Spousal fees for Employer Sponsored Coverage

Bob S asked about something that is becoming increasingly common:

an old friend of mine (and his wife) get their health insurance through his employer — as I understand it, the cost is charged to his gross income and he pays somewhat more to have both he and his wife covered than if it were just him. However, because his wife is offered (and declines) coverage by her employer, his employer charges him an additional fee. Apparently this policy was begun soon after implementation of the ACA and consequently he blames ObamaCare for the extra $120/month he’s being charged after already paying for spousal coverage. Is this in fact a stipulation of the ACA, or is his employer just taking advantage of the timing to gouge him for a few dollars more?

This is not ACA related. It is employers seeking to minimize their costs by covering as few people as possible while taking advantage of an extremely weak labor market to change the terms of the social contract.

Speaking behind the veil of ignorance, tying health coverage to employment is just odd, and the ACA is slowly dissolving those bonds.  Employers offer health insurance becuase they can offer their employees a better deal if the insurance is purchased as a group than if they buy it on the individual market. This better deal is due to tax treatment, statistical variance control, a healthier population than the general population, and bulk purchasing.  Employers really don’t want to pay to cover an entire family but the social contract has been that they have to offer family coverage if they want to attract and retain middle class workers.

That implied social contract was formed when it was typical that a married family had one person (usually the husband) working at a job with good benefits and the other person (usually the wife) was either not working or working at a low wage/low benefit position.

That reality has changed dramatically.

And employers are trying to not pay to cover people that they don’t have to while still offering at least the patina of offering family coverage.  The goal of the scheme is to divert people (usually spouses, sometimes adult children) away from the best insurance deal to lower coverage values by increasing the relative cost of the best insurance deal.

My wife’s company does this.  She could cover our family for $193 a month for a Gold plan if I was not working at a job with health insurance available to me.  Since I do have an ACA qualified plan offered to me, I am ineligible to get on her family plan unless I pay a $200 a month surcharge over and above the family rate.  For us, this is not a problem, as Mayhew Insurance allows my wife to come onto my plan, and our monthly premium deduction for a Gold Plus plan is less than half of my wife’s company’s charge.

If I did not work for Mayhew Insurance but worked at MegaEvilBank that offers a Bronze plan only to its employees, $300/month might be worthwhile for me to go to the much better plan with a $1500 out of pocket max instead of the $6,500 deductible.  But my wife’s employer is trying to minimize the number of people they actually have to cover and pay for.  The covered spouse surcharge does that by first diverting spouses who are covered under shitty insurance to jump to good insurance and secondly getting some of their employees to go on the spouse’s coverage that does not have a surcharge.






27 replies
  1. 1
    OCD says:

    My wife’s former employer pulled this shit on us for years – long before the ACA. It’s just another way to stick to you.

  2. 2
    RSA says:

    Some capitalists will be capitalists, whether they’re buying and selling pork belly futures or the-lives-and-health-of-your-immediate-family futures. (I’m speaking very metaphorically here.)

  3. 3
    Pseudonymous Bosch says:

    Semi-OT: It took me a year to figure out but when evaluating prescription plans treat Tier 3* drugs that are needed for chronic conditions (i.e. drugs that you are taking for the rest of you life unless some breakthrough occurs) as uncovered for this purpose. I took a plan, not minding having to pay extra but was cut off of my preferred brand medication after a few refills. Cut off — they say I can still get the drug, but I pay full price (which is not, as far as I can tell, a negotiated price but retail.) It seems dishonest to me, but at least I understand this now.

    *Tier 1 = generics (lowest cost,) Tier 2 = preferred brand (higher cost,) Tier 3 = covered brand, but not preferred (highest cost,) specialty drugs (haven’t used any.) My drug is still listed as Tier 3 in the formulary, but they don’t cover it at all in my case.

  4. 4
    Nutella says:

    @OCD:

    My wife’s former employer pulled this shit on us for years – long before the ACA. It’s just another way to stick to you.

    But what a great excuse ACA is for EvilMegaCorp! Every ratty thing they do with insurance for their employees can be blamed on the evil gubmint.

  5. 5
    NonyNony says:

    @OCD:

    My wife’s former employer pulled this shit on us for years – long before the ACA. It’s just another way to stick to you.

