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View Full Version : Surcharge for Employed Spouse Waiving Own Coverage


Dorothy
07-28-2003, 12:48 PM
My spouse's employer requires payment of a monthly surcharge for (health plan) coverage of an employed spouse who has waived purchase of coverage offered by his or her own employer.

No surcharge is required for coverage of unemployed spouses.

I understand the purpose of this provision, but is it legal?

Thanks.

Maine-iac
07-28-2003, 01:12 PM
Don't see why it wouldn't be legal. When I worked in health insurance, employers would propose all kinds of contribution schemes to suit their notions of fairness. Some were looney, some weren't, but there were generally no legal impediments. We still tried to talk them out of the looney ones. (One employer wanted the "one adult plus children" rate only to be available to single parents, not to two parent families where the spouse was covered as a single at his or her place of employment. We did talk them out of that, but it was legal.)

Probably a defensive move against employers who offer cash to participants who "opt out" of the program where they have spousal coverage available.

Wigmeister General
07-28-2003, 01:17 PM
Bring on the cafeteria plans.

Dorothy
07-28-2003, 02:05 PM
Thanks. I thought it was probably legal, but it seems so unfair that I wanted to get the opinions of people working in the health area.

My employer is not among those offering monetary rewards for employees opting out of their plans.

In addition to having to pay the surcharge, I have repeatedly had to submit statements to the effect that I don't have other health insurance coverage, and the HMO uses this as an excuse to delay claim payment. It's really getting annoying, which I suppose is the idea.

Axis of Symmetry
07-28-2003, 02:15 PM
It's really getting annoying, which I suppose is the idea.

How true! :roll:

Meanwhile, due to coordination of benefits, being covered under two plans ends up with really minimal benefits even if you don't opt out.

Harry and Louise, you lied to us. :evil:

Rainson
07-28-2003, 04:24 PM
Under my husband's plan, I am not even eligible for coverage if I am employed and my employer offers coverage. He can get a cash payout for waiving coverage.

Since he is eligible under my employer's plan, he waives coverage with his, receives the cash payout, which it turn covers my contribution under my employer's plan.

Dorothy
07-28-2003, 05:15 PM
That's an interesting idea, Rainson. I will have to investigate whether I could do the same.

I suppose that all spouses and children are subsidized to some extent; however, I remember reading that, for reasons unknown, stay-at-home female spouses generally have health costs exceeding those of their working counterparts, so I find the surcharge somewhat ironic.

SamChevre
07-28-2003, 05:27 PM
Under my husband's plan, I am not even eligible for coverage if I am employed and my employer offers coverage. He can get a cash payout for waiving coverage.

Since he is eligible under my employer's plan, he waives coverage with his, receives the cash payout, which it turn covers my contribution under my employer's plan.

This situation is exactly what an "employed spouse surcharge" is designed to avoid.

Maine-iac
07-28-2003, 05:57 PM
The employer doesn't really see it as unfair. He sees it as "Why should I pay to cover a spouse just because they have chosen to refuse coverage they are entitled to from their own employer? I'll pay for a spouse that would otherwise have no coverage, but I'm not paying to let the spouse's employer off the hook."

Of course, that can result in a disadvantage to individual employees, based on the relative richness of the two plans, and the employee contribution at the one employer versus the single/family contribution differential at the other.

But the employer tends to feel that if they have a rich plan, or a well subsidized plan, unless they do something like this, all the other employers in town will feel free to offer cheap charlie plans and/or high ee contributions and dump everyone on them.

Remember, whatever you are paying for your health coverage, chances are your employer is paying a LOT more.

Dorothy
07-28-2003, 06:22 PM
As the spouse of the employee, I see it as discrimination against two-income families, since the company is effectively offering a different benefit to some married employees than to others.

I don't think that many companies would go to 'cheap charlie' plans, because they would still want to have a good plan for their single employees and for those in one-income families, and the high-level decision makers are probably still made up mostly of the latter.

Maine-iac
07-28-2003, 08:19 PM
Believe me, many would go cheap charlie. Many do. Generally, the health benefit is not as important a recruiting and retention tool to the single worker as the family worker. Short-sighted, but usually true. Or, you can structure it so that the benefit is OK for a single person, but cheap for the family (i.e. make the family OOP max much larger than 2 or 3 times the single max).

