Guest blog from Joy Binkley who serves as Principal, Health & Welfare Consultant for CAI’s employee benefits partner Hill, Chesson & Woody.
The cost of health insurance continues to rise, but the cost of covering one’s spouse is looking to be quite expensive for those spouses that waive their own employer-sponsored benefits. According to a recent survey of U.S. employers, the use of spousal surcharges is expected to double by 2018, from 27% to 56%. The average spousal surcharge is $1,200 per year, which is tacked on the previously determined payroll deduction.
The surcharge is going on top of the fact that employers are just asking employees to pay more to cover spouses and dependent children. More than half (56%) of employers are increasing payroll deductions for spouses, while just under half (46%) are increasing the cost to cover children. This is a trend we are seeing here in North Carolina as well. The most recent CAI 2015-2016 North Carolina Benefit and Cost Survey shows the average medical cost increasing for family rates going up 6.2% versus the previous survey’s increase of 4.4%. Employers are consistently asking employees to pay roughly the same portion as last year, which is 47% of the total premium cost.
Employers are continuing to focus on ways to impact healthcare cost. Besides asking those to pay more that are waiving their own employer plans, some are considering dropping spouses all together. The elimination of spousal health coverage is permitted under the Affordable Care Act criteria. The rational to drop coverage entirely can depend on the underlying benefit strategy. Some employers are dropping coverage due to low (or no current) participation on their plans, therefore eliminating coverage just entitles those that may be subsidy eligible to earn those governmental credits. Other may be considering it due to a financial hardship. Regardless, of the reason the current landscape is quickly changing for spousal health coverage.
Look back on the trends in spousal health coverage in 2014 and 2015, and see how the numbers have changed over the past couple of years.