Health care reform ... It's not you, it's your spouse

More companies likely to drop coverage for spouses

POSTED: 10:29 AM CDT Aug 27, 2013    UPDATED: 10:56 AM CDT Aug 27, 2013 
Health Insurance 2

By attorney Keith Sonderling, Special to THELAW.TV

Since the Patient Protection and Affordable Care Act (also known as "Obamacare") was signed into law, many business owners have consistently complained about the increased costs of its implementation. Because the start date of the major provisions of the Act were delayed from 2014 to 2015, most of the employees whose policies may be affected have not yet actually felt any of the alleged negative effects and instead have only heard of looming changes.

Now, as companies begin to prepare for the start of the act, employees are slowly beginning to feel these effects. UPS recently informed its employees that health care coverage for their spouses would no longer be made available. UPS estimates that this change will effect nearly 15,000 of its employees' spouses and save the company $60 million dollars. Similarly, the University of Virginia is dropping employees' spouses from its plan, in response to spending $7 million dollars to implement Obamacare at the University. Many employees now are questioning why their employers are targeting and dropping their spouses.

The reason is simple: the Affordable Care Act allows it. Under the act, employers are not required to provide health care coverage to an employee's spouse. In doing so, the act altered the definition of who is a "Dependent" for purposes of offering health care coverage to employees. The term Dependent means a child under the age of 26 years old. This includes all natural born children, adopted children, and stepchildren of the employee. The term specifically does not include the spouse of the employee. The reasoning behind not including an employee's spouse as a Dependent is based upon the assumption that the spouse is working and eligible to receive coverage from their own employer (regardless if they are actually employed).

In essence, the Affordable Care Act only requires employers to offer health care coverage to its full-time employees and their dependents -- no one else. Although the employer has no option with regards to insuring the employee's children, it is the employer's sole option to offer coverage to the employees' spouses. Thus, many employers like UPS will drop spouses from their health care plan as a cost-saving mechanism. Doing so will certainly be a cost saving mechanism for the employer, but could pose a logistical nightmare for a spouse who suddenly needs to find a new insurance plan separate from their spouse and children. Other employers may continue to offer spousal coverage, but charge a surcharge, penalty, or other fees for spouses to be on the company plan. Although this change may enrage employees and their spouses, the companies who have done so, and those who will follow suit, can simply contend that they are simply following the mandates of the law.

The author, Keith Sonderling, is a business lawyer at the West Palm Beach, Fla., firm Gunster, Yoakley & Stewart, P.A.