The Supreme Court decision (King vs. Burwell) upholding federal subsidies more or less guarantees some level of access to health insurance to all Americans. As we’ve discussed in earlier posts, the availability of subsidized coverage on the public exchange has made it easier for some employers to consider terminating employer-sponsored coverage for early retirees. Will it also be enough to trigger a re-evaluation of eligibility requirements within employer-sponsored health plans for active employees?
Under the ACA, employers are required to make the offer of coverage to all employees working 30 or more hours per week and their dependent children. They are not required to cover spouses, which raises the question of whether they will continue to do so now that other coverage is available. The more people covered by a plan, the greater the cost — including the additional fees that are collected on a per-participant basis for PCORI and transitional reinsurance.
Currently, virtually all employers that offer coverage to employees also offer coverage to their spouses and dependent children, although they typically require employees to contribute a greater share of the cost for spouse and dependent coverage. Among large employers (500 or more employees) with a separate contribution level for coverage for employee plus spouse, the average employee contribution required is 20% of premium for employee-only coverage, but 29% of premium for employee plus spouse. The gap is far wider among small employers — 28% of premium for employee-only coverage and 48% for employee plus spouse. For employers that already require a very high contribution for spousal coverage, it might be a shorter step to discontinuing eligibility for spouses entirely.
Right now, it seems unlikely that many employers would be willing to risk the potential negative impact on employee engagement and attraction and retention that might result from making spouses ineligible for coverage. While we have seen some employers excluding spouses who have other coverage available, large employers are far more likely simply to impose a surcharge, a less draconian move that has still proven effective in reducing spousal enrollment. But as the benefits landscape continues to evolve in response to the ACA, excluding all spouses from coverage — inconceivable before the advent of the public exchanges — may become at least a discussion item on the health benefit strategic planning agenda before long.