Reimbursing Employee Health Insurance under a spouse's group plan

[shamil10]

My company provides health insurance for all employees. We have several employees who have declined our insurance but, have elected coverage on their spouse's group health plan due to better coverage options. Are we able to reimburse the spouse's employer directly for this coverage as it is a group health coverage, not individual coverage?

[GBurns]

I have never seen anyone "reimburse the spouse's employer",

Are you sure that this is what you want to do?

If, Yes, I must ask Why?

Usually the spouse would be charged by her employer for the additional coverage and you would reimburse your employee for the additional cost incurred by their spouse.

[hr for me]

I can see all sorts of administrative pitfalls. What happens if/when

(1) the spouse changes employers?

(2)The amount of the premium/reimbursement changes

(3) the employer refuses to let a 3rd party come into their employment/benefit relationship with the spouse

(4) the spouse's employer's payroll can't handle a different deduction than everyone else, etc.

(5) the spouse quits working and wants on your plan -- got to stop the reimbursement or risk overpayment

This would need ALOT of oversight assuming other random employers even want to take the reimbursement.

I agree with GBurns- go back to WHY you are doing this? And see if you can't deal directly with your employees. Possibly give a discount to those whose spouses are covered elsewhere? (if that is even legal under PPACA) I know that you can upcharge those whose spouses have access to other coverage but choose to be on your plan anyway.

[GBurns]

hr for me raises some very important points to consider even if you decide to reimburse your employee since it is not feasible to reimburse their spouse's employer, anyhow.

You would only be able to reimburse your employee AFTER proof of the expense is provided. However, the employee most likely might not be able to get usable proof, because all that there might be is the line item on the spouse's paystub.

A cash out option might be what you really want to offer. The best examples are found in the public sector, especially with the large school districts, universities and state plans. Take a look at those in your state.

[hr for me]

And even a paystub may not show coverage if the employee is not required to pay any part of the premium. And I still know quite a few employers that pay 100% of the employee-only which means nothing would be on a paystub. Most pay at least 50% of the premium. So would you reimburse only the employee portion? Or the whole premium? And generally the employer won't publish the cost of the full premium, except possibly through knowing the COBRA premiums they charge.

And what happens when the cost of one employee spouse with the best plan ever is $1000 a month and another employee's spouse is terrible insurance at $400 a month. How do you make it equitable? I would find a way to reimburse a consistent amount back to your employee.

[GBurns]

The OP stated that this was not an employee only issue, the coverage would be spouse and employee and that they were interested in reimbursing for the cost of this additional coverage, however much that might be.

But, there is also the complication which would be caused if the spouse's coverage tiers did not include an "Employee and Spouse" but instead had "Family". How would the OP know how much to reimburse for their employee's portion?

I think that the OP could get some guidance from the public sector plans.