Exploring the unintended consequences of spousal exclusion policies


By:          Zack Pace, SVP, Benefits Consulting

As we’ve discussed over the years, when an employer sponsored health plan features an unusually high amount of spousal enrollment, it’s usually a symptom of an imbalance in the employee contribution rates. It usually means that the employer is charging less for spousal coverage than what an average employer charges for employee only coverage. If so, an employer can easily bring balance by adding additional enrollment tiers, if necessary, and increasing the cost of employee + spouse and full family coverage. Many of you have seen firsthand how this simple, innocuous change gently leads spouses onto their own employers’ plan.

Meanwhile, in lieu of using this simple method, more and more employers are instead adding other employer spousal exclusions to their health plan policies. Under these arrangements, employers bar spouses from joining the health plan if the spouses are eligible for coverage from their own employer. These arrangements often usher in confusion and feature the hassle and risk of trying to enforce this policy via employee affidavits.

Last July, in one of my first essays for Employee Benefit News, I described the challenges of these spousal exclusions and made the case for the alternative method: The alternative to health plan spousal exclusions.

Nevertheless, one year later, the popularity of other employer spousal exclusions continues to build. Thus, I decided to share the real world story of a spouse that decided to not transition to full-time employment precisely because of her husband’s employer’s spousal exclusion policy. I believe her story is worth our careful consideration. You can read about her story here: The unintended consequences of spousal exclusions.

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You can reach me on zpace@cbiz.com or via Twitter. My collection of LinkedIn essays is located here, and my Employee Benefit News articles are available here.

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Zack Pace

Zack Pace, SVP, Benefits Consulting at CBIZ Inc., and his team design, implement, and manage benefits packages that are highly effective at empowering clients to attract and retain the top talent needed in order to outperform competitors, while ensuring that the cost of the overall benefits program and its components are cost-effective.
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