Q. My husband’s boss offers good health insurance that protects our entire family. But now I have heard that because of Obamacare, employers are going to begin dropping spouses from their plans.
Meanwhile, my employer doesn’t offer insurance. And I just read that “middle-class people who can no longer get insurance through a spouse’s job will not be able to get subsidized coverage through the new state marketplaces.” What am I going to do?
A. Don’t panic. Obamacare is not forcing employers to dump spouses.
Today, just 6 percent of large companies have decided not to cover spouses and this is almost always only if the mate works for an employer who offers insurance.
For instance, in 2013 UPS announced that among the 33,000 spouses now covered under UPS insurance, about 15,000 have the option of enrolling in their company’s insurance. UPS decided to stop covering those 15,000. In a memo to employees UPS explained: “Since the Affordable Care Act requires employers to provide affordable coverage, we believe your spouse should be covered by their own employer — just as U.P.S. has a responsibility to offer coverage to you, our employee.”
This seems reasonable. Employer-sponsored insurance spread in the 1950s when few wives worked; they were “dependent” on their husbands. But today, working women are not viewed as dependents .
Secondly, under Obamacare, if an employer refuses to cover a spouse who doesn’t have access to affordable insurance through her own job, she will be able to buy insurance in the state marketplaces. There, she will qualify for a subsidy if the couple’s joint income is less than $62,040 ($78,120 for a family of three, $98,240 for a family of four).
Third, and perhaps most importantly, going forward, it is not likely that we will see a wholesale exodus of spouses from employer-sponsored plans.
What is more likely that companies will ask employees to pay extra if they ask an employer to cover a working spouse. A survey by Towers Watson reveals that one large employer in five now asks employees to pay a surcharge if they want to cover a “working spouse.” Another 13 percent said they planned to add a penalty next year.
Xerox now asks employees to pay $1,000 to include a spouse on their plan. Next year, the annual surcharge rises to $1,500.
Why are employers asking for surcharges? “The fact is that spouses cost more — about $1,500 more” than employees, explains Tracy Watts, who heads the health care reform team at Mercer, a benefits consulting firm.
Often, the mates covered on employer plans are either wives who are younger and file maternity claims, or husbands who are older and suffer from chronic conditions. “Women incur more claims when they are younger, and men tend to incur more claims when they are older,” Watts adds.
While reform’s critics are eager to blame Obamacare for the surcharges, Julie Stone, a consultant with Towers Watson recently told NPR that this is hardly a new idea: “A decade ago a number of employers were looking at spouse surcharges for employee spouses who declined coverage with their employer. The surcharge” is “not related to the health care reform law at all.”