Should you take a tougher stance on spousal coverage? 4 different approaches

As employers struggle to keep up with the rising cost of health insurance, spousal coverage is becoming one aspect of the benefit that’s coming under fire via spousal surcharges and carve-outs. But like all healthcare cost-cutters, employers have a variety of options to choose from here.

It’s understandable that employers are looking for ways to kick spouses off of their plans or, at the very least, limit the availability to certain individuals.

The average spouse can cost up to $1,179 more than the actual policyholder on a health plan, according to a comprehensive study by the Employee Benefit Research Institute (EBRI).

Finance chiefs that are considering adding a spousal surcharge or charge out to their own healthcare benefits are certainly in good company. A recent “Employee Benefits Survey” by the International Foundation of Employee Benefit Plans (IFEBP) found that nearly a quarter (21%) of employers have implemented some form of spousal surcharge or carveout.

What’s right for your firm?

Depending on the needs of your company, there are a number of different spousal surcharge/carveout options. Adam Abelsom, the associate director of IFEBP, recently highlights the basics of the four major options for employers:

1. The Straight-Up Spousal Surcharge. The standard spousal surcharge is exactly what it sounds like: A surcharge employees’ spouses must pay in order to contribute to the additional cost burden of providing healthcare coverage to participants of the plan.
   This tactic is often sold as a simple, straightforward means keeping up with rising costs to provide healthcare to employees and their spouses.
2. The Limited Surcharge. If your company feels a blanket surcharge penalizes some workers unfairly — e.g., employees who’s spouses don’t have the option of getting health insurance from an employers — this option tends to offer a nice middle-ground. Typically, limited surcharges are imposed on employees when spouses are offered coverage through their own employer but still opt to get coverage through their spouse.
3. Limited Spousal Coverage. A more drastic approach to the limited surcharge, limited spousal coverage policies prohibit employees’ spouses from obtaining healthcare coverage if they have the option of getting coverage through their own employer.
4. No spousal coverage. Rising costs have caused some employers to take a very hard stance against spousal coverage. By prohibiting any type of spousal coverage, employers are guaranteed to cut costs, but they also run the risk of hurting morale as well as recruiting and retention. Still, this option is slowly gaining traction, especially among larger firms. According to a Mercer study, one in ten large employers currently excludes spouses from any type of healthcare insurance.