WWD.com/beauty-industry-news/financial/wal-mart-sets-new-workers-health-plan-557402/

BOSTON — Seeking to counter criticism that Wal-Mart’s health benefits are unaffordable for most rank-and-file workers, chief executive officer H. Lee Scott on Monday revealed details of a new, low-cost insurance plan during a television broadcast to stores.

Premiums can be as low as $11 per month starting next year, but that option will be offered only in certain southeastern metropolitan markets, said Wal-Mart spokesman Dan Fogelman. For the majority of subscribers, health insurance will cost about $25 per month for an individual, $37 per month for a single parent and $65 per month for a family. Employees can visit a doctor three times for preventative care before a $1,000 annual deductible kicks in.

Also starting in 2006, Wal-Mart will permit workers to set aside pre-tax dollars to cover medical expenses in healthcare spending accounts. The company will match as much as $1,000 in that spending account, depending on an individual’s coverage level.

The world’s biggest retailer employs 1.2 million people in the U.S. and 568,000 of them, or about 47 percent, have health insurance, the company said.

In its attempt to increase the ranks of insured, Wal-Mart is bucking a national trend among corporations looking to curtail spiraling health care costs.

Ulysses Yannas, a broker with Buckman, Buckman & Reid, speculated that Wal-Mart will pay for its low-cost health plan with improved profits on apparel sales and savings from its RFID (radio frequency identification) inventory management systems. He estimated the retailer could generate $8 billion next year from both initiatives, “part of which they will be using to improve health care and wages, and keep the unions out of their doors.”

Paul Blank, director of WakeUp Wal-Mart, a union-sponsored campaign that has steadily attacked the retailer’s wages and benefits, said the new plan is an “empty promise.”

The group calculated that, figuring in the $1,000 deductible, the monthly premium and separate deductibles for hospital care, prescription drugs and surgery, the plan could theoretically consume as much as 25 percent of an employee’s take-home pay for individual coverage, and as much as 40 percent for family coverage. Wal-Mart’s average entry-level wage is $9.68 per hour, according to the company.

This story first appeared in the October 25, 2005 issue of WWD.  Subscribe Today.

Fogelman said those additional deductibles, at $300 to $1,000 apiece, are “part of the trade-off for lower premiums.” He said the new program, called the Value Plan, is “an attractive option for someone who visits a doctor once or twice a year for a sinus infection.”

Fogelman said he could not speculate how many workers would select the plan. He also said he did not know if the new plan option would affect Wal-Mart’s total health care costs. The retailer pays two-thirds of its associates’ health care expenses, he said.