Wal-Mart is overhauling their benefits package, and one of the new options will be a Health Reimbursement Account (HRA) into which the company will contribute up to $1000 per worker that can be used for health care costs before deductibles and copays kick in.
In general, HRAs are a good way for employers to save money on health care and for employees to have more control over how their health care dollars are used. But it’s unclear whether or not this will truly benefit Wal-Mart’s employees. Wal-Mart has come under fire numerous times for providing limited benefit health insurance, policies with deductibles that are unrealistically high for a person living on Wal-Mart wages, and for only insuring a little more than half of its workforce, leaving the rest to rely mostly on state-funded health insurance. Wal-Mart notes that all employees (both part time and full time) can become eligible for health insurance that has no lifetime maximum, but that coverage may be unaffordable for the employees, or the high deductible may make it seem unattractive to them. High deductible health insurance with no lifetime maximum actually provides a far superior safety net than “mini-med” limited benefit plans, but if families are faced with spending 25% of their annual income on premiums and health care costs before the deductible (for more than that if you include coinsurance in the event of a large claim), many might choose to skip the coverage all together.
The extra $1000 per worker that Wal-Mart is planning to contribute to the HRAs will definitely help employees to offset routine costs, and will hopefully encourage more of them to enroll in the company’s health insurance policy. But it will still be a struggle for many families to come up with the rest of the high deductible in the event of a serious illness or injury, if the family relies on wages from Wal-Mart to cover all of their living expenses.