One of the games that HR Leaders of all shapes and sizes (company size, not body size) have to play is medical cost. How can I manage the cost of my medical plan? Whether you're fully insured or self insured, you're still left to tweak the design of your plan to manage cost increases. Don't kid yourself, you'll still be doing this when and if Obamacare becomes official. Unless you decide to stop providing benefits at all and take your Obamacare penalty. Good luck recruiting if that's your approach.
The normal flavors of these medical plan design tweaks are pretty obvious. You're basically looking to cut the quality of the plan to keep your costs under control. Flavors of that include - increase the deductible, raise the co-insurance, alter your prescription meds program, etc.
One heftier option was in the news last week - the spousal carve out, which means that you start denying coverage to spouses that have viable medical plans available where they work. Here's more from the New York Times:
"United Parcel Service has told its white-collar employees that it will stop providing health care coverage to their spouses who can obtain coverage through their own employers, joining an increasing number of companies that are restricting or eliminating spousal health benefits.
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.”
I did a spousal carve out one time at a mid-sized software company. Things you'll need to think about include:
1. The communication plan so you don't look like a total ###. You're going to look like an ###, but you don't want to look like a total ###.
2. Certification - in order for you to really execute this, you're going to have to make all spouses ineligible, then only add spouses that bring you certification from their company that no viable medical option is available. Open enrollment is really the only time to do this without causing a riot.
3. You'll have to define what a viable medical plan looks like at a spouse's company so you can easily determine whether the spouse is eligible to join your plan. My definition of viable is communication related to quality of the plan (what does it cover) and cost (how much comes out of the spouse's paycheck to get coverage). Needless to say, there are a lot of decisions to be made with this.
Having said all of that, the number of employers who have executed the spousal carve out on their medical plans is fairly low. The Times article goes on to outline the following:
"While the percentage of employers adopting changes in policies like U.P.S.’s new limits remains in the single digits, it is growing. According to a corporate survey by Mercer, a consulting firm, 6 percent of companies with 500 or more employees excluded coverage for spouses in 2012 if their spouses could obtain coverage through their own employer. That is double the percentage in 2008, Mercer found."
Notable - The new U.P.S. policy does not apply to the children of those employees. Nor does it affect the company’s 250,000 unionized workers, who belong to the International Brotherhood of Teamsters. At the end of last year, the company had around 399,000 employees, which means 3-4% of it's employees are impacted by the change.