• FREE RESOURCES
  • PREMIUM CONTENT
        • SEE MORE
          PREMIUM RESOURCES
  • HR DEEP DIVES
        • Coronavirus (COVID-19) Resources for HR Professionals
          Employment Law
          Labor Law Posting Requirements: Everything You Need to Know
          Recruiting
          businesswoman selecting future employees on digital interfaces
          Recruiting Resources for HR & Hiring Managers
          Performance Management
          vector image of young female making star rating
          Performance Review Resources
          Employment Law
          Understanding Equal Employment Opportunity and the EEOC
          Recruiting
          Onboarding Resources for HR & Hiring Managers
  • CORONAVIRUS & HR

  • LOGIN
  • SIGN UP FREE

HR Morning

  • FREE RESOURCES
  • PREMIUM CONTENT
        • SEE MORE
          PREMIUM RESOURCES
  • HR DEEP DIVES
        • Coronavirus (COVID-19) Resources for HR Professionals
          Employment Law
          Labor Law Posting Requirements: Everything You Need to Know
          Recruiting
          businesswoman selecting future employees on digital interfaces
          Recruiting Resources for HR & Hiring Managers
          Performance Management
          vector image of young female making star rating
          Performance Review Resources
          Employment Law
          Understanding Equal Employment Opportunity and the EEOC
          Recruiting
          Onboarding Resources for HR & Hiring Managers
  • CORONAVIRUS & HR
  • Employment Law
  • Benefits
  • Recruiting
  • Talent Management
  • Performance Management
  • HR Technology
  • More
    • Leadership & Strategy
    • Compensation
    • Staff Administration
    • Policy & Procedures
    • Wellness
    • Staff Departure
    • Employee Services
    • Work Location
    • HR Career & Self-Care
    • Health Care
    • Retirement Plans

Is this health cost-cutter worth the morale hit?

HR, human resources, executives
Jared Bilski
by Jared Bilski
November 11, 2015
2 minute read
  • SHARE ON

Employers are always looking for proven ways to lower health costs, so why are so many firms balking at a tactic with guaranteed results?  
Restricting healthcare coverage to employees’ spouses who are offered health insurance through their own employer will no doubt impact an employer’s healthcare costs.
Consider these findings from a 2014 study by the Employee Benefit Research Institute (EBRI): Insured employees spent an average of $5,430 on healthcare services, while insured spouses spent $6,609, a difference of $1,179.
(Note: Because the EBRI study found that spouses in an employment-based health plan are two times more likely to be female than male, the stark difference in cost uncovered in the EBRI study is at least partly explained by pregnancy-related expenses for wives insured through their husbands’ plans.)
Even if employers aren’t comfortable completely excluding spouses who can receive coverage elsewhere, there are other deterrents such as imposing a spousal surcharge.
But in spite of the potential savings of such a move, a surprisingly low number of employers are tackling the cost of spousal healthcare coverage through carve-outs.
In fact, according to a recent Mercer report just 9% of employers (with 500 or more workers) don’t cover spouses who have health insurance coverage available elsewhere. Plus, just 9% impose a spousal surcharge, and 13% offer cash to employees who waive coverage for their spouses, according to Mercer.

Thinking about it, but …

Backlash appears to be the major factor that’s keeping employers from taking advantage of the benefits of a spousal carve-out. As Jim Winkler, the chief innovation officer for Aon Hewitt, puts it:

“A  lot of organizations are very focused on developing and maintaining a reputation for being family-friendly. These organizations worry that a decision like this could hurt that reputation. Many employers are considering a carve-out but they have not pulled the trigger.”

But if HR can clearly communicate the specifics of how a carve-out can benefit the majority of employees, the company may avoid worker backlash and employee damage.
According to Winkler, firms should stress how the savings will directly benefit employees by telling them the carve-out may prevent premium increases or allow the company to avoid switching to a higher deductible plan for more narrow (i.e., “restrictive”) networks.

Formal or informal verification

If you do decide to opt for a spousal carve-out for your health plan, you’ll need to decide how aggressive you want to be about verifying whether spouses have other coverage options.
In other words, do you want to rely on the honor system where workers voluntarily let you know about their coverage  — or do you want to set up a more formal coverage verification process (e.g., requiring workers to sign an affidavit when spouses don’t have healthcare coverage available elsewhere)?

Get the latest from HRMorning in your inbox PLUS immediately access 10 FREE HR guides.

I WANT MY FREE GUIDES

Keep Up To Date with the Latest HR News

With HRMorning arriving in your inbox, you will never miss critical stories on labor laws, benefits, retention and onboarding strategies.

Sign up for a free HRMorning membership and get our newsletter!
  • This field is for validation purposes and should be left unchanged.
HR Morning Logo
  • Facebook
  • Twitter
  • Linked In
  • ABOUT HRMORNING
  • ADVERTISE WITH US
  • WRITE FOR US
  • CONTACT
  • Employment Law
  • Benefits
  • Recruiting
  • Talent Management
  • HR Technology
  • Performance Management
  • Leadership & Strategy
  • Compensation & Payroll
  • Policy & Culture
  • Staff Administration
  • Wellness & Safety
  • Staff Departure
  • Employee Services
  • Work Location
  • HR Career & Self-Care

HRMorning, part of the SuccessFuel Network, provides the latest HR and employment law news for HR professionals in the trenches of small-to-medium-sized businesses. Rather than simply regurgitating the day’s headlines, HRMorning delivers actionable insights, helping HR execs understand what HR trends mean to their business.

Privacy Policy Terms of Service
Copyright © 2021 SuccessFuel

WELCOME BACK!

Enter your username and password below to log in

Forget Your Username or Password?

Reset Password

Lost your password? Please enter your username or email address. You will receive a link to create a new password via email.

Log In

During your free trial, you can cancel at any time with a single click on your “Account” page.  It’s that easy.

Why do we need your credit card for a free trial?

We ask for your credit card to allow your subscription to continue should you decide to keep your membership beyond the free trial period.  This prevents any interruption of content access.

Your card will not be charged at any point during your 21 day free trial
and you may cancel at any time during your free trial.

preloader