{"id":3047,"date":"2013-06-06T04:00:30","date_gmt":"2013-06-06T08:00:30","guid":{"rendered":"https:\/\/kerryhannon.com\/?p=3047"},"modified":"2013-06-04T01:55:07","modified_gmt":"2013-06-04T05:55:07","slug":"employers-penalizing-spouses-for-health-insurance","status":"publish","type":"post","link":"https:\/\/kerryhannon.com\/?p=3047","title":{"rendered":"Employers Penalizing Spouses For Health Insurance"},"content":{"rendered":"

\"forbes\"<\/a>Here\u2019s a dose of medicine women might not want to swallow: It\u2019s getting more expensive for a wife to get health insurance through her husband\u2019s plan.<\/p>\n

Employers, it seems, are madly seeking ways to put a tourniquet on their escalating health care costs. \u201cThey\u2019re well aware that in 2014, when the health reform law\u2019s provisions kick in, they will be asked to cover more employees and face added cost pressure,\u201d said Julio Portalatin, president and chief executive of benefits consultant\u00a0Mercer<\/a>. \u201cThey\u2019ve taken bold steps to soften the impact and it\u2019s paying off already.\u201d<\/p>\n

(MORE:<\/strong>\u00a0Divorce Deals a Painful Blow to Women\u2019s Health Insurance<\/a>)<\/p>\n

One of those bold steps recently caught my eye.<\/p>\n

Are Bosses Dumping Wives\u2019 Coverage?<\/strong><\/p>\n

I read a fascinating, if unsettling, piece by MarketWatch\u2019s Jen Wieczner called \u201cWhy Your Boss Is Dumping Your Wife<\/a>,\u201d whose premise was that companies are dropping health coverage for spouses to cut costs.<\/p>\n

While titillating, based on my reporting, the article turned out to be somewhat hyperbolic.<\/p>\n

It seems that it\u2019s not so much that companies are suddenly\u00a0dumping\u00a0<\/em>coverage for spouses. (They\u2019ve never been required by law to provide that coverage, although many do; nor have they been obligated to insure employees.) What\u00a0is<\/em>\u00a0happening is that firms are increasingly tacking on spousal surcharges that can run as much as $3,000 a year. And more companies are planning to do so next year.<\/p>\n

Surcharges of Up to $3,000 a Year<\/strong><\/p>\n

In a recent survey conducted by the\u00a0National Business Group on Health<\/a>, a membership group that advises large employers about health benefits, and the consulting firm Towers Watson, 20 percent of respondents said they now levy a surcharge of roughly $100 per month on wives who decide not to take advantage of their own employer\u2019s insurance and instead opt for coverage through their husband\u2019s policy.<\/p>\n

An additional 13% said they plan to do so in 2014. These types of surcharges typically range from $500 a year to $3,000.<\/p>\n

(MORE:<\/strong>\u00a0Benefits Blues: A Growing Epidemic Among U.S. Workers<\/a>)<\/p>\n

More Firms Slap on Spousal Surcharges<\/strong><\/p>\n

In 2012, 18% of employers with 5,000 or more employees had some type of spousal surcharge provision, up from 15 percent in 2011, according to the Mercer 2012 National Survey of Employer-Sponsored Health<\/a> Plans. The employers either imposed a surcharge on spouses who had access to other coverage or in rare instances (4% of employers) denied coverage entirely.<\/p>\n

A few years ago, these types of clauses were practically nonexistent.<\/p>\n

Companies often find that spouses are more expensive to insure than their own employees, says Helen Darling, president of the National Business<\/a> Group on Health.<\/p>\n

That\u2019s because, Darling and other the benefits experts I interviewed say, covered spouses are often women. As a group, women spend more on health care than men because of childbearing and having more free time, which results in additional doctor\u2019s visits.<\/p>\n

Health insurance surcharges can have serious financial repercussions for women in their 50s and older.<\/p>\n

As I wrote in in my Next Avenue post, \u201cDivorce Deals a Painful Blow to Women\u2019s Insurance<\/a>,\u201d Bridget Lavelle, a Ph.D. candidate in sociology, and Pamela J. Smock, director of the university\u2019s Population Studies Center, noted in the\u00a0Journal of Health and Social Behavior<\/a>\u00a0many women between 50 and 64 need to opt for spousal coverage because they are out of the workforce, working part-time or employed by small firms or nonprofits that don\u2019t offer health insurance.<\/p>\n

(MORE:<\/strong>\u00a03 Things Women Should Know About Health Reform<\/a>)<\/p>\n

What to Do About a Spousal Surcharge<\/strong><\/p>\n

If you\u2019re hit with a spousal penalty, I suggest taking matters into your own hands and compare your alternatives.<\/p>\n

If you\u2019re currently on your husband\u2019s policy but work full-time for an employer that offers health benefits, check with your human resources department for details on enrolling. You might find that your employer provides a larger subsidy.<\/p>\n

Before switching over to your employer\u2019s plan, though, scrutinize the benefits of both choices. Your coverage might not be as generous as your spouse\u2019s and paying a surcharge might be worth it.<\/p>\n

You might also want to stay on your spouse\u2019s plan and pay the piper just to keep life simple. Being covered by the same insurer can make paperwork less complicated for filing and tracking medical expenses. And you\u2019ll avoid the potential hassle of needing to switch doctors when you change insurers if your plan has a different set of care providers.<\/p>\n

Remember to factor in the tax savings when reviewing the surcharge; the penalty may not be as big as you think.<\/p>\n

The health insurance premium and any surcharge is paid pretax, Darling says. So if you\u2019re charged $100 extra and are in the 30% bracket, you\u2019ll only effectively be responsible for 70% of the extra cost.<\/p>\n

My advice may not eliminate the sting entirely, but perhaps it will numb it a bit.<\/p>\n

Kerry Hannon<\/a>,\u00a0Contributor <\/cite><\/p>\n

Kerry has spent more than 25 years covering personal finance for Forbes, Money, U.S. News & World Report and USA Today. Her website is\u00a0kerryhannon.com<\/a>. Follow her on Twitter@kerryhannon<\/a>.<\/em><\/p>\n

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