Jan 22, 2014 3 min read

NEW YORK – Target Corp. said it will no longer be offering health care coverage for its part-time workers.

The discounter is citing new options available through health care exchanges under the Affordable Care Act.

Target, based in Minneapolis, said the majority of its part-time workers who have been eligible for its health care insurance coverage don’t enroll. In fact, less than 10 percent of its total employees of 361,000 take advantage of the part-time plan. The company said it will stop covering the part-time workers beginning April 1.

Other large employers, including UPS, are scaling back health coverage by dropping spouses from their employee plans if they are able to get insurance through another employer.

“Health care reform is transforming the benefits landscape and affecting how all employers, including Target, administer health benefits coverage,” Jodee Kozlack, Target’s executive vice president of human resources, said in a corporate blog post Tuesday.

“Our decision to discontinue this benefit comes after careful consideration of the impact of 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 in the post that by offering its part-time workers insurance, it could actually disqualify many of them from new subsidies that could reduce their overall health insurance expenses.

Target said part-time workers who are enrolled in the health care plan and are losing coverage will be given a $500 cash payment.

The Affordable Care Act created insurance exchanges that customers can visit to shop for coverage and compare policies. Some people also qualify for income-based subsidies or tax credits to help buy a plan.

The law requires that companies with 50 or more workers offer health coverage to full-time employees — defined as those working 30 hours or more.

Target said employees who average 20 to 31 hours per week will continue to be eligible for other benefits, including vacation, dental, disability and life insurance. Its part-time employees also will still qualify for store discounts and its 401(k) plan.

Separately, Target said Wednesday it was laying off 475 employees across the company’s operations. It also said that over the past six months, it has closed about 700 open positions.

“As an organization, Target continually assesses our operating model to ensure we are well positioned to adapt to changing business needs,” Target spokeswoman Molly Snyder said in a statement. “We believe these decisions, while difficult, are the right actions as we continue to focus on transforming our business.”

The move comes almost two weeks after Target lowered its fourth-quarter profit outlook as it grapples with the fallout of a massive security breach. Before the breach, the discounter had uneven sales growth as it navigated a still difficult economic environment.