Spousal Surcharge

[Silver70]

HR is planning on implementing a spousal surcharge in 2016. I was wondering how others process this.

1. Do you make it pre-tax or post-tax?

2. Is it an additional deduction or do you add it to the premium? Does this affect it's pre-tax/post-tax status?

3. We currently offer a Cash Award to employees who opt-out of our insurance. If the opting out employee's spouse also works for the organization, do you charge then the surcharge if they pickup their spouse (who is an employee)? If so, does the waiving spouse still receive the cash award?

4. What about Domestic Partners?

Thank you

[Flyboyjohn]

Several questions:

1. Does you currently subsidize spousal coverage (so the "surcharge" is simply a decrease in the employer subsidy) or do you offer but not subsidize spousal coverage so the "surcharge" goes in your pocket?

2. Is this across the board or just for spouses who have coverage available through their employer?

3. If you're an ACA large employer do you understand the adverse impact of the cash-in-lieu option on the issue of affordability?

[GBurns]

I have not noticed anyone doing this.

Why does HR think that this is:

1. Legal?

2. Cost effective?

3. A good idea?

[hr for me]

My husband's last employer charged a spousal surcharge if the spouse had coverage through their own employer and chose to be on the husband's plan. It was about $80 a month extra. So I have definitely experienced it personally. I was required to get a letter from my employer stating I was not eligible for coverage to not be charged the spousal surcharge.

So charging it is legal and the $80 was enough to get the spouse to pick their own employer coverage especially if their employer covered 100% of employee coverage.

Of course you have the administration of checking spouse's status (working and eligibility at a different employer). But the surcharged was charged until the employee/spouse proved otherwise each year. For $80/month most employees made sure they completed the paperwork quickly.

It was part of the premium and paid pre-tax.

I agree that the Cash Award in-lieu-of changed dramatically under PPACA so I would make sure you understand how that affects any cash award.