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Employers Get Stingy with Health Plan Coverage for Spouses

Health insurance dollars make it less affordable

Health care costs continue to rise, and many consumers are struggling to figure out how to afford or understand the health insurance plans available to them. Now a new shift adds to those medical insurance headaches: Employers who are limiting health care coverage for spouses, reported the Columbus Dispatch on September 8.

What's Changing

Traditionally, spouses check out their partners' health insurance plans, choosing coverage through the more generous and affordable option. However, both public and private employers are now leaning towards a less lenient approach. They're requiring spouses to choose coverage through their own employers rather than giving them options.

United Parcel Service Inc. is one such company. Spouses of nonunion employees are no longer allowed on the company’s health plan if those spouses can get coverage through their own employers. UPS pointed to health care reform (Obamacare) as the partial reason for the new policy.

The result: About 15,000 spouses will lose UPS coverage. In some cases, employees will pay extra to add their spouses if coverage is available to them on their own jobs.

How common is it? Towers Watson and the National Business Group on Health surveyed employers and determined that 20 percent of respondents have instigated a penalty for covering the spouses of workers when other coverage for them is available. On average, they charge $100 per month. More such shifts will occur in the future, with 13 percent of respondents saying they plan to follow that approach in 2014.

Changes Linked to Obamacare

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Many of the employers who are making these changes are doing so in preparation for the Obamacare fees beginning in 2014, said Chrissy Knott, health and benefits practice leader in Columbus for employee-benefits consultant Mercer. She noted that the fee is designed to help insurance companies pay for high-cost patients covered through the private individual health insurance marketplace.

With a fee of $63 per member in 2014, employers are hoping to reduce the predicted additional costs by tightening up the guidelines for spouses on the plans.

Examples of How Employers Are Changing

To help reduce the number of spouses on health care plans, companies increasingly are adding surcharges to insurance plans, thus making them less affordable. Examples include:

• Nationwide in January began charging $50 more per two-week pay period for employees who enroll a spouse or household member on the company’s health plan if that spouse or household member could obtain coverage through his or her own employer.

• Express Scripts implemented a surcharge this year and plans to continue it in 2014. A spokesman would not disclose the amount.

• Kroger assesses a “working spouse fee” for spouses of salaried and certain hourly employees who could get coverage elsewhere but opt for coverage through Kroger. That fee is $200 per month, a spokeswoman said.

• American Electric Power assesses a monthly $50 surcharge per employee whose spouse could get coverage through his or her own employer. Of AEP’s 5,600 Ohio employees who have health coverage through the utility, 1,025 pay the surcharge, according to a spokeswoman.