As employers grapple with controlling costs in a post-health care reform environment, theyre considering a variety of ideas to help them deliver the same quality health insurance to employees.
The concept of limiting coverage of spouses through the implementation of a surcharge or waiver program has been talked about for years. Now, businesses are actually doing it. This is a microcosm of the employee benefits environment where employers are considering every possible cost-control strategy.
The idea has been gaining traction in the months since United Parcel Service decided to stop paying for the benefits of employees spouses.
So heres the big question: if a business doesnt adopt these strategies, will it be way behind the curve? There are competing considerations. Depending upon the industry, being an employer of choice is critically important for attracting talent in order to make the firm succeed. That might lead to a decision to forego spousal surcharges and waivers. However, employers who choose not to implement restrictions on spouses could suddenly find they are paying for a significantly higher number from other employers.
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Before we get too far into this, lets define spousal coverage programs, a term which actually encompasses a number of variations designed to safeguard the employers cost structure by placing new parameters on the health insurance provided to the family members of employees. These provisions limit access to a plan when an employees spouse works for another business that offers health insurance.
There are several ways this can manifest. Employees are required to pay a higher cost-share or surcharge. Or the employer institutes a waiver credit, which provides a payment to an employee in exchange for waiving coverage for a wife or husband. Sometimes, an employer will outright exclude spouses from coverage under their plan if similar coverage is available from the spouses employer.
Regardless of the approach, employers need to perform due diligence to understand the risk/reward of implementing these programs. Something that should not be overlooked is that there will almost certainly be some aggravation for both the employer and employee. To that end, employers should start first by simply capturing the data:
- How do the claims of the spouses compare to those of employees?
- How many covered spouses can obtain coverage through their own employers?
- What is the competition doing?
- Does a spousal surcharge or waiver program affect employee recruitment and retention goals?
Employers need to consider how aggressive they want be with these programs. Nobody wants to do them but, undeniably, it has become a viable option. Spousal programs are not a magic cost-savings bullet and employers should not automatically implement these restrictions simply because its the buzz in the industry. The concept requires careful consideration and each employers situation is unique. However, its smart business to at least consider whether this is the right fit for your business.
Raymond Kim is director of account management and Bob Elmer is senior benefits consultant, both with Corporate Synergies.
