Wave of the Present: The Surge in Working Spouse Provisions
by John Webb, Jan. 31, 2017
Twenty-seven percent of all U.S. employers used some form of a Working Spouse Provisions in 2015, a figure that may double by 2018, according to Willis Towers Watson/National Business Group. The cost-savings measure identifies employees’ spouses with access to other health insurance coverage through their employers.
The provision is implemented either as a surcharge, where each employee pays on average an additional $1,200 annually to keep their spouse on the plan, or a carve-out, where the spouse must choose coverage either by their own employer or purchase insurance independently.
This concept is not new, but has gained more notoriety since 2013 when UPS implemented the process.
Initially many employers allowed their employees to self-report spousal employment status. This trend closely mirrors how employers initially dealt with the broader concept of Dependent Verification, via the honor system. This approach, mostly administered by internal staff, can quickly become unwieldy for a number of reasons – from staffing to storage to cultural considerations – especially for employers with more than 500 employees.
Now we see many employers turning to a third party to help administer the process, often called a Working Spouse Provision Review, or audit. This usually entails the spouse’s employer becoming involved in the process to certify spousal coverage available. Non-responsive spouses are typically dropped from coverage or assessed a surcharge.
This is typically administered with a dependent verification, simultaneously verifying the spouse’s coverage options and the actual status of the relationship. If an employee is divorced, the working spouse provision becomes moot – the ex-spouse is not eligible for coverage, even with a surcharge. For this reason, employers will often execute the verification at point of hire, and then again on a routine basis. This is usually every 12-24 months, verifying both marital and employment/benefit status.
Some employers choose to implement the Working Spouse Provision as a stand-alone process.
If your company does not have a Working Spouse Provision today, chances are this is a concept you will carefully consider in the near future. You will have to determine what type of provision to implement, how frequently it should be administered, and whether or not you have the internal staffing to manage the process or need to establish a vendor relationship.
The implementation of a formal review process typically leads to an additional shift of 12% in coverage based on spouses either leaving coverage or opting to pay a surcharge.
John Webb is Managing Director of Employer Solutions for HMS.