48PM
Isn't this the same Jason Notte that just wrote an article on how Obamacare has nothing to do with so many part time workers in America? Now he is trying to shame a few companies for calling them out cutting hours to 28 from 32 - sounds pretty much double talk to me.
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