Abstract: As of 2012, 7 percent of employers did not cover spouses when other coverage was available to them; and 4 percent of employers with 1,000 or more employees reported not providing such spousal coverage. As of late 2012-early 2013, another 8 percent of large employers were reporting that they planned to exclude spouses from coverage when other coverage was available. A recent decision by United Parcel Service to eliminate health benefits for spouses who were eligible for coverage through their own employer may be a tipping point in employment-based health benefits, in part due to provisions in the Patient Protection and Affordable Care Act (PPACA). Although employers that exclude working spouses from coverage may save money in the short run by way of the reduction in the number of covered lives, the effect of this strategy over the long term is less clear. Undoubtedly, more employers will follow suit, which will result in more workers reverting to enrollment in their own employer’s plan. This hypothetical re-sorting of members according to whether they are policyholders or the spouses and whether they themselves are employed or not prompts a critical question that is the focus of this paper: All else equal, do spouses use more health services and cost more to cover? This report conducts a novel analysis that addresses this question and discusses the implications for plan sponsors. This paper documents that spouses, on average, cost more to cover than otherwise comparable policyholders. This, in conjunction with the latitude offered by PPACA, makes spousal coverage a target for employers seeking ways to lower their health care expenditures. However, this analysis finds that working and non-working spouses are likely quite different in their use of health services. Therefore, the strategy of not covering spouses who are employed may have unintended consequences for employers.The PDF for the above title, published in the January 2014 issue of EBRI Notes, also contains the fulltext of another January 2014 EBRI Notes article abstracted on SSRN: “The Role of Social Security, Defined Benefits, and Private Retirement Accounts in the Face of the Retirement Crisis.”
Publication Year: 2014
Publication Date: 2014-01-01
Language: en
Type: article
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Cited By Count: 5
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