What is the spousal rule?

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What is the spousal rule?

The spousal rule and spousal surcharge strategies are gaining. Employers are starting to look at who they are covering as health insurance continues to increase.

The spousal rule - Working spouses with access to medical insurance through their own employer are not eligible to participate in the employer group health plan.

Spousal surcharge - Working spouses with access to medical insurance through their own employer are charged and additional fee to remain on the employer group’s health plan. The fee is typically $25 to $50 per pay period.

The spousal rule made headlines in the summer of 2015 when UPS announced that they were going to eliminate coverage for working spouses of non-union employees, impacting more than 15,000 individuals and saving potentially $60 million. Also in 2015, The Emerging Trends Health Care Survey sponsored by Towers Watson indicated approximately 32 percent of employers utilize a spousal surcharge and 30 percent of employers surveyed are considering implementing one.

Although the spousal rule and surcharge are grabbing headlines and becoming more popular, they do not seem popular with employees. Adding a surcharge or eliminating coverage for working spouses may result in employee dissatisfaction. Companies and organizations may want to consider the impact of these strategies on recruiting and retaining quality employees versus the savings they receive before moving forward with either option. If an employer decides that the savings outweigh potential employee dissatisfaction, work with a qualified consultant to properly implement these programs as part of an overall benefit strategy.

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