U.P.S. to End Health Benefits for Spouses of Some Workers – NYTimes.com

U.P.S., the world’s largest package delivery company, said its decision was prompted in part by “costs associated with” the federal health care law that is commonly called Obamacare. Several health care experts, however, said they believed the company was motivated by a desire to hold down health care costs, rather than because of cost increases under the law.

In a memo addressed to employees, U.P.S. said, “Limiting plan eligibility is one way to manage ongoing health care costs, now and into the future, so that we can continue to provide affordable coverage for our employees.”

The memo also estimated that about 33,000 spouses were covered under its insurance plan for white-collar employees and that “about 15,000 of these would have health care coverage available through their own employers.”

via U.P.S. to End Health Benefits for Spouses of Some Workers – NYTimes.com.

Before we jump all over UPS on this one, let’s think this through. One employer provides health benefits while another avoids the cost because a spouse does not take coverage as an employee; is this fair? Employees enroll their spouses who do have coverage available for three reasons or combination of reasons. 1. Employee coverage is better. 2. Employee coverage is less expensive or 3. Having coverage through two employer groups allows employee and spouse to coordinate benefits possibly receiving 100% reimbursement.

UPS did not drop coverage for spouses as the headline implies. Non-working spouses or those working without employer coverage may still enroll and if a working spouse loses coverage they may return to the UPS plan.

Encouraging or requiring a working spouse to enroll in her employer’s plan is nothing new. I initiated a spousal surcharge in a plan over 15 years ago for just that purpose.

Given the above reasons why an employee enrolls a working spouse, it is likely that affected employees will see an increase in their out of pocket costs (less premium savings in the UPS plan) so this is not good news for employees.

From the employee’s perspective this practice may appear discriminatory. After all, the employee with a working spouse now prevented from taking UPS coverage is effectively receiving lower total compensation than previously. I wonder if the economists theory will hold up; UPS will give them a raise … LOL!

Make no mistake about it, Obamacare is causing employers to rethink the entire issue of health benefits and their role in it. Ten years (likely less) from now employer health benefits will be very different from what we see today.