    Depending on how its implemented, it’s a great way for a company to lie to prospective employees about their salaries (since you might not find out about this policy until you’ve taken a job) or to apply a stealth pay cut to existing employees – a lot of folks don’t consider benefits as part of their pay envelope for some reason, so while forcing you to pay more out of pocket can be phrased as a “benefit cut” it’s actually a paycut.

    Companies have been doing this for years. The problem is that the ACA being in the news co-incided with a lot of companies deciding to nickel and dime their health insurance as much as possible (the two events being highly correlated after all – both were caused by rising health care costs). So a lot of companies decided to just let employees assume that the ACA was causing their changes when, in fact, it wasn’t. (Hell I saw the ACA getting blamed for changes made at companies while it was still being debated in Congress. People like to have scapegoats.)

  6. 6
    OzarkHillbilly says:

    When I was still working, my union required that both parties carry insurance if their employers offered it. If my wife did not take her insurance, the union would refuse to be her primary coverage. Now I had great insurance to the tune of low copays and no deductibles and massively better vision and dental with no increased cost for family coverage, so it worked out well for her, but I also had to be on her plan which cost her considerably more and I received zero benefit from (the only benefit was to my insurer, the union). Over all the savings from having her on my plan more than balanced out the increased costs of her family coverage so we were OK with it.

    Now that I am not working a regular job anymore, we rely solely on her insurance. Every year they try to deny me coverage because I don’t have an employer sponsored policy of my own.

    ps:I know they are just being dicks about this, but in all my years I have never heard of an insurer trying to deny coverage to a man’s wife for the same reason.

  7. 7
    japa21 says:

    @NonyNony: There was a time that some companies took into account that employees who did not get their insurance through their employer were, in effect, taking a pay cut.

    Several years ago I worked for a company that offered insurance but I chose to be included on my wife’s plan as better coverage at less cost. That company gave those employees who did what I did an increase in pay to cover what they were paying out for insurance for the employees who did accept insurance through them, adjusted for taxes.

    This more or less happened out of the blue but only lasted about one year. My guess is the bean counters went to them and asked if they were nuts or something. My second guess is the person who made the decision to institute that policy ended up looking for another job.

    It is one of the reasons why I am skeptical about the claim that with universal single payer, companies would increase wages because they wouldn’t be paying out that money for insurance.

  8. 8
    Duke of Clay says:

    My employer and my wife’s employer instituted these higher fees for spousal coverage if they were eligible for coverage elsewhere SIX YEARS AGO. Let’s see. Obama was president then, so it must be his fault. Thanks, Obama!

  9. 9
    pharniel says:

    Ugh. There isn’t even a fee you can pay for my spouse’s insurance – if I am offered coverage (that meets bronze) I am ineligible for coverage.
    We pay the spouse fee for my insurance because it’s at least mid-bronze (75% max deductible, but the company kicks in a few K to the FSA) for 60% of her cost even with the spouse fee.

    I suspect that since we are being taken private that our benefits will become ‘In Line’ with the current wall street god Carl Ichon’s – A/K/A ‘fuck you’ bronze.

    We’d do better kicked to the exchange with a subsidy from work. And in a functioning government that’d be an option for employers or the floor would have been moved to silver for large companies but we don’t.

    If HR has the balls to blame this on ‘obamacare’ I’m going to go all Lying Cat on them.

  10. 10
    Redshift says:

    A coworker and his wife are separately on their own employer’s insurance for just this reason. Since my wife is an adjunct professor and is getting screwed by employers in an entirely different way, I’ve never had to deal with this issue.

  11. 11
    Marc says:

    ACA is at least partially responsible for these changes because of the Cadillac plan tax. Basically, health care that is more generous than average can lose tax deductions, and employers are trying hard to avoid this. Reducing spousal coverage and tying premiums to income are both nods in this direction, and people are being told that this is tied to Obamacare. And it indirectly is, at least through the strong incentives to reduce the rate of future medical care cost increases.

    If you want to know why the ACA is unpopular, it’s in no small part because it does actually cost many people something and helps different people than the ones impacted by higher costs. And, of course, it’s become a catch-all for blaming regular medical cost increases that have nothing to do with ACA.

  12. 12
    pacem appellant says:

    In my decade+ years in the labor force, I’ve not seen this. I don’t know if it’s specific to certain markets (we work in CA). What the spouse’s company (and current company as well) do is just make it a lot more expensive to cover the partner. My coverage is pretty good deal for me and my children, but if I add the +1 adult, it gets expensive. This lead us to a situation where I and the kids have the same insurance, while the wife has separate insurance. It isn’t horrible, but it does mean that my wife has to carry around two insurance cards and keep FSA records which I can later reimburse (since she is the one who is primarily in charge of the brood’s health but the FSA CC is in my name).

