Net sites see cuts in health coverage

Wal-Mart cites overall package

The steady growth of e-commerce has been a source of jobs and benefits as employment in traditional stores declines. But at online retailers taken over by Wal-Mart, workers are finding one benefit in retreat: their company-sponsored health coverage.

In little more than a year, Wal-Mart has spent nearly $4 billion acquiring e-commerce companies with thousands of workers. Last month, many learned that their potential out-of-pocket costs for medical expenses would increase in 2018 at a rate far exceeding the overall rise in health care costs -- reaching thousands of dollars in many cases.

Wal-Mart has periodically struggled against the perception that it skimps on health care benefits. Facing criticism from legislators and worker advocates that too many of its employees relied on public programs like Medicaid -- a critique that a 2005 internal memo conceded had a kernel of truth -- the company began expanding access to coverage and making it more affordable about a decade ago.

But with costs rising in recent years, Wal-Mart has reversed course in some ways. In 2011, it raised some premiums more than 40 percent. Three years ago, it ended coverage for employees working fewer than 30 hours per week on average. Retailers Target and Home Depot made similar changes.

Health care benefits tend to be harder to come by in retail than in any other industry, with just over half of all retail employees eligible for company plans, versus more than 90 percent in manufacturing, according to a survey this year by the Kaiser Family Foundation. Retail workers also opt into their company plans at a far lower rate than any other industry's workers, suggesting that the insurance is not very attractive or affordable even when companies do offer it.

Wal-Mart says the share of its employees eligible for company-sponsored coverage, and of those choosing it, is slightly above the industry norm. But the health benefits it offers in its online operations appear to be inferior to those of many e-commerce competitors.

At Bonobos, an online menswear retailer that Wal-Mart agreed to buy in June for $310 million, workers pay nothing in premiums for medical coverage in exchange for a deductible -- that is, the level below which they are responsible for covering their own expenses -- of $2,000 for individuals and $4,000 for families. A similar policy under Wal-Mart's plan will cost an individual about $750 per year in premiums and a family nearly $4,000, according to documents on Wal-Mart's employee benefits website. Both plans will also feature a deductible that is 50 percent higher than the current one.

Some of the biggest changes appear to be occurring at another recent acquisition, ModCloth, an online retailer that made its name selling hip, vintage-inspired apparel to millennial women. To keep biweekly premiums for ModCloth's roughly 300 workers relatively close to what they pay now, their deductibles will rise from nothing to several thousand dollars per year.

Some economists say that as Wal-Mart amasses such properties, its practices could put pressure on benefits throughout the e-commerce sector, which had been a relative bright spot for low-wage workers.

"My concern is they bring their model with them regardless of what was going on before they got there," said Jared Bernstein, a senior fellow at the left-leaning Center on Budget and Policy Priorities, who served as chief economic adviser to former Vice President Joe Biden.

Blake Jackson, a Wal-Mart spokesman, said: "We've put a lot of thought into creating a total package, including both compensation and benefits, that offers more than what we've had in the past."

Jackson said ModCloth workers would gain other benefits such as a 401(k) plan with a company match and a stock purchase plan.

Jackson said the company would make sure its benefits largely kept up with those of competitors, and the benefits that Wal-Mart offered hourly e-commerce workers were essentially the same benefits it offered hourly workers in its traditional stores.

In addition to its standard health insurance benefits, Walmart covers 100 percent of the cost of certain types of major surgery, such as transplants, at a top facility.

The group OUR Walmart, which prods the company to improve wages and benefits, alerted The New York Times to the changes in coverage. The group's campaign seeks to make ModCloth's customers aware of Wal-Mart's policies.

Business on 11/29/2017

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