More employers are adopting spousal surcharges or exclusions in response to rising health care costs. Employers considering a surcharge should understand the options available and consider the consequences any exclusion or limit has on employee relations.
A 2010 Towers Watson report found that nearly 20% of employers adopted a spousal exclusion or provision of some type and another 12% intended to adopt such policies in the future. Spousal exclusion policies can include one of four forms:
- A working spouse must pay a surcharge premium if coverage is offered through his/her own employer;
- A working spouse must purchase health insurance through his/her employer’s plan before he/she is eligible to
enroll in the employer’s plan;
- A working spouse who is offered coverage from his/her employer is denied coverage on the employer’s plan;
- All spouses, working and non-working, are ineligible for coverage.
While employers with at least 50 full-time equivalents must offer health coverage to full-time employees and their dependents or incur a penalty under the Affordable Care Act, there are no requirements to extend coverage to a spouse.
Employers who have a high percentage of low-income families may learn that an exclusion is welcomed among some whose spouse could be eligible for a premium tax credit for coverage purchased through the Health Insurance Marketplace.
When contemplating a spousal surcharge, an employer should consider the effects on employee relations. By raising health care costs for employees, resentment could develop causing tension in the workplace. Also, enforcement can be challenging for human resource departments. Implementation of surcharge language within health plans needs to abide by discrimination laws and regulations. An employer should check with legal counsel and their benefits consultant before modifying plan eligibility rules.