  13. 13
    NonyNony says:

    @japa21:

    It is one of the reasons why I am skeptical about the claim that with universal single payer, companies would increase wages because they wouldn’t be paying out that money for insurance.

    I’m skeptical about that claim because I’ve actually worked as an employee for a company for longer than a week.

    (Seriously – they could increase wages, but they only will if their competitors are offering high enough wages to prevent them from hiring the people they want. Otherwise it’ll probably go to the CEO’s next pay increase – or the CFO would take credit for saving the company so much money and it would go to him instead. Have people who make that claim ever actually worked for anyone in their lives? Even the non-profits I’ve worked for would keep that money instead using it for across the board pay raises.)

  14. 14
    gene108 says:

    And employers are trying to not pay to cover people that they don’t have to

    We’re in an interesting situation, with regards to our company medical insurance policy. We don’t have such exclusionary premiums, with regards to if a spouse is working. What we charge employees is a flat percentage across any tier (single, couple, family, parent+child) for medical insurance, with dental and vision being voluntary.

    What we ran into with our renewal last year was being told we were getting a 15% increase because people on the plan were aging and if we had more people enrolled, we would probably get a lower premium as the risk would be distributed.

    We have about 75 W2 employees with about 38-42 being enrolled on our insurance, depending on people dropping out or new enrollees.

    Anyway, I understand the knee-jerk reaction by employers to want to exclude people from insurance, especially with small or medium sized businesses, because it doesn’t take much to blow up a good benefit package and making it unaffordable to continue to provide better benefits. One or two catastrophic claims, from experience, is all it takes. And so every covered employee is basically a ticking time bomb, who could blow up your rates and cost the business more money.

    I just found it interesting that employers can also hurt themselves by not having a high enough participation rate. That’s something, I had not run into before.

  15. 15
    gene108 says:

    @RSA:

    Some capitalists will be capitalists, whether they’re buying and selling pork belly futures or the-lives-and-health-of-your-immediate-family futures. (I’m speaking very metaphorically here.)

    Having shopped benefits for the past 17 years for my current employer, I do not think employers are being “evil” in handling medical insurance for their employees.

    The system is broken. It sucks.

    Employers are part of a fucked up system.

    And sometimes there are not a lot of alternatives to make things better, because it costs too damn much.

    If anyone needs to shoulder more blame it is medical service providers, form doctors to equipment makers to administrators, etc., because they are the one sucking in and imposing all the increases in health care costs we’ve seen over the last 20 years.

  16. 16

    @pacem appellant:

    I’m also in CA, and my employer’s insurance for employee+spouse is about twice what it would be for employee+children. One theory I’ve been told is that it’s more expensive to cover two adults than one adult plus child or children because adults are more likely to get seriously ill than kids are. It will be almost $100 a week for both of us.

    We’re putting my spouse on my insurance next year because he’s going to start graduate school in January (after being laid off last year). He’s not eligible for other coverage (though he could continue COBRA) so I don’t think we would get hit with an extra penalty in any case. Even Bronze coverage would cost more than putting him on my insurance because we won’t be eligible for a subsidy next year thanks to some investments we inherited from my late father that put us over the top once you add together my salary and his salary/severence pay.

  17. 17

    @gene108:

    Huh. I wonder if that’s why the Giant Evil Corporation I work for here in CA now has mandatory insurance. It’s really crappy catastrophic insurance, but if you can’t show that you’re covered by other insurance and don’t sign up for a different plan, you’re automatically enrolled.

    (The GEC is self-insured, so they hire an insurance company to administer claims and put a network together, but the GEC pays claims, not the insurance company.)

  18. 18
    FridayNext says:

    My wife’s employer will be going to this in the New Year. Since I am not currently employed, I am obviously not covered by any employer insurance. Any thoughts on what I can expect to produce to prove that I do not have access to my own insurance? I figure if I start now, we can have this settled by June.

  19. 19
    Southern Goth says:

    @Marc:

    If you want to know why the ACA is unpopular, it’s in no small part because it does actually cost many people something and helps different people than the ones impacted by higher costs. And, of course, it’s become a catch-all for blaming regular medical cost increases that have nothing to do with ACA.

