News Feature | September 4, 2013

Did Obamacare Strike Again? Kroger To End Healthcare Benefits For Employees' Spouses

Source: Retail Solutions Online
Sam Lewis

By Sam Lewis, associate editor
Follow Me On Twitter @SamIAmOnFood

Kroger Store Front

Grocer says Obamacare was not the direct catalyst of the decision, but the timing is curious

Cincinnati-based grocer, Kroger, will no longer provide health insurance benefits to its employees’ spouses in its Central Division, beginning January 1, 2014. The announcement has come in accordance with an agreement made between Kroger and its unions, including the Local 700 United Food and Commercial Workers Union, in late June. The actions of Kroger are in direct contrast of mega-retailer, Walmart, who recently stated its employees’ significant others, including same-sex partners, would receive benefits.

However, the new agreement will provide pensions, pay increases, and health insurance for part-time employees working as few as 20 hours per week. John Elliot, a Kroger Spokesperson in Indianapolis, says the new policy is more generous than what the ACA requires. “We went into this discussion knowing that we wanted to protect coverage for our part-time associates,” Elliott states. The Affordable Care Act (ACA) will require companies employing 50 or more workers to provide healthcare benefits to employees working 30+ hours weekly.

Elliot also added that Kroger fully admits that the ACA did play a role in the decision, but increasing costs of healthcare in the U.S. was the basis of the change. “There is a lot of comment about the Affordable Care Act and so on and those mandates are something that we have to factor into those discussion, but frankly, healthcare costs were going up dramatically with or without the Affordable Care Act, it just adds some specific requirements that we have to fund to deal with,” he says. The fact that costs are rising is indisputable, but we are seeing many retailers making similar decisions before the ACA is implemented.

According to Elliot, 89 percent of union members voted to ratify the new contract, though not everyone can be happy with the decision. Another Kroger Spokesperson, Keith Dailey, says only about 15 percent of Kroger employees who currently receive benefits for their spouse will be affected by the decision. The grocer has offered a one-time, $1,000 payment, available in February 2014, to affected employees to compensate for the upcoming changes. Despite the gesture of goodwill on behalf of Kroger, recipients of the compensation will have to pay taxes on the $1,000 in addition to finding additional healthcare options for their uncovered spouses.

Kroger, or at least its Central Division, joins UPS in the removal of spouses from employee benefits plans. The difference between UPS’ and Kroger’s plans is that Kroger will not cover any spouse, while UPS has simply knocked off spouses that can receive healthcare benefits from their employer. As the ACA draws closer, retail workers, and workers in numerous other industries, can only sit and wonder what will be their employers’ next move to comply with new mandates and keep their businesses above water.