Target Corp. said Tuesday it will stop offering health insurance coverage for its part-time workers, effective April 1.
Instead, the retail giant is offering $500 to employees who are losing their coverage, and directing them to seek coverage through health insurance marketplaces run by states or the federal government.
Home Depot, Trader Joe's and other retailers have taken similar actions.
"Health care reform is transforming the benefits landscape and affecting how all employers, including Target, administer health benefits coverage," Target's vice president of human resources, Jodee Kozlak, said Tuesday on its corporate blog.
"Our decision to discontinue this benefit comes after careful consideration of the impact to our stores' part-time team members and to Target, the new options available for our part-time team and the historically low number of team members who elected to enroll in the part-time plan."
Target said less than 10 percent of its workforce now enrolls in its part-timer health insurance plan.
For some of those workers, Kozlak said, Target's decision could end up being a benefit. That's because if workers aren't offered employer-provided insurance, they become eligible for subsidies offered as part of Obamacare.
"We recognize this change may be better for some," she said, "and also may cause disruption for those who previously elected to enroll."
David Martin, principal at Ahmann Martin Risk and Benefit Consulting in Edina, Minn., said Target's decision isn't surprising. He suspects that "we're probably going to see that more and more" among corporate employers.
Considering new regulations on employer-sponsored health plans, plus the requirement for large employers to cover full-timers starting next year: "It makes quite a bit of sense to apply your resources where you need to -- and for other populations, have them be available for the subsidies and other benefits from the Affordable Care Act," Martin said.
The Obamacare subsidies are generous enough that -- especially for a part-time worker -- "it might actually be a better deal for the employee for the employer not to offer them coverage," Martin said.
Until now, consumers always faced issues of insurability. "Now, everyone has access if they want it," Martin said. "And if they're part-time and that's the only source of wages, their subsidy through the public exchange could reduce the cost of coverage much lower than what an employer could provide to them."
But not everyone will benefit. While fewer than 10 percent of Target's workers now enroll in the part-time coverage, "the sad fact is, the 10 percent who do take it ... may be the ones who are most in dire need of it," Martin notes.
The government -- and ultimately taxpayers -- also have cause to be displeased.
"They're hoping the employers don't drop their coverage, because it would make the cost of the federal program go up, more than what they budgeted for it," Martin said.
Target's Kozlak said that its part-time employees working more than 20 hours a week will continue to be eligible for other benefits, including vacation, dental, disability and the 10 percent Target employee store discount.
Christopher Snowbeck contributed to this story.