Dropping Spouses from Healthcare May Increase Employer Costs

The Employee Benefit Research Institute published a study in this month’s issue of their Notes that suggests that the employer trend of excluding spouses from health care coverage may cost them more in the long run.

As many as 15 percent of employers nationwide have already eliminated spousal coverage in cases where the previously-covered spouse has access to health care through his or her own employer. NPR reports that a continuing trend of such cuts may offset any short-term savings as their own employees lose spousal coverage picked up by other companies.

A simple example: Company A and Company B both offer spousal health care coverage. Company A currently covers Employee A and Spouse A, who works for Company B. Company B covers Employee B and Spouse B, who works for Company A. If both companies eliminate spousal coverage, Spouse A and Spouse B will return to their own company’s health care plan, which means that at the very least the companies have not saved any money.

Further, if the companies have traditionally subsidized a lower amount for spouses then each will face higher health care costs by covering two of their own employees.

Situation: Each Company Covers Spouses (cost to company)

Company A

Company B

Employee A: $5,000/year

Employee B: $5,000/year

Spouse A: $3,500/year

Spouse B: $3,500/year

Situation: Neither Company Covers Spouses (cost to company)

Company A

Company B

Employee A: $5,000/year

Employee B: $5,000/year

Spouse B: $5,000/year

Spouse A: $5,000/year

*The figures above are purely hypothetical and are only meant for illustrative purposes.

According to a weekend report in Forbes, meanwhile, more full-time employees are enrolling in employer-provided health care to take advantage of better coverage at lower costs than the plans provided on the health care exchanges. These new enrollees may also contribute to rising employer costs, even without an influx of employees who have lost coverage under their spouses’ plans.

Is your company prepared for rising healthcare costs? PRN Funding offers a variety of healthcare factoring programs that can give your company the immediate cash to meet those costs as they occur. Learn more about our healthcare factoring services and contact us today to get started.

Comments are closed.