Spousal Carve Out

[Miner88]

I need some opinions on this please!

I have a plan that wants to refuse coverage for spouses of active employees who have coverage available "elsewhere." What if the "elsewhere" is Medicare coverage? I am aware of the Medicare rules that say you cannot drop an employee, spouse, or dependent from your plan just because they are eligible for Medicare. However, I came across another provision that says you have to provide Medicare-eligible individuals with coverage under the same terms and conditions as non-Medicare eligible individuals. If the spousal carve-out rule applies to all individuals, and not just Medicare-eligible individuals, does the MSP rule still apply?

[CAFA]

Same question, any responses since 2011?

[Peter Gulia]

CAFA, is your question about health coverage that is insured or "self-insured" (that is, not provided by a health insurance contract)?

Also, what method (if any) beyond a participant's statement would the employer/administrator use to discern whether a participant's spouse has an availability of coverage (other than Medicare) elsewhere?

[Chaz]

I believe, off the top of my head, that HHS has informally stated that an opt-out/cash-out incentive does not violate the MSP rules if it is available to Medicare-entitled employees on the same terms as other employees.

But my recollection is that the informal guidance was provided many years ago so I recommend checking to see if it has revised its thoughts or has issued more recent guidance.

[Peter Gulia]

CAFA, are you asking about an incentive to elect against covering one's spouse (what Chaz describes), or about making an employee's spouse ineligible if the spouse is eligible for other health coverage?

If it's about making a spouse ineligible, one guesses that Medicare might be treated differently than employment-based group health plan coverage.