Humana will lay off more than 800 employees in Kentucky and several states

LOUISVILLE, Ky. – Health insurance giant Humana is cutting its workforce by more than 800 people in Louisville and across its operations in several states.

The Louisville-based company confirmed plans Monday to trim its payroll by 2% by the end of the year. Some employees were notified that pink slips would be handed out this week, and most would learn their fate by Thursday, spokeswoman Kate Marx said in a prepared statement.

"Humana announced a series of measures scheduled for 2020 and beyond aimed at improving productivity and positioning the company for long-term, sustainable success. These measures are in alignment with broader efforts started earlier this year to evaluate the work and cost structure of the organization," according to the statement. "Some of this work has resulted in involuntary staff reductions."

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Humana is preparing to report its third-quarter earnings on Nov. 5, so the layoffs are expected to be part of the discussion about the company's 2020 forecast.

In its release, Humana said that it expects to maintain an employee base of 12,000 in Louisville and that employees will be encouraged to apply for other open positions that now number about 2,000 nationwide. Those laid off will be provided severance "or monetary pay based on years of service with the company."

Marx declined to provide additional detail about the locations where cuts will be made but said, "We're creating new jobs that support our health-focused strategy and business operating model and phasing out positions that are no longer aligned."

Humana is one of the country's largest providers of privately run Medicare, called Medicare Advantage. It also holds large government contracts under TRICARE to oversee medical care for retired and active duty military members and their families. As a result, the company has a large presence in states such as Louisiana, Florida and Texas, where many in the military reside.

Two years ago, Humana announced an even larger wave of 2,700 layoffs, or 6% of its workforce, a move that executives told investors would cost the company $124 million in early retirement benefits and severance, but would pay "hundreds of millions of dollars" in savings starting in early 2018.

One reason for the cuts then is suspected to be the same this time around — the anticipation of a $1 billion, non-deductible health insurance fee, or HIF, that the company must pay in 2020. The charge for health insurance companies under the Affordable Care Act had been lifted this year, but is set to return in 2020.

The HIF is projected to increase health care costs by $20 billion for 142 million people. Humana Chief Executive Bruce Broussard said during an earnings call in early summer that the company expects "reasonable growth" next year, driven in part by the return of the fee.

But the company would need to trim benefits or increase prices to offset the expense, he said then.

Knowing that the tax will restart next year "has been hard to grapple with," CFO Brian Kane added during the same call. "... we're facing significant headwinds with that HIF."

Humana now has a workforce of about 41,600 nationwide, so 2% of the total is about 832 employees.

Employees in Louisville received an email Monday from Broussard informing them of the layoff plans for "the team," and informing them they'd have 60 days to find another job within the company. Rumors of pending layoffs had circulated around several departments starting in September.

"Our commitment to the employees whose positions are being eliminated is to be transparent and fully supportive as they plan the next phase of their careers, which may include another position with Humana," the company statement said.

Those who don't "transition" into a new position will receive two months of career counseling. The company will continue paying medical, dental and vision benefits during that time, and also will pay tuition through the end of the semester for any employee using company-provided tuition reimbursement.

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Contact reporter Grace Schneider at gschneider@courierjournal.com and on Twitter: @gesinfk.

This article originally appeared on Louisville Courier Journal: Humana to lay off more than 800 employees in several states