To Offer to Spouse, or Not to Offer
According to recent news, United Parcel Service Inc. (UPS) has announced it plans to drop health care benefits for thousands of spouses starting in 2014. In a memo to their employees, UPS accredited the cuts to the high costs of the Affordable Care Act along with the increasing coverage costs for chronic diseases and other health conditions.
The spousal coverage drops are expected to affect about 15,000 spouses, which is a little less than half of the 33,000 spouses who are currently covered by their health care plans. However, UPS clarified that the changes will only apply to those spouses who are employed elsewhere and that are eligible to receive coverage from their own employers. Furthermore, out of UPS’s 322,000 employees, about 250,000 belong to a union. Under bargaining agreements, UPS will continue need to offer coverage for covered employee spouses regardless of the latter’s employment. Whereas, nonunion workers will no longer have the option to cover their spouses through UPS health care plans. This divide between union and nonunion workers could potentially generate a contentious work environment that essentially highlights differentiating health care value among workers.
In light of this news, it is understandable that you may have potential concerns about your own health care plans regarding spousal coverage. If you are an employer who currently offers coverage to spouses, you must first understand that you are under no obligation under the Affordable Care Act to do so. Nonetheless, since you do offer coverage, your company is at an advantage when it comes to attracting better candidates. The employer mandate has probably caused you to reassess your coverage plans. Before you make a final decision to drop or continue spousal coverage, you should evaluate your particular situation. Specifically, you want to focus on your industry, your finances, and the skill level of your employees.
For example, let’s say a company currently offers spousal coverage in an industry that requires most of their employees to have a college education. Additionally, the company is in an industry that is traditionally accustomed to offering spousal coverage to remain competitive and to attract highly qualified workers.
Though the company wants to remain competitive in the industry, continuing to offer spousal coverage could be financially impossible. In this situation, the company should be aware that dropping coverage could make the company less attractive to potential employees. Moreover, this may lead to current employee dissatisfaction and could result in their departure to greener pastures. If enough employees decide they are dissatisfied, this could set the company back and result in the loss of revenue greater than the costs of continuing to offer spousal coverage.
As with the above example, the decision to offer, drop, or continue spousal coverage should be ultimately decided on a case-by-case basis. If you are unsure of your stance on spousal coverage, come see us about your particular situation so we can help guide you.
Mario K. Castillo