As far as discriminating against two earner couples vs. one earner couples, that is true enough. But there is discrimination against the single employee versus the family employee as well (The employer kicks in more bucks for the family health plan than he does for the single health plan.) Except for the true cafeteria plan, where the employer kicks in fixed bucks that you can apply toward a menu of benefits of your choosing, there is an element of paternalism in all employer paid health plans that offer family coverage. It's just a matter of how far the employer chooses to take it and who they define as "needing" their dollars more.

My husband's employer offers a richer plan than mine offers. The single to family buy-up on his plan is cheaper than the single price at my employer. So I opt out of my employers plan and take his. But I don't get an opt-out benefit, so my employer saves a bunch on me. They spend more on an equivalent employee who takes the single plan. They spend even more on an equivalent employee who takes the family plan. For my own self interest, and in the interests of strict equity, I would prefer a cafeteria plan. But the company sees it as spending their benefit dollars on the employees with the highest need.

Dorothy
07-28-2003, 09:21 PM
Thanks. I will just add it to the list of subsidies that one-income families get, regardless of whether the spouse has compelling responsibilities (e.g., young children, disabled elderly parent) at home, or simply does not want to work outside of the home.

Lucid
07-29-2003, 11:27 AM
I don't think that employers who have spousal surcharges consider it a subsidy to single income families. One of the factors that can drive an employer to have higher health insurance costs than other companies in its region or industry is having a higher average contract size (ie, paying for too many dependents to get coverage). They think, "why should I be paying for your spouse's health insurance when they have a plan offered by their employer." So they feel justified in charging you extra if you choose to opt out of your employer's plan and become a dependent under their plan. However, they would not feel justified charging someone extra if they had no other option, which is the case with non-working spouses. If an employee's spouse works outside of the home but is not offered health insurance through their job, then they wouldn't have to pay the surcharge either. And trying to require non-working spouses to provide some evidence of a need to not work (ie, caring for children/parents) would be a nightmare.

Dorothy
07-29-2003, 01:28 PM
I just meant that the company is treating some married employees differently from others based on something that is independent of the employee's relationship with the company. I can understand the rationale for that, but that doesn't make it fair.

With regard to working/not working spouses, I don't really care whether the non-working spouse goes to work or not; that's a personal decision. I am just tired of subsidizing able-bodied adults who choose the latter if they are essentially housekeepers with no caregiving responsibilities.

Kepler!
10-13-2003, 05:31 PM
Thanks. I will just add it to the list of subsidies that one-income families get, regardless of whether the spouse has compelling responsibilities (e.g., young children, disabled elderly parent) at home, or simply does not want to work outside of the home.

What subsidies are one-income families enjoying?

Personally, I'm tired of subsidizing childcare for two income families (unless one income would put them into poverty).

Fiveagain
10-14-2003, 10:07 AM
I was told this year that I would not be covered on a primary basis by my husband's carrier if I could purchase health insurance at my own job. The problem is, he is a union worker, and has no choice. His premium was not reduced when I was thrown off of his plan either. It seems illegal to me that he is not offered a single instead of family plan.

The irony is, my insurer is the same one that my husband had, but my drugs now cost $20 instead of $15. If I was still on his plan, drugs would be $15. So I have to pay $5 more per month for each drug (which is over $300 extra per year), plus pay the monthly fee. Yikes.

I think I'll just quit and let them cover me again for free.

Kepler!
10-14-2003, 02:45 PM
I was told this year that I would not be covered on a primary basis by my husband's carrier if I could purchase health insurance at my own job.


That is the trend right now. We did that about five or six years ago at the corp HQ (at first we waived the rule if the spouse had to pay more then $100/month to purchase coverage through their employer but we dropped that provision two years ago) and are recommending that all of our subsidiaries do the same.


The problem is, he is a union worker, and has no choice. His premium was not reduced when I was thrown off of his plan either. It seems illegal to me that he is not offered a single instead of family plan.


Tell him to bring it up at the next union negotiation.

Soccer Mom
10-14-2003, 03:21 PM
Does anyone have any idea what these surcharges are running? In otherwords, if your spouse have coverage elsewhere but your employer will allow them onto your plan if they pay a surcharge, how much are they having to pay?

Fiveagain
11-21-2003, 12:38 PM
My spouse's plan made me purchase my own, but then THEY DID NOT REDUCE HIS PREMIUM. He still pays the same premium. If they are going to kick off dependents, they should charge him for a single instead of family premium. It sounds illegal to me.