Conditioning participation in a health plan upon being covered by, or not being covered by, your spouse's health plan.

[Kirk Maldonado]

papogi:

I've heard of employers trying to design eligibility conditions for health plans that being covered or not being covered under your spouse's employer's health plan affects your ability to participate in your employer's health plan. The inclusion or exclusion rule might have been designed to only apply to dependents, my memory is very fuzzy on this point. In fact, I honestly don't remember precisely what the configuration was or what objetive the employer was trying to achieve.

Have you heard of any such arrangements? Do you have an opinion as to whether they are legally permissible? Do they achieve their desired results?

Actually, I would like to hear from anybody that has any experience and/or insight regarding the legality and/or efficacy of such plan design features.

[papogi]

The growing plan design is one where spouses can come on the plan only if they elect coverage at their employer, if they are employed and eligible for medical coverage. The benefit to the plan in question, of course, is that these spouses will only be paid secondary. Or some of these spouses will terminate off the plan if they feel that the cost to participate is too high for the benefit they might receive having a secondary payer. I know of a handful of plans that have this policy that I have dealt with directly. By the nature and tradition of one of these businesses, most employees are female. The men who these females are married to are almost all employed, and have coverage. There were very few situations where the husband was forgoing coverage at his employer in favor of dependent coverage under his wife. Implementing this policy did not have a great effect. If the employer employs mostly men, however, this policy could generate a good number of spouse terminations, and reduced risk by moving several spouses into secondary paying situations.

Each business and industry needs to judge their own population. They need to look at the ratio of males to females, and the types of jobs that your employees’ spouses have (do the spouses have benefits to sign up for, or are they poor benefits), and your particular employee base (are your employees of the mindset that the husband oversees things such as benefits, and they might not even consider using the wife’s employer’s plan). In many cases, a policy like this is just another administrative layer to get through. Or, it allows policymakers to sleep at night knowing that they have knocked on every potential cost-saving door they could. It is possible for this provision to have measurable results on claims costs.

I deal only in the self-funded environment, and the legality of these provisions does not seem to be in question. There certainly could be a bad view of the policy by employees, and that can hurt morale and employee satisfaction, but it appears to be technically legal.

[Kirk Maldonado]

papogi:

Thank you for that detailed response. In particular, your insights on the situation were valuable.

The situation that you are describing is exactly what I had heard of before.