The paradise of employer sponsored health insurance for otherwise insured spouses is reaching its end. If up until this moment, the spouse of a well-insured person was happy to enjoy some of the benefits which came from their partner’s health insurance, this won’t be such an affordable option anymore. The newest healthcare trends in the world of insurance business are moving towards making employers refuse to extend their insurance plans to their employee’s spouses, due to a new spousal surcharge.
This trend is already more than noticeable by looking at last year’s factual data: more than a quarter of U.S. employers (27% to be more precise) have already charged the spouses of their employees a health insurance surcharge for using their partner’s insurance. It’s important (and somewhat reassuring) to note that this spousal surcharge doesn’t apply to spouses with no access to some other form of health insurance (stay-at-home parents and so on). The health insurance surcharge only targets the spouses of employees who do have access to their own type of insurance but prefer to get cheaper healthcare by using their partner’s more generous health coverage plan. Although it is an arguably socially-positive trend and a perk which couples enjoyed for years, and one which made healthcare altogether more affordable for married couples, this type of benefit is about to end.
What Is the Health Insurance Surcharge and How Does It Work?
As mentioned above, the spousal surcharge is only applicable to spouses who could have access to their own valid health coverage, although probably a more modest one, but choose to benefit from the more fancy insurance of their spouse. In their efforts to cut back on spending, employers have come to view this use of spousal insurance as some form of freebooting, and therefore are targeting it pretty hard. While they can’t technically forbid the use of your spouse’s insurance plan, they can and will make it be more and more expensive to use in this manner.
Every time you will choose to buy a couple of meds or make a doctor’s visit through your spouse’s insurance instead of your own, you will be billed a health insurance surcharge that will just keep rising, the more you use it. By keeping the employer sponsored health insurance affordable only to their direct employees (and spouses who really don’t have any other form of health coverage), employers are expecting to cut down significantly on the rising insurance costs. Their frantic way of searching for solutions to reduce their health insurance spending can be traced down to a couple of main causes:
- First of all, the new health care law suddenly meant (and will mean) that they have to provide basic health coverage to a lot more employees than they used to cover before the healthcare reform;
- Second of all, the law doesn’t specifically require them to cover spouses; it never did. Extending the health coverage to spouses wasn’t a legal requirement for them, and more of a perk which they extended to their employees in order to make them happier with their employment package.
So where to now, as far as employer sponsored health insurance for spouses is concerned? Well, employers aren’t exactly dropping the coverage of spouses completely. Instead, they are just making it more expensive through the spousal surcharge which many employer coverage plans will contain. The average health insurance surcharge for spouses is currently around $1,200 per year, but it can go up to $3,000 for extended use of the spouse’s healthcare insurance plan.
How Employer Sponsored Health Insurance Will Look Like
If this trend has only gotten 27% of all employers to introduce the spousal surcharge to their health insurance plans in 2015, things are expected to progress rapidly. Since the health insurance surcharge is such a great way to contain the spiraling costs (especially since employers are faced with the prospect of having to ensure all of their employees), more and more companies are likely to adopt it. Let’s see how the numbers on this issue look like.
According to Willis Towers Watson, the rate of employers who will add a spousal surcharge to their health insurance plans is likely to rise to 56% by 2018. Moreover, 3% of all employers have eliminated any form of subsidies for spousal coverage (since the law doesn’t specifically require them to extend the coverage on spouses) and the number is expected to rise to 10% by 2018. Compared to this share of employers, the ones who simply add a little tax when using your spouse’s insurance while also having access to your own coverage seem like the nicest guys in the world.
As for children, since they are dependent on the insurance of their parents as well, things aren’t looking to good here either. Currently 46% of employers have added a health insurance surcharge to the kids’ benefits as well, and another 15% are expected to add such surcharges as well by 2018. All in all, healthcare is becoming more expensive, and most forms of employer sponsored health coverage are not going to be enough to truly cover it anymore, especially with all the added surcharges.
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