Provided by: Judge Ruth B. Kraft


Several weeks ago, a client called to inquire whether it was legal for her health insurance plan to charge a monthly fee to cover her husband, who was eligible to obtain benefits through his own employer. The answer is, unfortunately, yes. A double standard? Absolutely; if her husband wasn’t employed, the surcharge would not have been applicable. However, expect to see much more of this going forward. At this time, only 6 percent of employers assess a surcharge if alternate coverage could be available. But, by 2015, that number is expected to rise to 33%. It is all a matter of dollars and sense! Because the employee derives a benefit (spousal coverage), the deduction from wages does not constitute wage theft.

Recently, United Parcel Service has announced that it will stop to provide health care coverage for any spouse who is eligible for insurance through his or her own employer. This will limit the ability to pick and choose which of the two benefit plans is more favorable to the family’s health care needs and pocketbook. Both my client and her husband’s employer provided coverage through the same insurance company---but remember that plan provisions and benefits aren’t always identical. United and Cigna, just to mention two insurers, customize plans, with “carve-outs” for a variety of procedures.

The Affordable Care Act does not require employers to provide spousal coverage; they must offer coverage for employees’ children, although this may be at the employees’ own expense.

Expect to see more of this going forward. Employers are looking at measures like this, as well as extremely high deductibles, to avoid being hit by the “Cadillac” tax, which imposes a 40% tax on health insurance premiums above a threshold number effective in 2018. That threshold, five years down the road, will be $10,200 for individual coverage and $27,500 for family coverage. If those numbers seem high, think again, particularly if we enter an inflationary cycle. By potentially covering fewer people, UPS is lowering its total exposure to these calculations.

It is worthwhile for employers to evaluate their options and to reserve their options as we enter a new era in American healthcare. Reduction of benefits which workers have to expect is a difficult thing to implement, in terms of employee satisfaction, but there may be less costly tradeoffs, in terms of items such as telecommuting and more flexibility in scheduling, which can be offered at the same time to ease the pain.


Have a question or comment?
Contact Jennifer at Jennifer@Kirschenbaumesq.com or at (516) 747-6700 x. 302.