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October 13, 2006
Wal-Mart Putting Health Savings Accounts to the Test
For years, proponents of consumer-driven health care and Health Savings Accounts have argued that making individuals responsible for spending decisions would slow the sharp rise in medical costs. Personal responsibility combined with greater price transparency and pricing information should help bring down rising healthcare costs. Wal-Mart Stores Inc. is in the process of conducting a massive test of these claims. Will Health Savings Accounts work at Wal-Mart?
- The Bentonville, Ark., retailer announced late last month that as of Jan. 1 its primary health-insurance offering for new hires will be a high-deductible health insurance plan with premiums as low as $11 per pay period in some areas.
- After employees are enrolled in Wal-Mart's coverage for a year, they can pair the high-deductible plan with a Health Savings Account, which provides them a tax-free method of setting aside their own money -- plus a contribution of up to $2,400 from Wal-Mart -- for medical expenses.
- The new offering quickly will become the dominant coverage among Wal-Mart's 1.3 million U.S. employees, considering that the average annual turnover rate in the U.S. retail industry is 80 percent for full-time workers.
- Employees hired before Jan. 1 can retain their older coverage plans, which offer lower deductibles for higher premiums.
Wal-Mart says the new plan, called the Value Health Plan, will save money for most of its employees. More than half of its covered associates didn't spend enough last year to exhaust their deductibles, yet they had to pay premiums higher than those in the Value Plan.
Wal-Mart said that the low-premium, high-deductible plan makes its coverage affordable for more of its employees. Also, Wal-Mart this year shortened the eligibility wait time for part-time workers to one year from two and allowed their children to get coverage.
Find out more about Health Savings Accounts and how they can help you reduce your healthcare costs at: http://www.health--savings--accounts.com
Posted by Wiley Long at October 13, 2006 09:47 AM