Here’s another unintended consequence of Obamacare. According to the legislation that enables the government to take over your health care, insurance must cover employees’ dependent children up to age 26, but there is nothing that says it has to cover spouses. The fees associated with the plan are causing employers to reconsider whether or not to included husbands and/or wives in their medical plans.
According to Market Watch:
This year, companies have to pay $1 or $2 ‘per life’ covered on their plans, a sum that jumps to $65 in 2014. And health law guidelines proposed recently mandate coverage of employees’ dependent children (up to age 26), but husbands and wives are optional. ‘The question about whether it’s obligatory to cover the family of the employee is being thought through more than ever before,’ says Helen Darling, president of the National Business Group on Health.
While surcharges for spousal coverage are more common, last year, 6% of large employers excluded spouses, up from 5% in 2010, as did 4% of huge companies with at least 20,000 employees, twice as many as in 2010, according to human resources firm Mercer. These ‘spousal carve-outs,’ or ‘working spouse provisions,’ generally prohibit only people who could get coverage through their own job from enrolling in their spouse’s plan.
According to Ms. Darling the number of companies moving over to a “no spouse if they can get their own plan system” is accelerating.
HMS, a company that audits plans for employers, estimates that nearly a third of companies might have such policies now. Holdouts say they feel under pressure to follow suit. ‘We’re the last domino,’ says Duke Bennett, mayor of Terre Haute, Ind., which is instituting a spousal carve-out for the city’s health plan, effective July 2013, after nearly all major employers in the area dropped spouses.
But when employers drop spouses, they often lose more than just the one individual, when couples choose instead to seek coverage together under the other partner’s employer. Terre Haute, which pays $6 million annually to insure nearly 1,200 people including employees and their family members, received more than 20 new plan members when a local university, bank and county government stopped insuring spouses, according to Bennett. ‘We have a great plan, so they want to be on ours. All we’re trying to do is level the playing field here,’ he says.
According to Mercer, about 20% of employers have a plan that discourages spouses from joining. Most of them charge about $1,200/year to cover spouses who could get insurance elsewhere, rather than deny coverage entirely.
But experts say more firms are likely to drop spouses altogether, whether they work or not—especially when the new federal health-care exchanges open in 2014, providing an alternative for spouses left out in the cold. ‘When there’s a place for people to go, employers won’t feel as beholden or compelled to cover the spouse,’ says Joan Smyth, an employee benefits consultant with Mercer.
Firms that recently decided to drop spouses from their plans range from private insurance agencies to school systems and universities like Ball State, as well as large companies like pump and valve manufacturer Flowserve. Wisconsin-based furniture company KI carved out spouses this year when couples flocked to its plan for the first time during open enrollment. ‘Now, each employer is responsible for its own employee,’ says Timothy Van Severen, corporate risk manager for KI, which insures about 1,700 employees in its health plan. ‘We were going to see a higher claim cost if we didn’t do that, because of the migration coming back to us.’
The effect of such plans can go way beyond money.
The news can be upsetting to couples when one partner is forced to pay more for coverage or accept lesser benefits: One spouse may even have to stop seeing the family doctor if his or her new plan stipulates a different set of providers. ‘I think that’s where the pain point comes in for the employee—that their spouse may have to be covered under a different plan, or their benefits might be reduced,’ Fischer says.
Couples then have to decide whether to stick together, even if it means losing benefits, or to split up so at least one spouse maintains coverage. If they separate, they may also have to choose which plan to insure the kids under, or whether to use different plans for each. ‘It certainly makes the family unit have to do some real soul-searching and figure out what works best for them,’ says Karen McLeese, vice president of employee regulatory affairs for CBIZ Benefits & Insurance Services. The decision, she adds, will likely come down to dollars and cents.
This is just another example of the fact that Nancy Pelosi was the only one telling the truth about Obamacare. According to the former speaker we wouldn’t know what was in the bill until it was passed. In the almost three years since Obamacare was passed we’ve learned exactly what was in the bill: tons of lies and tons of unintended consequences.
Jeff Dunetz is editor/publisher of the political website, The Lid.