Q. My husband works for a much larger company than I do. I have always been covered under his plan because it is more affordable than the one offered by my smaller company. We just received a letter from his company stating that beginning next year, if I have access to my own health insurance I can no longer be covered under his insurance. Is this legal?
A. Yes, it is legal.1 The ACA requires employers with 50 or more workers to offer coverage to employees and their children (until age 26). However, there is no requirement that employers of any size offer health benefits to employees’ spouses.
Most employers that offer health benefits do voluntarily offer spousal coverage: According to a 2022 KFF analysis, 95% of employers that offer health benefits extend that offer to employees’ spouses.2
However, 16% of employers that offer family coverage do not allow spouses to enroll if they have access to coverage from their own employer, and another 14% only allow those spouses to enroll in certain circumstances (for example, depending on the type of coverage the spouse is offered).2 Limiting spousal enrollment or adding a surcharge when the spouse has access to their own coverage has been gaining popularity among employers as a cost-saving measure.
Do I have any other alternatives?
It’s likely that the coverage offered by your employer will be your best option, even if it’s more expensive than the coverage you’ve had under your husband’s employer. But depending on the circumstances, you might choose to purchase Marketplace/exchange coverage instead.
Since you’ll no longer have access to coverage through your husband’s job, the affordability test for your coverage will depend on what it costs to obtain coverage through your own job. Assuming the portion of the premium that you’re required to pay (for yourself only) doesn’t exceed 8.39% of your household income in 2024,3 and assuming the coverage your employer offers pays for at least 60% of the average enrollee’s medical costs and provides “substantial coverage” for inpatient and physician care (ie, meets minimum value requirements), you wouldn’t be eligible for a subsidy to purchase individual health insurance in the exchange.
But if the coverage your employer offers doesn’t meet the tests for affordability and minimum value, you could be eligible to receive a subsidy to offset the cost of health insurance purchased through the exchange, as long as you’re a legal U.S. resident and you qualify for a subsidy based on household income (note that you might still end up being ineligible for a subsidy, since the calculation will be based on whether or not the cost of the benchmark plan for just your coverage exceeds a specified percentage of your entire household’s income, including the income your husband earns).
Footnotes
- ”Spousal Surcharges and Carve-Outs” McGriff Employee Benefit Solutions. 2022 ⤶
- ”Employer Health Benefits, 2022 Annual Survey” KFF.org. October 2022 ⤶ ⤶
- “Revenue Procedure 2023-29” Internal Revenue Service. Accessed Feb. 16, 2024. ⤶
