you asked / we answered: Spousal Surcharges.

Author:Lucey, Jenny

What methods do employers use to discourage or block employees from enrolling their spouses in the health plan?

Employers often use one of the following four methods to reduce the number of spouses they cover.

  1. Charging employees more to cover spouses who have access to employer-sponsored coverage through their own jobs (spousal surcharge)

  2. Charging employees more to cover spouses whether or not they have access to other coverage

  3. Choosing not to cover any spouses who have access to their own employer-sponsored coverage (spousal carve-out)

  4. Choosing not to offer coverage for any spouses under any circumstances.

    What is driving the trend toward fewer spouses being covered on health plans?

    The Employee Benefits Survey 2018 showed 20% of responding health plan sponsors imposed spousal surcharges or exclusions, up from 15.7% in 2016.

    At least three factors are driving this trend.

  5. Plan sponsors are looking for new ways to stem the rising tide of health care benefit costs.

  6. Employees, especially those on single-only coverage, may view spousal surcharges as a more equitable way for an employer to allocate health benefit costs among single and married employees.

  7. As more plans impose surcharges or exclusions, plans that cover spouses without a surcharge could be at risk for adverse selection.

    How do plans identify whether spouses enrolled in the plan are eligible for another workplace program?

  8. Employee affidavit (the employee signs a statement certifying that his or her spouse is ineligible for other employer-sponsored coverage)

  9. Certification from the spouses employer (assuming the spouse's employer is willing to cooperate, the spouse's employer signs a statement certifying that the employee's spouse is ineligible for health coverage where he or she works)

    How does a spousal surcharge or carve-out design affect the employer shared responsibility provisions under the Affordable Care Act (ACA)?

    There are no ACA compliance concerns because an employee's spouse doesn't meet the ACA definition of dependent. Also, affordability is determined by the cost of employee-only coverage.

    How would a self-insured employer report the offer of spousal coverage under a spousal carve-out design?

    On Form 1095-C issued to the employee...

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