Navigating Benefits

Should You Offer Spousal Coverage as Part of Your Employer Health Plan?

  • The International Foundation of Employee Benefit Plans projects a trend of employers not covering spouses in their company-sponsored health plan

  • While the Affordable Care Act requires employers with more than 50 employees to offer coverage to their eligible staff members and dependent children under the age of 26, spousal coverage is not mandated

  • Many employers are beginning to exclude or enact surcharges on spousal coverage

Posted by April 11, 2019

There have been so many changes to the rules and regulations of employee health benefits over the past decade, it’s been difficult for some organizations to keep up, especially small business owners. With increases in both utilization and cost, many businesses are looking for ways to continue offering a quality plan to staff—without breaking the budget.

Dropping the option for spousal coverage is one way to save money while still offering a dynamic plan to employees. But is this the right move for your organization? Here’s what you need to know.

How Other Companies Are Handling Spousal Coverage

Due to the high cost of health care coverage, employers are beginning to look at ways to lower their benefits costs while still providing the same value to employees. Spousal coverage tends to be one of the first places to get adjusted.

The International Foundation of Employee Benefit Plans (IFEBP) announced that it sees the trend leading toward not covering spouses. According to the organization, spouses are beginning to essentially get pushed off of health plans, and are increasingly faced with finding their own coverage elsewhere.

To make this change, some organizations are charging a surcharge to any employees who elect to keep their spouses on their employer-sponsored plan. Others companies have chosen to outright exclude any spousal coverage options, even if they do allow children to be covered. According to the IFEBP’s 2018 International Foundation Employee Benefits Survey, more than 20 percent of health plan sponsors implemented spousal surcharges or even exclusions, which was almost a 5 percent increase since 2016.

Any employer considering this should remember that, like retirement plans, all employer-sponsored health benefit plans must be nondiscriminatory. This means that if a spousal surcharge or exclusion is put in place, it applies to all employees, regardless of their position, status, length of employment or personal traits, such as sex, race or religion.

What ACA Guidelines Say About This Coverage

More employers are beginning to exclude or enact surcharges on spouses, but is that legal? Yes.

All employers with 50 or more full-time equivalent employees are required to offer affordable coverage to their staff, according to the Affordable Care Act (ACA). However, it doesn’t require that spouses be covered as part of the plan.

The ACA does require employers to cover any dependents until they turn 26 years old. However, it doesn’t require that employers pay for any portion of the premium for dependents. The law does not address spousal coverage; and because of this, employers are not required to cover spouses.

Should You Offer This Coverage as Part of Your Employer Health Plan?

While the decision is completely up to each individual business, for most organizations, offering spousal coverage is one way to entice candidates and retain employees. Of course, for some small businesses, the financial impact of covering spouses can be too great to carry. Alternatively, it may be a good benefit for medium-to-large businesses to offer.

Before making any decisions on whether or not to offer this coverage—or to enact a surcharge for employees who choose to cover their husband or wife—make an appointment to discuss all scenarios with your employee-benefits broker. Not only do they understand the law fully, but they can help determine what benefit-plan offerings are right for your organization.

Offering a benefit like this can be a great way to show colleagues that you care about them and their families. Explore United Concordia Dental’s Employer Toolkit to learn more about benefits your team members will love.

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