Reducing Cost with Spousal Surcharges or Carveouts

We’ve had a couple of people ask about spousal surcharges and carveouts in the last week, so I thought it might be a good topic for a blog post.

There are a few ways to reduce cost in your health plan.  Here are a few ideas, some that I’m sure you may have considered:

  • Cancel the health plan, possibly replacing it with an ICHRA or a QSEHRA
  • Change carriers or negotiate for lower pricing
  • Water down the plan for lower rates, possibly filling in a portion of higher deductibles with an HRA
  • Reduce the number of people insured
  • Reduce the number and/or severity of claims

Spousal surcharges and carveouts are meant to reduce the number of people insured.

The Affordable Care Act (ACA) requires that applicable large employers provide health coverage for full time employees and dependent children or risk a penalty.  Notably absent from the language is a requirement to cover spouses, which has been a contributing factor in a modest rise in interest in spousal coverage restrictions.

Two common ways to carve spouses out of the health plan are these:

  1. Exclude spouses completely
  2. Exclude spouses who have health coverage available through their own jobs

A spousal surcharge charges an additional premium or contribution to employees whose spouses enroll in the plan and have coverage available at their own jobs.  Usually these surcharges don’t apply if the spouse is not eligible for coverage elsewhere, and it does not apply to dependent children.

You might be saying to yourself, “Wow, that seems kind of unfriendly,” and you would arguably be correct.  However, there are local employers who have implemented plans like this today, and those numbers will probably increase over time as costs continue to rise.

There are also a couple of more friendly ways to reduce the number of people covered on the plan that are outside the scope of this post.  If you’d like more information, just give us a call at (866) 724-0008 or click the button below.


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