NEW YORK (Reuters) - WellPoint Inc WLP.N said on Friday that it would eliminate about 1,500 positions, or about 3.5 percent of its workforce, to reduce administrative costs, becoming the latest U.S. health insurer to cut jobs in the face of the weakening economy.
The largest U.S. health insurer by membership will eliminate more than 900 open positions, with about 600 workers receiving severance pay. WellPoint expects to take an after-tax charge of about $24 million for the fourth quarter.
“With the current state of the economy, we made the difficult decision to adjust the size of our workforce as we continue to meet our members’ needs while appropriately controlling operating expenses,” WellPoint Chief Executive Angela Braly said in a statement.
Indianapolis-based WellPoint employs about 43,000 workers.
WellPoint said the cuts would not affect its compliance staff for its Medicare plans for seniors. Earlier this week, the government ordered WellPoint to stop marketing and enrollment for its Medicare plans because of violations of federal regulations.
Health insurers have seen their enrollment levels pressured by layoffs sweeping through corporate America because of the weak economy. The volatile markets have also led to investment losses for the insurers.
WellPoint posted a 5.4 percent drop in third-quarter profit in October as it recorded $562.6 million in net investment losses before taxes. Earlier this week, WellPoint said it expects to record $349 million in net investment losses after taxes for the fourth quarter.
Reporting by Lewis Krauskopf; Editing by Lisa Von Ahn, Dave Zimmerman