Employers Scaling Back Health Coverage For Spouses And Dependents


To better control rising health care costs and minimize the risk of triggering the Patient Protection and Affordable Care Act’s (ACA) excise tax over the next three years, a growing number of employers will make significant changes in how they subsidize health care coverage for their employees’ spouses and dependents, according to the Towers Watson 2014 Towers Watson Health Care Changes Ahead Survey. The survey found that by 2017, 63 percent of employers will add surcharges or exclude spouses from coverage when employer-sponsored health coverage is available elsewhere.

“Health care coverage for spouses and dependents is a charged topic,” said Randall Abbott, a senior consultant for Towers Watson. “Historically, virtually all large employers have offered and subsidized it, but it’s expensive. As employers seek to manage their expenditures, a growing number are rethinking their willingness to cover a working spouse who has a health benefit option elsewhere. The emphasis has been on increasing employee contributions or introducing surcharges, with a small percentage of employers actually excluding working spouses from coverage altogether.”

The survey shows that in 2014:
• 49 percent of employers increased employee contributions for spouse and dependent coverage at a faster rate than for individual employee coverage.
• 24 percent implemented spouse coverage surcharges in 2014 of about $100 per month or more when other coverage was available to the spouse.
• These surcharges increased the cost of spouse coverage for employees by $1,200 a year, on average, and at the high end, by more than $2,000 a year. Two percent offered no subsidy at all for spouse coverage.

“These subsidy changes and surcharge levies are just some of the many changes employers continue to make to control costs,” said Abbott. “The overall goal is to manage costs and derive greater value for each dollar spent while also improving worker health, quality of care and health outcomes. The challenge for employers is that there is no single solution; rather, they must look across all program dimensions.”

For more information, visit http://www.towerswatson.com.

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