    Guaranteed coverage and some of the regulations do help those with the higher costs, but, yep, there are plenty of parts that stink.

    I don’t see any improvements in the foreseeable future, since Republicans just want to burn the whole thing down.

  20. 20
    Ohio Mom says:

    Same thing with my husband’s insurance, and a reason why I did not pursue a couple of short-term job opportunities that were otherwise very good fits.

    I did not want to go off his insurance, go on another, then go back on his. I thought it was tempting fate, that every switch brought with it the possibility of somehow being left uninsured.

    I have come to the conclusion that the entire health insurance system is nothing but organized corruption. We can try our best to navigate it so we don’t get screwed as badly as we could (hence the value of Richard’s posts) but we are going to get screwed.

  21. 21
    gene108 says:

    @Mnemosyne (tablet):

    (The GEC is self-insured, so they hire an insurance company to administer claims and put a network together, but the GEC pays claims, not the insurance company.)

    They’ll use the insurance company network and applicable discounts the insurance company negotiates with providers.

    Even GEC will use the existing health insurance system, it’s just that they probably have a helluva a lot of negotiating power with insurance versus Small Mom and Pop Evil Corporation (SMPEC).

    Huh. I wonder if that’s why the Giant Evil Corporation I work for here in CA now has mandatory insurance. It’s really crappy catastrophic insurance, but if you can’t show that you’re covered by other insurance and don’t sign up for a different plan, you’re automatically enrolled.

    My understanding of the PPACA is that if your company has over 50 full-time equivalent* employees, either you need proof of people having alternate coverage or you have to show they voluntarily waived coverage.

    It might be easier in the case of GEC to just enroll people in their insurance, rather than worrying about if they got waivers signed, i.e. it’s easier to do something automatically yourself than waiting for someone to fill out a form and send it back to you, with regards to meeting compliance requirements.

    * Full-time equivalent employees basically tries to make sure companies cannot skirt the 50 full-time employee rule, by switching people to part-time work. It requires you report the total hours worked for certain positions, where you have part time employees, to determine how many full-time employees would be required to get the job done.

  22. 22
    OzarkHillbilly says:

    @FridayNext: In our case it is just reasserting that I am not eligible for insurance from an employer. It is a pain because my wife has to do this twice: First at the renewal time and than again 3 or 4 months later when she receives notice that I am being kicked off her insurance.

    Of course, at that point we then begin to wonder what bills are getting paid and which ones aren’t.

  23. 23
    OzarkHillbilly says:

    @Marc: You mean there are winners and losers? Whod’a thunk it! I guess there really is no free lunch after all.

    (my sarcasm is directed at those who are complaining)

  24. 24

    @gene108:

    IIRC, they started doing it a year or two before PPACA passed, so I’m wondering if there was some CA regulation that passed, or if they just decided it was too expensive for them in the long run to have uninsured employees.

  25. 25
    nastybrutishntall says:

    OT but wondering if you have an explanation for this mess, Richard:
    Colorado HealhOP is being decertified because the Feds are paying them less than expected.

  26. 26
    Nutella says:

    @gene108:

    If anyone needs to shoulder more blame it is medical service providers, form doctors to equipment makers to administrators, etc., because they are the one sucking in and imposing all the increases in health care costs we’ve seen over the last 20 years.

    Don’t forget the insurance companies! Also, too.

    We are a step better off, on the average, with ACA than we were without it but we still have the most expensive health care in the world because we have

    1. a single-provider system (Veterans Administration), and
    2. two single-payer systems (Medicare and Medicaid), and
    3. a private, profit-making system (insurance companies), and
    4. every individual expense, from doctor’s salaries to cost of one aspirin issued to a hospital patient, is way more expensive than anywhere else in the first world.
    5. …
    6. PROFIT!!! for the insurance companies and suppliers, not us.

    I hope we can continue to improve things with ACA Part 2 but it was such an ordeal getting the first ACA passed that it will be a long while.

  27. 27

    […] Nasty, Brutish and Short posted a link to a good article and raises a good question about why are so many Co-ops closing right before the 2016 open enrollment period is beginning: […]

Trackbacks & Pingbacks

  1. […] Nasty, Brutish and Short posted a link to a good article and raises a good question about why are so many Co-ops closing right before the 2016 open enrollment period is beginning: […]

Comments are closed.