Target said it will stop offering health coverage to part-time workers, citing new public insurance exchanges floated by the U.S. government.
Less than 10 percent of the company's 361,000 employees currently participate in the insurance plan that is being discontinued, Target said in a company blog post on Tuesday.
"By offering them insurance, we could actually disqualify many of them from being eligible for newly available subsidies that could reduce their overall health insurance expense," Target said.
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The public exchanges set up under the health care law, also known as Obamacare, allow individuals to buy government-subsidized health care based on their income.
The health insurance coverage will be discontinued from April 1.
"Target will provide U.S. stores' part-time team members who are currently enrolled in Target's health coverage and who are losing access to that coverage a $500 cash payment," Jodee Kozlak, executive vice president of Human Resources at Target said in a company blog post.
The retailer joins a list of companies looking for ways to tackle rising health care costs. In September, Home Depot said it was shifting medical coverage for part-time workers to new public marketplace exchanges.
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Walgreen, the largest U.S. drugstore, and more than a dozen other large employers have said they would offer their employee insurance for 2014 through the Aon Hewitt Corporate Health Exchange.
More than 2.1 million people have enrolled in private health insurance plans through new federal and state websites since they were launched in October as part of President Barack Obama's health care overhaul, U.S. officials earlier said.