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.
posted by Monty & Ramirez LLP
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9:56 AM
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