participation in more than one plan

[Guest lindap]

Can a group health plan deny an employee participation in the plan because the person already has coverage under another plan, such as a spouse? I know about coordination of benefit rules but I'm wondering whether there's anything in the Internal Revenue Code or ERISA that allows this.

Thanks for any thoughts you might have on this.

[Guest llerner]

It is common practice to permit 'waiving due to spousal coverage" and lately I have seen employers and even union plans require this. More common is the requirement that an employee's spouse must go with their own employer's plan, if a plan is available. There is nothing that I know that would prohibit this practice as long as the spouse's employer does cover the spouse. Spousal coverage was originally intended to cover the family based on the assumption of a single breadwinner and dependents with no coverage. Until recently,employers permitted employees to choose themselves whether they will waive coverage. Due to the popularity of HMO plans & the extremely high cost of providing healthcare, employers feel that double coverage is redundant & a waste particularly with HMO since they do not have any coordination advantage. The cost is excessive to cover employees when prescriptions are not impacted by coordination of benefits at all on copay plans and some HMO require HMO copays regardless for office visits. It seems like a waste of money to them so they have adopted the stance that if a spouse's plan will cover the employee, they must waive coverage because they do have coverage. If the spouse's plan forces the employee's plan to cover, that is a different situation then they would cover the employee.

A union plan recently with Kaiser told employees that if there spouses had any group insurance plan, even a high deductible PPO plan available at their employer, they could no longer receive coverage under the union's Kaiser plan.

Since many companies now require an employee contribution for the employee, most employees will waive if their spouse's employer has a better deal or plan. Employees usually go with the Plan that pays the most premium or offers the best coveage. Employers are trying to cut this huge expense wherever they can.

As far the group health plan requiring this, I don't think they are the ones denying coverage or I have never heard of them denying coverage to someone covered under a spouse's plan. Perhaps the employer is blaming the health plan or maybe there is more to it, I have never seen a group health plan decline coverage for this reason. If the employee is very ill, it would seem discriminatory unless they changed carriers on a non-guaranteed issue plan but still, the carrier would have the potential risk at open enrollment or if the spouse with the coverage loses coverage, employment etc. At that point, the carrier once they accepted the group, cannot single out an employee.

My guess is it is the employer/union finding ways to cut costs with the last few years of double digit increases. Many are struggling to stay in business now as it is.Many employees are not aware of the costs until they go onto continuation coverage (COBRA). They think it is only what the employer deducts from their check as a contribution!

[mroberts]

I don't see how an employer can DENY coverage if the spouse is eligible for medical insurance elsewhere. I can see the employer indicating that they will make no contributions to pay for the spouse's coverage if he or she has coverage elsewhere. It would seem to me that you would have a problem with eligibility since you as the employer can't be very well consistent (people are going to lie). Any thoughts?