A simple internet search for the term “spousal carve outs” turns up dozens of links. The surfeit of links underscores the interest that employers are showing for measures that may reduce health coverage costs.
Implementing a spousal carve-out or spousal surcharge is no small task. Employers need to consider a host of issues, not the least of which are whether there are state laws, insurance contracts or other impediments to doing so.
A prelude to changing the terms of the health plan that also is likely to save money would be undertaking a dependent eligibility audit. A dependent eligibility audit ensures that enrolled dependents – children and spouses – are eligible under the rules of the employer’s plan. A survey by a business group found that on average 7% of dependents are found ineligible. Whether these averages are solid, there is no doubt that plan sponsors have a fiduciary duty to administer the plan in the interest of the eligible participants.
Employers should weigh the pros and cons of changing the eligibility of spouses before taking action. NAHU’s Compliance Corner White Paper Spousal Exclusions and Surcharges – Considerations and Caveats discusses the administrative and legal steps to implement a spousal carve-out or exclusion.