Apple Skips Debate, Commits to Health Insurance

October 26, 2009

In the midst of a heated national debate over legislation to provide all Americans with affordable health insurance, Apple will skip the controversy entirely and extend full-benefit medical insurance to part-time employees in January 2010. According to sources, the benefits now offered only to full-time employees, including those who work at the retail stores, will be offered to those working as few as 15 hours a week, which would include nearly all store employees. The insurance benefit will apply to employees who have at least one year of service with Apple. The change in coverage is significant, since American businesses have traditionally offered medical and other benefits only to full-time employees, and sometimes reduced benefits to those who work at least 20-hours a week. Apple has 16,500 full-time equivalent retail store employees, according to the company’s latest financial filing. It’s estimated the staff is composed of about 9,900 part-time employees who will be affected by the insurance change. Based on the average cost of medical insurance policies purchased by employers, the annual cost of extending medical benefits to part-time store employees could be at least $80 million a year.

According to the sources, the improved medical benefit sprang from significant dissatisfaction that emerged over the past year among part-time company employees. The input led to a company survey of the employees, intended to identify possible areas for improvement. A recurring topic of the feedback was improved benefits, and medical insurance in particular.

The sources say Apple now pays up to 65 percent of an employee’s health care insurance, with the employee paying the remainder. That pay-out will reportedly also apply to the part-time employees insurance coverage. That figure compares to an nationwide average of 73 percent, according to the 2009 Kaiser Family Foundation’s Employer Benefits Survey.

Apple’s insurance includes plans for individuals, spouse, domestic or same-sex partner.

The real cost of corporate-provided medical insurance has been hotly debated, especially during last year’s presidential election. In this case, the actual cost to Apple for an employee’s medical coverage is unknown. However, according to industry association surveys and employee advocate groups, the cost for companies to provide medical insurance ranges from $3,600 a year to over $12,000. Both figures are likely too extreme, with the actual cost somewhere in between. A commonly-accepted compromise figure is $8,000.

The estimated $80 million cost of the health insurance is balanced against the stores’ spectacular fiscal 2009 performance—$6.5 billion in revenues and $1.4 billion in profits. At that rate, the insurance cost would represent just one percent of revenues or less than six percent of profits.

An insurance industry grade group has posted their latest health insurance figures (pdf).

 

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