Spousal Coverage contingent on spouse's employer's coverage.

[Guest Ariana Raines]

An employer's group health plan will only cover an employee's spouse if the spouse is not covered under his/her own employer's health plan or if the spouse's employer's health plan pays less than 50% (or some other designated percentage) of the premium. Does anyone know of employers who are utilizing this type of plan design? If so, how does it work? How is it received by employees? How was it transitioned in? This type of design could clearly save an employer substantial dollars. Any thoughts or feedback would be appreciated. Thank you.

[Guest jamesfdavis]

Ariana,

I'm not sure the savings would be all that substantial. Under normal COB rules, the spouse's plan would be the primary carrier for the spouse's claims, so the employer's plan would not be liable for very much to begin with.

There may be an administratively easier way to cut the cake, if the employer still wants to reduce its secondary claims under COB -- replace the conventional COB provision with a carve-out arrangement. However, this may work only for a self-funded plan, because state insurance law may require conventional COB for insured plans (I don't know what Maryland requires).

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[Guest Ariana Raines]

This is not a COB issue. The employee's spouse is not eligible to be covered under the plan if he/she is covered under his/her employer's plan (unless the spouse's employer's plan pays less than 50% of the premium). Thus, only some employee's spouses would be eligible to be covered under the employer's group health plan. Could this create a discrimination problem?

[Larry M]

It is my understanding the only time this might be a discrimination issue is in a section 125 plan IF only non-hce's were affected.

[Guest HIPAAdrome]

To really save dollars, the exclusion should read that a spouse is eligible for coverage only if they are not eligible for an employer-sponsored plan. This forces the spouse to take the coverage through his/her own employer if available. You might want to play with the what will be considered an employer-sponsored plan. If an employee must pay 100% (or a very high percentage) of the premium, is that an employer-sponsored plan?

[Guest kchristy]

One alternative would be to establish a "spousal" plan. Such a plan pays, for instance, 20% of medical expenses as a way of providing supplemental coverage to those employees whose spouses have their own coverage through their jobs.

As far as cost is concerned, it could be a substantial consideration if the employer offers a PPO or indemnity plan and the spouse is covered under an HMO. In that case, the spouse could end up using the employee's plan as his or her primary coverage; I've seen it happen.